Recent Actions Confirm FinCEN’s Aggressive Anti-Money Laundering Enforcement Agenda

July 2015

Matthew D. Lee

Financier Worldwide Magazine

Blank Rome Partner Matthew D. Lee recently authored an article for the July 2015 edition of Financier Worldwide Magazine, “Recent Actions Confirm FinCEN’s Aggressive Anti-Money Laundering Enforcement Agenda.”

The publicly stated mission of the US Treasury Department’s Financial Crimes Enforcement Network (FinCEN) is to safeguard the US financial system from illicit use, and combat money laundering and promote national security through the collection, analysis and dissemination of financial intelligence and strategic use of financial authorities. Historically viewed as primarily a data-gathering agency, FinCEN has recently advanced a significantly more aggressive enforcement agenda aimed at combating trade-based money laundering, money laundering through real estate transactions, the use of third-party money launderers, and money laundering through use of virtual currency. In each of these areas, FinCEN’s latest actions confirm that the agency intends to take a far more aggressive approach to enforcement and will exercise its authority, where warranted, to impose substantial penalties and sanctions on wrongdoers.

To read the full article, please click here.

“Recent Actions Confirm FinCEN’s Aggressive Anti-Money Laundering Enforcement Agenda,” by Matthew D. Lee was published in the Financier Worldwide Magazine July 2015 Issue.

FinCEN Announces First Civil Enforcement Action Against Virtual Currency Exchanger

Continuing its aggressive anti-money laundering enforcement agenda, the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) announced yesterday that it had commenced the first-ever civil enforcement action against a virtual currency exchanger.  FinCEN announced that it had assessed a $700,000 civil money penalty against Ripple Labs Inc. and its wholly-owned subsidiary, XRP II, LLC.  Ripple is the second largest cryptocurrency by market capitalization, after Bitcoin.

FinCEN found that Ripple Labs willfully violated multiple provisions of the Bank Secrecy Act by acting as a money services business (MSB) and selling its virtual currency known as XRP.  Ripple Labs failed to register with FinCEN as a MSB and failed to implement and maintain an adequate anti-money laundering program designed to protect its products from use by money launderers or terrorist financiers.  Ripple Labs’ subsidiary, XRP II, also willfully violated the BSA by failing to implement an effective AML program and by failing to report suspicious activity related to several financial transactions.  Ripple Labs and XRP II agreed with FinCEN’s conclusions and consented to imposition of the civil money penalty.  In a companion civil settlement with the U.S. Attorney’s Office for the Northern District of California, Ripple Labs agreed to forfeit $450,000 and avoided criminal prosecution.

In a Statement of Facts and Violations released as part of the settlement documents, and agreed to by Ripple Labs and XRP II, FinCEN and U.S. Attorney’s Office described the following suspicious transactions that were not properly reported:

On September 30, 2013, XRP II negotiated an approximately $250,000.00 transaction by email for a sale of XRP virtual currency with a third-party individual. XRP II provided that individual with a “know your customer” (“KYC”) form and asked that it be returned along with appropriate identification in in order to move forward with the transaction. The individual replied that another source would provide the XRP virtual currency and did not “require anywhere near as much paperwork” and essentially threatened to go elsewhere. Within hours, XRP II agreed by email to dispense with its KYC requirement and move forward with the transaction. Open source information indicates that this individual, an investor in Ripple Labs, has a prior three-count federal felony conviction for dealing in, mailing, and storing explosive devices and had been sentenced to prison, see United States v. Roger Ver, CR 1-20127-JF (N.D. Cal. 2002);

In November 2013, XRP II rejected an approximately $32,000.00 transaction because it doubted the legitimacy of the overseas customer’s source of funds.  XRP II failed to file a suspicious activity report for this transaction; and

In January 2014, a Malaysian-based customer sought to purchase XRP from XRP II, indicating that he wanted to use a personal bank account for a business purpose.  Because of these concerns, XRP II declined the transaction but again failed to file a suspicious activity report for the transaction.

As part of this global settlement, Ripple Labs agreed to implement a series of remedial measures including the following:

  • It agreed to conduct activity only through a registered MSB;
  • It agreed to implement and maintain an effective AML program;
  • It agreed to comply with Funds Transfer and Funds Travel Rules;
  • It agreed to conduct a three-year “look-back” to require suspicious activity reporting for prior suspicious transactions; and
  • It agreed to retain external independent auditors to review BSA/AML compliance every two years until 2020.

