New Third-Party Reporting Requirements Make It Very Likely That the IRS Will Now Know About Your Foreign Account or Entity
Under the recently enacted Foreign Account Tax Compliance Act ("FATCA"), foreign financial institutions  must disclose their customers to the IRS. Institutions that do not agree to comply with the reporting requirements of FATCA will subject all of their customers (even non-U.S. customers) to 30% mandatory withholding on all transfers of funds from the U.S. to the foreign institution. Given the severity of these provisions, it is expected that most foreign institutions will ultimately comply with these account disclosure requirements.
Thus, you should assume that the IRS will eventually be informed of your foreign account, and criminal prosecution for non-disclosure and non-reporting will likely follow. Successful criminal prosecution will result in a fine of 50% of the highest value of the account or entity, plus an additional $250,000 fine, plus a possible prison sentence.
Please contact your attorneys or accountants as soon as possible if you have undisclosed foreign accounts or entities, so that you can enter the OVDI program and avoid criminal prosecution.
 "Financial institutions" is broadly defined to include banks, mutual funds, funds of funds, exchange-traded funds, hedge funds, private equity and venture capital funds, just to name a few.
Note also that FATCA imposes additional disclosure requirements (via a new Form 8938) on U.S. individuals with foreign assets (e.g., foreign accounts, foreign-issued stocks or securities or any interest in a foreign entity).
 Please note that many states, including New Jersey, have similar disclosure programs in place for state income tax purposes.