Penalties for Violation of the BSA Reporting Requirements: On a Per-Form or Per-Account Basis?

The purpose of the Bank Secrecy Act (“BSA”) is, among other things, to require “certain reports or records where they have a high degree of usefulness in criminal, tax, or regulatory investigations or proceedings or in the conduct of intelligence or counterintelligence activities …” 31 U.S.C. Section 5311. A primary objective of the BSA is to aid in minimizing the utilization of foreign bank accounts for the purposes of evading taxes. In pertinent part, the BSA requires all U.S. citizens who maintain “an aggregate high balance in a foreign financial account or accounts exceeding $10,000.00 in any given year to report the financial interest to the Treasury Department” on a single annual form.

In the recent case United States v. Bittner, the Defendant maintained multiple foreign bank accounts over the course of several years with aggregate balances exceeding $10,000.00, and failed to file reports as to same on an annual basis with the Treasury Department while living outside of the United States. As such, the Defendant was fined a sum certain and challenged the amount of the civil fine by arguing that the fine imposed was inflated due to the government’s misinterpretation of the penalties applicable for non-willful reporting violations per 31 US.C. § 5321 (a)(5(A) and (B)(i).  Effectively, the government fined the Defendant an amount based on the number of foreign financial accounts maintained and not properly reported per year. The Defendant argued that the fine should not be based on the number of foreign financial accounts not properly reported, but rather a singular fine per unfiled annual report regardless of the number of accounts maintained. On this question of statutory construction, the Fifth Circuit Court of Appeals held that non-willful reporting penalties apply on a per form basis, not per account basis as the government argued. The case is now scheduled for argument before the Supreme Court during the October 2022-2023 term.


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