FinCEN’s latest enforcement action is an outgrowth of its efforts to regulate the growing virtual currency industry.  Two years ago, FinCEN issued guidance specifying that virtual currency exchangers and administrators are “money transmitters” under the BSA and are required to register with FinCEN and institute certain recordkeeping, reporting, and AML program measures.  In a speech delivered today at the West Coast AML Forum, FinCEN Director Jennifer Shasky Calvery touted her agency’s enforcement action against Ripple Labs and warned other virtual currency businesses of the consequences of non-compliance:

     Virtual currency exchangers – like all members of regulated industry – must bring products to market that comply with our anti-money laundering laws. Innovation is laudable but only as long as it does not unreasonably expose our financial system to tech-smart criminals eager to abuse the latest and most complex products.

The regulatory framework for money services businesses, which include virtual currency exchangers and administrators, has been in existence for years.  To clarify these regulatory requirements, FinCEN issued guidance just over two years ago, noting that virtual currency exchangers and administrators are “money transmitters” under the Bank Secrecy Act (BSA) and its implementing regulations.  As such, they are required to register with FinCEN as a money services business and institute certain recordkeeping, reporting, and AML program measures.

Since issuing the guidance, FinCEN has regularly engaged with the virtual currency industry through administrative rulings and outreach efforts to further clarify our regulatory coverage.  We are extremely fortunate to have a team of experts who work very hard to keep pace with the quickly evolving technology in this area.  They share what they have learned through extensive training efforts with law enforcement, regulators, and prosecutors domestically and globally.  These are the people who are on the front lines of investigating illegal use of emerging payment systems.  They also share their experiences with industry so that companies will be able to avoid being compromised by unlawful actors, and being used as a vehicle for illicit finance.

The FinCEN Director also noted that her agency, working with BSA examiners at the Internal Revenue Service, recently initiated a series of supervisory examinations of virtual currency businesses:

     Working closely with our delegated BSA examiners at the Internal Revenue Service (IRS), FinCEN recently launched a series of supervisory examinations of businesses in the virtual currency industry.  As with our BSA supervision of other parts of the financial services industry, these exams will help FinCEN determine whether virtual currency exchangers and administrators are meeting their compliance obligations under the applicable rules.  Where we identify problems, we will use our supervisory and enforcement authorities to appropriately penalize non-compliance and drive compliance improvements.

 

Latest GTO Reflects FinCEN’s Aggressive Approach to Anti-Money Laundering

On April 21, 2015, the Treasury Department’s Financial Crimes Enforcement Network issued a geographic targeting order, an anti-money laundering device focused on trade-based money laundering schemes used by drug cartels, including Sinaloa and Los Zetas, to launder illicit proceeds through businesses in South Florida.[1] FinCEN stated that the GTO, the third such order issued publicly by the anti-money laundering agency since August 2014, was served on about 700 electronics exporters in and around Miami. An ongoing criminal investigation conducted jointly by the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations and the Miami Dade State Attorney’s Office South Florida Money Laundering Strike Force has revealed that many electronics exporters are exploited as part of sophisticated trade-based money laundering schemes in which drug proceeds in the United States are converted into goods that are shipped to South America and sold for local currency, which is ultimately transferred to drug cartels.

Background Regarding GTOs

A GTO is an order issued by the United States secretary of the Treasury requiring all domestic financial institutions that exist within a geographic area to report on transactions any greater than a specified value. GTOs are authorized by the Bank Secrecy Act in 31 U.S.C. § 5326(a). Originally, GTOs were only permitted by law to last for 60 days, but that limitation was extended by the USA Patriot Act to 180 days.

In general, a nonfinancial trade or business that receives more than $10,000 in currency in a single transaction, or multiple related transactions, is required to file a Form 8300 with FinCEN. The Miami GTO lowers the $10,000 reporting threshold to $3,000 for covered businesses. These businesses are required to report to FinCEN currency transactions over $3,000, and to include in those reports information about the transaction and the persons involved. Each business covered under this GTO received notice of its obligations via personal service or by certified mail. Failure to comply could result in substantial criminal and civil penalties.

