The Report of Foreign Bank and Financial Accounts (i.e., the “FBAR”) was for many years confined to the lonely backwaters of Title 31 of the United States Code—the intriguingly-named Bank Secrecy Act. For years, compliance levels were abysmal. But penalties were generally not enforced. To put the situation in perspective, in the course of more than a decade, you could probably have counted the number of penalties assessed against non-compliant account holders on one hand—maybe, just maybe, two hands—at least according to contemporary reports from the Treasury Department to Congress.
But my how the times have changed. FBAR penalties are most certainly enforced these days. Some might argue that they are enforced with a vengeance—a vengeance that is disconnected with the purpose behind the FBAR filing requirement. Truly, the penalties associated with failing to file an FBAR are among the most punitive civil penalties on the books.