On August 27, 2012, the U.S. Court of Appeals for the Seventh Circuit joined the Ninth Circuit in holding that the required records exception to the Fifth Amendment privilege against self-incrimination applies to records of foreign bank accounts. The full citation is In re: Special February 2011-1 Grand Jury Subpoena Dated September 12, 2011, No. 1:11-gj-00792-1 (7th Cir. August 27, 2012). Until this decision, the Ninth Circuit had been the only federal appellate court to hold that a person may not resort to the Fifth Amendment to resist a subpoena for the person’s offshore bank records. See In re Grand Jury Investigation M.H., 648 F.3d 1067 (9th Cir. 2011).
The Seventh Circuit acknowledged that when a person produces records of his or her offshore bank account in response to a grand jury subpoena, the person risks self-incrimination. The so-called required records doctrine, however, is an exception to the Fifth Amendment privilege against self-incrimination. Since the Bank Secrecy Act requires a holder of a foreign bank account to maintain records of the account, the account holder may not invoke the Fifth Amendment to protect him or her from being forced to produce the account records to the government on demand.
This holding means that people who have foreign bank accounts can be forced to produce records that may prove that they have committed tax crimes, including failure to file FBARs, filing false tax returns, tax evasion, and conspiracy to defraud the U.S. The Southern District of California, in the M.H. case, has gone a step further by holding that even if the account holder does not have the records, he or she must go to the bank and request the records for the government. These decisions, while valid precedents, are limited to the Seventh and Ninth Circuits.