Terms of the Miami GTO

The terms of the latest GTO are effective beginning April 28, 2015, and ending Oct. 25, 2015. The GTO provides that its requirements apply to a “covered business,” which refers to any trade or business that exports electronics (including cell phones), and any of its agents, subsidiaries and franchisees, within the following U.S. zip codes: 33172; 33178; 33166; 33122 and 33126.

If, in the course of its trade or business, a business covered by the GTO receives currency in excess of $3,000 in one transaction (or two or more related transactions), then the business must report the transaction by filing a FinCEN Form 8300. For purposes of this GTO, “currency” means: (1) the coin and currency of the United States or of any other country, which circulate in and are customarily used and accepted as money in the country in which issued, or (2) a cashier’s check (by whatever name called, including “treasurer’s check” and “bank check”), bank draft, traveler’s check or money order.

A covered business receiving more than $3,000 in currency must identify the customer involved in the transaction by obtaining a telephone number and one form of valid identification. The business must also determine whether the customer is conducting the transaction on behalf of a third party, by obtaining a written certification identifying whether such a third party is involved and, if so, the identity of such third party. In addition, when a covered business files a FinCEN Form 8300 to report a transaction, it must also include the following information in the comments section of the form: (1) a description of the goods involved in the covered transaction; (2) the name and phone number of the person receiving such goods; and (3) the address to which such goods are being shipped.

The GTO provides that a covered business must supervise, and is responsible for, compliance by each of its officers, directors, employees, agents, subsidiaries and franchisees with the terms of this order. In addition, a covered business must notify each of its officers, directors, employees, agents, subsidiaries and franchisees of the terms of the GTO, and must transmit the order to its chief executive officer. The GTO further provides that a covered business and any of its officers, directors, employees or agents may be liable, without limitation, for civil or criminal penalties for violating any of the terms of the GTO.

In a press release announcing issuance of the Miami GTO, FinCEN’s director, Jennifer Shasky Calvery, stated that “[w]hen we issued a similar GTO in the Los Angeles area last year, many speculated about whether we’d be doing the same in other parts of the country. We are committed to shedding light on shady financial activity wherever we find it. We will continue issuing GTOs, as necessary, as well as exercising FinCEN’s other unique anti-money laundering authorities, to ensure a transparent financial system that impedes money launderers and other criminals from masking their identity and illicit activity.”

Prior GTOs Issued in Los Angeles and the California-Mexico Border

The Miami GTO is the third publicly announced GTO issued by FinCEN since August 2014. On Oct. 2, 2014, as part of a probe by the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations targeting alleged money laundering activities in Los Angeles’ garment trade, FinCEN announced the issuance of a GTO that imposed additional reporting and record-keeping obligations on certain businesses located within the city’s fashion district.[2] According to FinCEN, the Los Angeles GTO will enhance ongoing efforts to identify and pursue cases against individuals and businesses engaged in the illicit movement of U.S. currency to Mexico and Colombia on behalf of prominent drug trafficking organizations. The GTO directed at L.A.’s fashion district, which went into effect Oct. 9, was sought by the U.S. Attorney’s Office for the Central District of California, which is working with HSI and the Internal Revenue Service’s Criminal Investigation division to fight money laundering schemes designed to allow international drug cartels in Central America and South America to reach drug proceeds generated in the United States.

According to a press release announcing the GTO, extensive law enforcement operations have revealed evidence that money laundering activities and Bank Secrecy Act violations are pervasive throughout the Los Angeles Fashion District, which includes more than 2,000 businesses. Much of the money laundering is conducted through Black Market Peso Exchange schemes, also known as trade-based money laundering, in which drug money in the United States is converted into goods that are shipped to countries such as Mexico, where the goods are sold and money now in the form of local currency goes to the drug trafficking organizations.

On Sept. 10, 2014, more than 1,000 federal, state, and local law enforcement officials executed dozens of search warrants and arrest warrants linked to businesses in the L.A. Fashion District suspected of engaging in money laundering schemes and evasions of required Bank Secrecy Act reporting requirements. Criminal investigations have revealed evidence that many of these businesses are routinely accepting bulk cash as part of schemes involving black market peso exchange and trade-based money laundering on behalf of drug trafficking organizations based in Mexico and Colombia. During the Sept. 10 enforcement action, HSI special agents seized what was ultimately determined to be more than $90 million in currency. The cash was found at various residences and businesses stored in file boxes, duffel bags, backpacks, and even in the trunk of a Bentley automobile.

