Money Laundering, Terrorism and Financial Institutions - USA Patriot Act Monitor

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12/03/2004 USA PATRIOT Act Monitor News Release: Foreign Financial Account Reporting Penalty Amended in Tax Act

The American Jobs Creation Act of 2004 has amended 31 USC 5321(a)(5) to provide that the civil money penalty for violation of 31 USC 5314 (Records and Reports on Foreign Financial Agency Transactions) is not to exceed $10,000 unless there has been a willful violation, in which case the maximum penalty is $100,000 or 50% of the amount of the transaction (if the violation consists of failure to report a transaction) or the balance of an account (for failure to report the existence of an account or required identifying information). The amended penalty section also contains a reasonable cause exception under which no penalty is to be imposed if the violation was due to reasonable cause and the amount of the transaction or the balance in the account at the time of the transaction was properly reported. The legislative history of the 2004 Act cites the Report of Foreign Bank and Financial Accounts: A Report to Congress in Accordance with section 361(b) of the USA PATRIOT Act (April 26, 2002) which concluded that compliance with foreign financial account reporting requirements under 31 USC 5314 could be less than 20%. The change will relieve the government of the previous requirement in 31 USC 5321(a)(5) that a violation be willful to incur a penalty. The amendment will be discussed in the December issue of the Monitor.

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