HSBC is back in the news and once again, it isn’t good news for the bank or its clients. This week The Guardian ran a feature story titled, “Cash Pilgrims and Bricks of Money: HSBC Swiss Bank Operated Like Cash Machine for Rich Clients.”

Long considered a bank secrecy and tax haven, some clients were lured to Swiss banks by the promise that their money would be safe and their affairs private. Others, however, flocked to banks like HSBC Switzerland hoping to evade taxes.

Most countries do not forbid the ownership of foreign bank accounts and the United States is no exception. Opening a Swiss or other foreign account is legal. U.S. law, however, requires the account to be reported yearly to the IRS.

Reporting an offshore bank account is easy. If the total value of your foreign financial holdings exceeds $10,000, all accounts must be reported. Reporting is done on Schedule B of the individual income tax return and on an FBAR form. Short for Report of Foreign Bank and Financial Accounts, FBARs have been required since 1970.

Foreign banks often don’t know if U.S. account holders have filed FBAR reports. In fact, foreign banks often don’t even know if an account holder has ties to the United States. A new U.S. law called FATCA is changing that. Banks worldwide must now review their accounts and report those accounts tied to Americans or other U.S. taxpayers. (Dual nationals, green card holders, foreign born Americans and U.S. expats living abroad are all included.)

The story should end here but several Swiss banks helped Americans evade taxes and avoid FBAR reporting. UBS, Credit Suisse and Wegelin have all been accused of conspiring with certain U.S. clients to hide accounts. And if the Guardian is correct, HSBC is certainly complicit in helping Americans break the law too.

According to the Guardian, the Swiss subsidiary of HSBC was a “cash machine.” High wealth customers from around the world traveled to Geneva to get cash. These aren’t Americans about to go shopping in Europe and needing some Euros. These are Americans going to Switzerland to pick up “packets of untraceable banknotes” – US banknotes.

In the United States, of course, banks must report cash transactions that exceed $10,000. Once again, possessing large sums of cash isn’t illegal but it may be an indication of tax evasion or money laundering. The IRS wants to know who is dealing in cash.

So why not just have your Swiss banker at HSBC wire your money to your U.S. account and simply drive a few blocks to your local bank and pick up cash? Obviously that is much easier than flying to Geneva. The answer for some, of course, is that they are trying to evade taxes.

Its not just the tons of cash walking out the door to Americans and other foreign customers. HSBC detailed how some accounts would have mail held or be marked “Do Not Contact.” That Is another classic sign of tax evasion. Foreign customers do not want a paper trail of bank statements and the like coming to their home or business.

It appears that HSBC tried to draw the line at “passive” assistance. For example, they refused to deliver cash from Switzerland to the U.K. Such a distinction, however, doesn’t mean the bank was complying with the law. In our opinion, it only means they were trying to not get caught. In the words of New Jersey’s U.S. Attorney Paul Fishman, “Bankers should encourage their customers to comply with the law, not advise them how to break it.”

The news about HSBC is not new, although the details captured by The Guardian make for excellent reading. What does this mean for U.S. taxpayers with unreported accounts? Plenty.

Bank secrecy is all but dead, particularly when it comes to taxes. Journalists, prosecutors, the IRS and hackers seem to find “secret” account data with ease. FATCA will soon require foreign banks to turn over the information.

For most Americans with unfiled FBARs, the risk of prosecution is low. If a data leak or subpoena shows that you asked for your statements to be held or if your banker testifies you wanted to avoid taxes, the stakes become much higher. Unfortunately, many Swiss bankers are now cutting deals to avoid prison themselves. The same banker that said your account was safe from the IRS is now the government’s primary prosecution witness!

Even if you are not prosecuted, the willful failure to file an FBAR carries huge civil penalties. It is easily possible to owe more than the entire account balance. If you have not filed FBAR reports, time is running out. Closing your offshore account and repatriating the money won’t work. Nor will engaging in what the IRS calls a quiet disclosure, simply mailing in the missing FBARs.

When the stakes are this high, consult with an experienced FBAR lawyer. Accountants and enrolled agents are great once your FBARs are current but they are not covered by the attorney – client privilege meaning the IRS can subpoena them to testify against you.