Businesses covered under the Los Angeles GTO include garment and textile stores, transportation companies, travel agencies, perfume stores, electronic stores (including those that only sell cell phones), shoe stores, lingerie stores, flower/silk flower stores, beauty supply stores, and stores bearing “import” or “export” in their name. The order took effect Oct. 9 and remained in effect for 180 days. In February 2015, the GTO was extended for an additional 180 days.[3]

Working in close coordination with its Mexican counterpart, the Unidad de Inteligencia Financiera (UIF), FinCEN announced issuance of a GTO in August 2014 that covered the U.S.-Mexico border at two California ports of entry.[4] The purpose of this GTO was to improve the transparency of cross-border cash movements. To address U.S. and Mexican law enforcement concerns about potential misuse of exemptions and incomplete or inaccurate reports filed by armored car services and other common carriers of currency, the GTO required enhanced cash reporting by these businesses at the San Ysidro and Otay Mesa Ports of Entry in California.

In 2010, Mexico enacted new anti-money laundering provisions to attack the flow of illicit cash from the United States to Mexico. These efforts made it much more difficult for criminals and narcotraffickers to place large amounts of cash in Mexican financial institutions and resulted in an increase in cash coming back to the United States from Mexico, via armored car services or couriers, for attempted placement in U.S. financial institutions. Law enforcement information and BSA data analysis suggest that much of this cash movement is not properly reported and therefore not made available in the FinCEN database for the benefit of investigators and analysts following illicit money trails.

Conclusion

The three recent GTOs described above demonstrate an increased attention to trade-based money laundering schemes by FinCEN and confirm that criminals are aggressively using legitimate U.S. businesses to launder the proceeds of their illegal activity. The GTOs issued in Miami, Los Angeles, and the San Ysidro and Otay Mesa Ports of Entry are presumably yielding a significant amount of information and data that FinCEN will then share with other federal law enforcement agencies in order to prosecute money launderers. Businesses that operate in any of the areas targeted by these three GTOs—electronics exporters, the fashion and garment industry, armored car services and common carriers—should be vigilant to the indicators of trade-based money laundering and take steps to ensure that cash transactions are properly documented and suspicious activity is reported.

The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

Footnotes

[1] See FinCEN Press Release, “FinCEN Targets Money Laundering Infrastructure with Geographic Targeting Order in Miami” (Apr. 21, 2015).

[2] See FinCEN Press Release, “FinCEN Issues Geographic Targeting Order Covering the Los Angeles Fashion District as Part of Crackdown on Money Laundering for Drug Cartels” (Oct. 2, 2014).

[3] See FinCEN Press Release, “FinCEN Renews Geographic Targeting Order (GTO) Requiring Enhanced Cash Reporting at the San Ysidro and Otay Mesa Ports of Entry in California” (Feb. 2, 2015).

[4] See FinCEN Press Release, “FinCEN and Mexican Counterpart Shine Spotlight on Cross-Border Cash Couriers” (Aug. 1, 2014).

“Display of FinCEN’s Aggressive Anti-Laundering Approach,” by Matthew D. Lee was published in the April 30, 2015, edition of Law360. To learn more, please click here or visit www.law360.com. Reprinted with permission from Law360.

FATCA Update: Latest Intergovernmental Agreements: Finland, Chile, and (Coming Soon) Luxembourg

Finland and Chile became the latest nations to sign agreements pledging tax transparency sought by the Foreign Account Tax Compliance Act (FATCA), bringing the total of such intergovernmental agreements to 24.   According to Law360, an agreement with Luxembourg will be announced soon, once a French translation of the agreement can be validated.  (Drew Singer, Chile, Finland Sign FATCA Agreements, Luxembourg Next, Law360 (March 7, 2014)).  Luxembourg has announced that its anticipated FATCA agreement will be a Model 1 agreement.

FATCA requires U.S. financial institutions to withhold 30% of certain payments made to foreign financial institutions (“FFI”) unless that FFI agrees to report U.S. taxpayer account information to the IRS.  FATCA currently goes into effect on July 1, 2014.

Finland has agreed to a Model 1A agreement where FFIs in Finland will report information to the Finnish Ministry of Finance, which will subsequently exchange information with the IRS.  This agreement is reciprocal, meaning that the U.S. will also report account information about Finnish individuals and entities in the U.S. to Finland.

