Not Even Royalty Safe from FATCA (Rothschild Bank AG and Banca Credinvest SA)

By Veronica Pamoukaghlian, Senior Journalist

The IRS is sending a clear message these days: not even European royalty is safe from FATCA´s grip. This became apparent when Baron David de Rothschild, 72, a member of one the old continent´s oldest dynasties and chairman of the Rothschild Group, saw Rothschild Bank AG fined by the U.S. Justice Department on charges of facilitating the concealment of American assets offshore.

As the FBAR filing deadline approaches, Rothschild Bank AG and Banca Credinvest SA have agreed to pay 11.5 and 3 million dollars in fines respectively. The agreement was reached in the frame of the IRS´s FATCA program, with both financial institutions agreeing to disclose information to the US government about every American taxpayer account they have been holding.

The bustle at the lakeside offices of Banca Credinvest must have contrasted the peaceful sight of the Alps and the quiet waters of Lake Lugano as the announcement was made. As the headquarters of both Banca Credinvest and Rothschild Bank quiet down and settle into the new order, it is the offices and homes of Americans who have held accounts at these banks in secret that must be seeing some unrest.

With the compliance of the new financial institutions comes an increase in penalties for voluntary disclosure of foreign accounts under FATCA. For example, those filing an FBAR for 2014 including accounts at Rothschild Bank AG or Banca Credinvest SA will now face 50% rather than 27.5% penalties for those accounts.

But 50% is nothing if you ask Carl R. Zwerner, a citizen of Florida, who faced penalties of 150% on his $1,691,054 foreign account in 2014. This happened because violations considered willful can draw penalties of 50% of the account for each violation, with each year counted as a separate violation. But a 150% penalty might be the least of your problems if the US Department of Justice decides to press criminal charges, as the law stipulates that “willfully evading or defeating imposed taxes” can be punishable with up to five years of imprisonment.

If you have been holding one or more accounts at foreign financial institutions, you must seek advice regarding the most convenient course of action to minimize penalties and avoid facing criminal charges. Any foreign account with a minimum of $10,000 at any given time in the calendar can put you at risk. If the accounts date back several years, the risk increases.

Waiting until your financial institution comes forward, and come forward they all will at some point, can only make things more difficult and fines higher. If you fear you might be in a position to be investigated by the IRS, it is crucial to seek expert legal advice right now.

Florida´s Mr. Zwerner faced 150% in penalties after reporting about his foreign accounts. This was in part the result of poor guidance from his legal and financial advisors. The IRS offers many different options for US taxpayers to disclose offshore accounts in compliance with current regulations.

If you want to find out about the legal status of your foreign accounts or are unsure whether opting for voluntary disclosure and filing an FBAR at this time might be the right move, give us a call. All inquiries are kept strictly confidential and subject to the attorney – client privilege.

Securing the services of an attorney experienced with foreign account reporting is crucial in order to avoid legal trouble and minimize financial losses. We have helped numerous taxpayers across the United States and the world with foreign account reporting questions and amnesty filings.

For more information, contact attorney Bethany Canfield at or by telephone (414) 223-0464. Initial consultations are always without obligation or charge. Services available worldwide and many IRS foreign reporting services are available on a flat fee basis.

Updated IRS FATCA BANK LIST

Full updated list of foreign financial institutions/facilitators (Updated by the IRS on June 4th):

1. UBS AG
2. Credit Suisse AG, Credit Suisse Fides, and Clariden Leu Ltd.
3. Wegelin & Co.
4. Liechtensteinische Landesbank AG
5. Zurcher Kantonalbank
6. swisspartners Investment Network AG, swisspartners Wealth Management AG, swisspartners Insurance Company SPC Ltd., and swisspartners Versicherung AG
7. CIBC FirstCaribbean International Bank Limited, its predecessors, subsidiaries, and affiliates
8. Stanford International Bank, Ltd., Stanford Group Company, and Stanford Trust Company, Ltd.
9. The Hong Kong and Shanghai Banking Corporation Limited in India (HSBC India)
10. The Bank of N.T. Butterfield & Son Limited (also known as Butterfield Bank and Bank of Butterfield), its predecessors, subsidiaries, and affiliates
11. Sovereign Management & Legal, Ltd., its predecessors, subsidiaries, and affiliates (effective 12/19/14)
12. Bank Leumi le-Israel B.M., The Bank Leumi le-Israel Trust Company Ltd, Bank Leumi (Luxembourg) S.A., Leumi Private Bank S.A., and Bank Leumi USA (effective 12/22/14)
13. BSI SA (effective 3/30/15)
14. Vadian Bank AG (effective 5/8/15)
15. Finter Bank Zurich AG (effective 5/15/15)
16. Societe Generale Private Banking (Lugano-Svizzera) SA (effective 5/28/15)
17. MediBank AG (effective 5/28/15)
18. LBBW (Schweiz) AG (effective 5/28/15)
19. Scobag Privatbank AG (effective 5/28/15)
20. Rothschild Bank AG (effective 6/3/15)
21. Banca Credinvest SA (effective 6/3/15)

Mahany & Ertl – America’s FBAR Lawyers