First Conviction in the United States for FATCA Violations

An investigation of Belize-based stockbrokers recently led to the first FATCA conviction since its enactment in 2010.

The former head of an offshore bank pled guilty to conspiracy to defraud the United States by intentionally circumventing the requirements of the Foreign Account Tax Compliance Act (“FATCA”). His guilty plea is the first conviction under FATCA according to prosecutors. The executive, a citizen of the United Kingdom and Saint Vincent, was extradited from Hungary to face charges in New York. He faces up to five years in prison.

FATCA, enacted in 2010, requires foreign financial institutions to report information about financial accounts held by U.S. customers either directly or beneficially through a foreign entity. Failing to comply with FATCA may subject a foreign financial institution to a withholding tax of 30 percent on certain payments. FATCA’s primary aim is to prevent U.S. taxpayers from using foreign accounts to facilitate U.S. tax evasion.

The conviction

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