Chile has agreed to a Model 2 agreement where FFIs in Chile will report information about consenting U.S. accounts directly to the IRS.  Information on non-consenting U.S. accounts can be reported government-to-government through a treaty request.

All FATCA intergovernmental agreements can be found here.

FATCA Update: U.S. Signs IGA with France

As the January 1, 2014, implementation date for the Foreign Account Tax Compliance Act (FATCA) rapidly approaches, the U.S. government is continuing to make progress in negotiating Intergovernmental Agreements with partner jurisdictions in order to facilitate the effective and efficient implementation of FATCA.

On November 14, 2013, Treasury announced that the U.S. has signed an IGA with France.  With this announcement, a total of 10 IGAs have been signed to date.  The press release is available here and the signed IGA is available here.

FATCA seeks to obtain information on accounts held by U.S. taxpayers in other countries.  It requires U.S. financial institutions to withhold a portion of payments made to foreign financial institutions (FFIs) who do not agree to identify and report information on U.S. account holders.  FFIs have the option of entering into agreements directly with the IRS, or through one of two alternative Model IGAs signed by their home country.  The IGA between the United States and France is the Model 1A version, meaning that FFIs in France will be required to report tax information about U.S. account holders directly to the French government, which will in turn relay that information to the IRS.  The IRS will reciprocate with similar information about French account holders.

The following list identifies the countries which have signed IGAs with the U.S. government to date, including the date of the agreement and the type (Model 1 vs. Model 2):

Model 1 IGA

Model 2 IGA

Treasury’s press release further stated that in addition to these 10 IGAs, the U.S. has also reached 16 agreements “in substance” and is actively engaged in negotiations “with many more jurisdictions.”

Treasury Debunks FATCA “Myths”

In its continuing effort to educate the world about the Foreign Account Tax Compliance Act (FATCA), and to address common misperceptions (or “myths”) about FATCA, Treasury has published an article today on its website entitled “Myth vs. FATCA:  The Truth About Treasury’s Effort to Combat Tax Evasion.”  The author of the piece is Robert Stack, Deputy Assistant Secretary for International Tax Affairs at Treasury.  The article appears below.

Myth vs. FATCA: The Truth About Treasury’s Effort To Combat Offshore Tax Evasion

By: Robert Stack
9/20/2013

The Foreign Account Tax Compliance Act (FATCA) is rapidly becoming the global standard in the effort to curtail offshore tax evasion.  This month’s G-20 communique marked another important milestone; highlighting the importance of global tax transparency and a renewed commitment to work towards an international standard for the exchange of tax information. 

For years, there has been concern about the so-called “tax gap” – the difference between the tax dollars that are owed under the law, and those that are actually collected.  Offshore tax evasion is a significant contributor to the tax gap.  FATCA establishes a process for foreign financial institutions (FFIs) to report information about U.S. account holders to the IRS.  

Treasury developed intergovernmental agreements (IGAs) to implement FATCA effectively.  These IGAs will require all of the relevant FFIs in a jurisdiction to report information about offshore U.S. accounts – a reporting obligation that will help the IRS catch tax evaders.  Yet despite the clear, positive benefits of FATCA, many continue to make misleading claims about its implementation and impact.  Here are the facts on FATCA:

Myth No. 1: Some claim it’s overly costly and burdensome due to complex regulations and difficult to meet reporting requirements.

FACT: Treasury and the IRS have designed our regulations in a way that minimizes administrative burdens and related costs.  Specifically, the regulations were intentionally designed to appropriately balance the scope of entities and accounts subject to FATCA with due diligence requirements, while also phasing in the related obligations over several years.  For example, the final regulations exempt all preexisting accounts held by individuals with $50,000 or less from review.  For similar accounts with less than $1,000,000, an FFI is only required to search the account information that is electronically available.  In many cases, FFIs are permitted to rely on information that they already must collect for local anti-money laundering and know-your-customer rules.  

Many of these cost-saving simplifications were the result of comments received from affected financial institutions and foreign governments, which helped us to tailor the rules to achieve the policy objectives of the statute without imposing undue burdens or costs.  

Myth No. 2:  Some claim that U.S. citizens living overseas will become outcasts in the international financial world.

