NEW YORK (TheStreet) -- The Foreign Account Compliance Act goes into effect today, meaning foreign financial institutions around the globe will be required to reveal American accounts holding more than $50,000.
Today, the Foreign Account Tax Compliance Act goes into effect -- requiring foreign banks to reveal American accounts holding more than $50,000.
The controversial act marks a significant step in the United States' effort to make banking transparent around the globe. So far, 80 countries, including China, Russia and Switzerland, and 77,000 financial institutions have registered. All foreign financial institutions are now required to identify their American customers and disclose all U.S.-related information about them to the IRS, or face a 30% tax on certain payments.
The act was signed into law in 2010 by President Obama in effort stave off tax evasion by U.S. citizens who work overseas or hold their money in offshore accounts without declaring it. It's part of a series of steps the U.S. has recently taken to combat tax evasion. Credit Suisse (CS - Get Report) agreed to pay $2.6 billion to U.S. authorities in May, pleading guilty to a criminal charge that it helped American clients evade taxes. UBS (UBS - Get Report) was fined $780 million for aiding in tax evasion in 2009.
In New York, I'm Brittany Umar for TheStreet.
-- Written by Brittany Umar in New York