What if your bank account is in another country, but your tax authority can still find out about it without ever calling the bank? That sounds a little creepy. It is also increasingly normal.
Imagine you live in the United States and keep $200,000 in a Swiss bank account.
The money is in Switzerland. The bank is Swiss. The building is Swiss.
The coffee machine in the bank lobby is almost certainly Swiss.
So you might think the IRS has to somehow cross the Atlantic, knock on the bank's door and say: "Hi. We heard about this account." It doesn't work that way. The modern international tax system has something much more efficient.
Information moves across borders. Banks collect information about who their customers really are and where those customers are tax-resident. Financial institutions report certain information to their domestic tax authorities under international reporting systems.
Those governments can then exchange information with the tax authorities where the account holders are tax-resident. And in the United States, FATCA creates a separate reporting system focused specifically on U.S. taxpayers with financial accounts outside the country.
So the money may be sitting in Switzerland. But information about the money can make quite a different journey: Swiss bank, Swiss tax authority, U.S. tax authority. Nobody needs to physically move the money. The data moves instead.
And the scale is enormous. The OECD says 116 jurisdictions had begun exchanging financial-account information automatically under the Common Reporting Standard. In 2024 alone, jurisdictions exchanged data on more than 171 million financial accounts representing nearly €13 trillion in assets.
That is the rabbit hole. Because the old idea was: "Put the money somewhere else." The new reality is closer to: "Putting the money somewhere else doesn't necessarily put the information somewhere else."