FBAR Penalties Add Up: What the $3.24M Ruimi Case Means for Your Clients

On June 11, 2025, the Western District of Washington rendered final judgment in U.S. v. Ruimi, concluding a years-long legal battle over willful FBAR violations. The ruling cemented $3.24 million in penalties and interest against Yoram Ruimi, a dual U.S.-Israeli citizen, for failing to report foreign bank accounts. This case underscores the severe financial risks associated with non-compliance and highlights the importance of proactive client engagement regarding foreign asset reporting.

Understanding the Penalties

Ruimi’s case involved failure to report foreign bank accounts from 2011 to 2016, leading to some staggering penalties:

Willful Violations: For 2025, the civil penalty for willful failure to file an FBAR is either $165,353 or 50% of the account’s highest balance each year—whichever amount is greater.

Non-Willful Violations: Even non-willful violations carry financial consequences, especially after the Supreme Court’s Bittner decision, which allows penalties of up to $16,536 per FBAR.

Criminal Exposure: A willful FBAR violation can lead to up to five years in prison and a $250,000 fine under 31 U.S.C. § 5322(a). If the conduct is connected to another U.S. offense or a pattern exceeding $100,000, the penalties can double.

While Ruimi’s case was civil, the facts surrounding it—such as the use of offshore entities and false statements—could have justified criminal charges. This highlights the risk that your clients may face if they do not comply with FBAR requirements.

Best Practices for FBAR Compliance

• Track daily balances. The $10,000 threshold for FBAR reporting applies at any moment in the calendar year. Encourage clients to monitor their accounts closely.
• Maintain comprehensive records. Keep six years of documentation, including bank statements, account-opening documents, filed tax returns, and related schedules. FINCEN may require these during an audit.
• File in a timely manner. Ensure clients are aware that the deadline for FBAR filings is April 15, with an automatic extension available until October 15. They can e-file using FinCEN’s BSA E-File or attach Form 114 to their annual tax return.
• Report all relevant accounts. Remind clients to report joint accounts (like those with a spouse or business partner) and accounts where they have signature authority, even if they do not directly own the funds. 

Options for Clients Who Missed Filing

If your clients have failed to file an FBAR, they still have options:

• Delinquent FBAR Submission: If no tax is due and the IRS hasn’t contacted the client, there may be no penalties.
• Streamlined Filing Compliance: For non-willful cases, clients may face 0% or a 5% offshore penalty, depending on their situation.
• Voluntary Disclosure Practice: This option provides criminal protection for clients but may involve a 50% offshore penalty for willful conduct.

The Cost of Non-Compliance

The cost of ignoring FBAR obligations can be staggering. Ruimi’s $3.24 million bill shows how quickly FBAR penalties can compound once the government labels a taxpayer “willful.”  With inflation adjustments pushing willful caps to $165,353 per year—and courts happy to presume willfulness from reckless conduct—the true cost of non-compliance dwarfs the administrative burden of e-filing Form 114.

It’s crucial for advisors to actively address these issues with their clients, ensuring they understand the implications of FBAR compliance. If you suspect any of your clients may have missed previous filings or have questions regarding their compliance status, reach out to McGuire Sponsel’s Global Business Services team.