FACT: FATCA withholding applies to the U.S. investments of FFIs whether or not they have U.S. account holders, so turning away known U.S. account holders will not enable an FFI to avoid FATCA.  We expect that many, if not most, of the governments implementing FATCA through IGAs will require their financial institutions to identify and report on all non-resident account holders, not just U.S. account holders.  

Those governments agree with FATCA’s policy objectives, and want to facilitate the collection of information about the offshore accounts of their own residents.  For example, 19 countries have already announced a pilot project to exchange account information about each other’s residents that will be collected by the governments in line with FATCA’s due diligence and reporting procedures.  FATCA is quickly becoming the global standard for automatic information exchange and we expect the number of jurisdictions that choose to implement the same reporting procedures for all offshore accounts to continue to grow.

Myth No. 3:  Some claim that Americans living abroad will give up their U.S. citizenship because of liabilities and burdens created by FATCA.

FACT: FATCA provisions impose no new obligations on U.S. citizens living abroad.  Instead, FATCA’s withholding obligations fall on institutions making payments to FFIs, and the due diligence and reporting requirements fall on the FFIs themselves.

U.S. taxpayers, including U.S. citizens living abroad, are required to comply with U.S. tax laws​.  Individuals that have used offshore accounts to evade tax obligations may rightly fear that FATCA will identify their illicit activities.  Yet a decision to renounce U.S. citizenship would not relieve these individuals of prior U.S. tax obligations, and might well create additional U.S. tax obligations for certain citizens and long-term residents who give up citizenship or residency.

Myth No. 4: Some claim that countries are opposed to FATCA, in part because the legislation could force foreign banks to violate laws in their own countries.

FACT: Treasury’s decision to implement FATCA through IGAs that are respectful of the individual laws and customs of partner jurisdictions has contributed to the significant international interest in participating in FATCA compliance efforts.  The two FATCA model IGAs incorporate a two-pronged approach: under the first model, FFIs report to their respective governments who then relay that information to the IRS; or, under the second model, they report directly to the IRS to the extent the account holder consents or such reporting is otherwise legally permitted, supplemented by government-to-government cooperation to facilitate reporting on non-consenting accounts.  These model IGAs offer alternative frameworks for information sharing that abides by local laws.

The success of this approach is evidenced by the international response to this legislation.  To date, Treasury has signed 9 IGAs and has reached 15 agreements in substance, including with Malta, Bermuda, and the Cayman Islands.  We are also engaged with over 70 additional countries and expect to conclude negotiations with several others soon.

In September 2013, G-20 leaders committed to the automatic exchange of information as the new global standard, and endorsed the development of a single model for this exchange, which is expected to be based on the FATCA IGAs.

Myth No. 5: Some claim that FATCA will generate a backlash from foreign governments who view this as an overreach of U.S. law.

FACT:  FATCA has received considerable international support because most foreign governments recognize how effective FATCA, and in particular our intergovernmental approach, will be in detecting and combatting tax evaders.  G-8 leaders recently acknowledged the central role of tax information exchange, stating in their June 2013 communiqué:  “A critical tool in the fight against tax evasion is the exchange of information between jurisdictions,” and urging that “[t]ax authorities across the world should automatically share information to fight the scourge of tax evasion.”  

Myth No. 6: Some claim that FATCA will unfairly expose FFIs to heavy penalties before they have the necessary mechanisms in place to comply.

FACT: We recently announced a six-month extension to our withholding and account due diligence requirements because we recognize that FFIs need sufficient time to register for, understand, and implement their due diligence and reporting processes.  Those requirements will now start on July 1, 2014.  This extension exemplifies our commitment to ensuring that foreign jurisdictions and FFIs have sufficient time to properly prepare so that the law can be implemented effectively.

Myth No. 7: Some claim that FATCA aims to use foreign banks as an extension of the IRS.

FACTIndividuals making this claim have confused reporting responsibilities with actual enforcement.  The objective of FATCA is the reporting of foreign financial accounts held by U.S. persons or certain entities with U.S. owners.  This law only requires FFIs to share information about financial accounts held by U.S. taxpayers, similar to what is already required of U.S. financial institutions; it does not include an enforcement component for those FFIs.  

Robert Stack is the Deputy Assistant Secretary for International Tax Affairs at the U.S. Department of the Treasury.