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U.S. Evidences Global Regulation of Banks

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    Last week, the United States Federal Reserve showed the world that they have the power to not only regulate banks inside the U.S., but nearly any bank that does business with Americans domestically, even if the banks are headquartered on another continent. The power that the Fed is wielding should be of concern to U.S. taxpayers who have monies in any overseas bank accounts.

    The Federal Reserve will occasionally put U.S. banks through a “stress test” to determine if it would be able to survive a severe economic collapse. The Fed sets standards and evaluates whether the subject of the test would be able to meet or exceed those standards by reviewing the bank’s capital plan. The plans that are reviewed should show that the bank has enough capital assets to survive a major downturn in the economy.

    Although two U.S.-based banks were identified by the Fed as needing to revise their capital plan, three foreign banks were also included in the findings of the governmental agency. The foreign institutions were HSBC, which is based in London, Banco Santander and Royal Bank of Scotland Group, based in Spain and Scotland, respectively. The actions by the Fed with regard to the foreign entities only affect the U.S. entities of the foreign banks and prevent payments of dividends that exceed last year’s levels until their capital plan is revised and is found satisfactory by the U.S. government.

    Though this news may not be immediately alarming to taxpayers living the United States, upon closer examination of the situation, it can be observed that the government has been able to successfully regulate banks that are controlled in countries that are thousands of miles away from the United States. Even European regulators have become concerned with the regulation muscle that the U.S. is trying to flex. They believe that the regulating bodies in Europe and beyond should be responsible for regulating their banks and subsidiaries.

    If you are a taxpayer and have assets in overseas accounts that you have not disclosed to the IRS, it seems that it is only a matter of time until the government of the United States finds a way to regulate the bank that holds your money. And with regulation comes discovery of account information. We have seen very recently that even banks without ties to the United States are caving to the pressures put on them by the Department of Justice. If you think that your secret is safe overseas, it may be time to start thinking again.

    The Offshore Voluntary Disclosure Program gives taxpayers a way out when they feel like there is none. If you are worried about spending time in federal prison because of your failure to report overseas assets, contact us today. There is no need for you to lose any more sleep or helplessly worrying about being put behind bars. To speak confidentially with an experienced tax attorney regarding the OVDI Program and voluntary offshore disclosure, call the Tax Law Offices of David W. Klasing at (800) 681-1295.

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