Starting with the US Government’s crackdown on Swiss Banks in 2008, there has been a steady increase in investigations and proseuctions of foreign financial institutions, bankers and taxpayers. The Cayman Islands have been a part of this scrutiny, especially within the last few years. Many Cayman institutions have been targeted, including Cayman National Securities and Cayman National Trust Co, both of which were prosecuted for allegedly assisting taxpayers in evading taxes owed to the IRS.
Recently, the Bank of N.T. Butterfield & Son Ltd. has made a provision for the payment of $4.8 million, recorded during the financial year ending 12/31/15. This provision is based upon the possibility that it could be required to make a settlement payment as the result of an ongoing US federal investigation into tax evasion.
U.S. citizens are required to report all of their foreign financial accounts if the total value of their accounts exceeds $10,000 at any time during the year. If reports are not filed, or information is withheld, there can be fines up to 50% of the amount of the accounts at the time of the violation, per the IRS. If you currently have assets abroad, you should make sure that you are in compliance with all Foreign Bank Account Reporting (FBAR) requirements.