When does technical advice cross into criminal risk—and how can advisors protect themselves?

If an advisor tells a U.S. client:

“Yes, Svalbard’s unique status means a financial institution there may not report to the IRS under FATCA. But this does not eliminate your personal obligations. You must still report on FBAR, Form 8938, and Forms 3520/3520-A—and failure to file carries severe penalties.”

That advice is accurate, complete, and defensible. The advisor is informing, not concealing. The key element of willfulness—intent to defraud—is missing.

But even with compliant advice, risks remain:

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• Abusive Tax Shelter Risk: If the advisor exaggerates benefits, promotes a sham trust, or ties fees to secrecy, they could be penalized.
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• Aiding Evasion: If the client ignores reporting duties and the advisor knowingly helps prepare false returns, liability follows.
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• Step Transaction Doctrine: The IRS may disregard the structure if it exists solely to achieve an unlawful result.
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• Negligence: Incorrect or sloppy advice can trigger civil penalties.
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Bottom line: Advisors protect themselves by being accurate, complete, and transparent—always reminding clients that structures may affect reporting, but never erase it.

#FATCA #AdvisorLiability #TaxCompliance #WealthManagement

Can an advisor get into trouble for giving technically true—but incomplete—advice? Under FATCA, the answer is yes.

Take the example of Svalbard. Norway has a FATCA Model 1 IGA with the U.S., but Svalbard is excluded from the treaty definition of “Kingdom of Norway.” That means a financial institution in Svalbard could, in theory, be treated as a non-participating foreign financial institution.

The problem arises when an advisor uses that narrow fact to suggest a broader loophole, while leaving out critical context. That transforms a technical truth into a misleading strategy. U.S. prosecutors don’t need the original fact to be false—they only need to show that the advice was reckless, incomplete, or designed to deceive.

In short: advisors can be held criminally liable not just for lies, but also for dangerous omissions.

#FATCA #AdvisorLiability #TaxCompliance #FinancialCrime

Owning foreign accounts or assets isn’t illegal, and it’s not inherently unlawful to fall outside FATCA’s scope. The real issue is knowing what counts as a reportable asset and making sure you’re not failing to disclose something that is covered.

FATCA is primarily an information-reporting regime. For individuals, this means filing Form 8938 (Statement of Specified Foreign Financial Assets) if the value of certain foreign assets exceeds set thresholds. These “specified assets” include accounts at foreign banks or brokerages, as well as stock in foreign corporations.

Not everything is reportable. Directly held real estate, personal property like art or jewelry, and assets inside U.S.-based retirement accounts are not covered by FATCA. But if you hold property through a foreign company, the company itself becomes reportable.

A big source of confusion is the difference between FATCA and the FBAR (FinCEN Form 114). FATCA has higher thresholds ($50k+ for U.S. residents, higher for expats), while FBAR applies if your total foreign accounts exceed just $10,000 at any time. That means an account that doesn’t trigger FATCA might still require FBAR filing.

What is illegal? Using foreign structures to deliberately hide income or assets. That’s when mistakes cross into tax evasion, false return filings, and willful FBAR violations—all of which can bring severe civil and criminal penalties.

#FATCA #FBAR #USTax #TaxCompliance #OffshoreAccounts