Missed FBAR After Reyes: When Reckless Counts as Wilful

A missed FBAR is non-wilful only if the failure came from negligence, inadvertence, mistake or a good-faith misunderstanding. After United States v. Reyes (2d Cir. 2026), several federal circuits hold that recklessness, judged objectively, can be wilful. So the question is no longer just what you knew. It is what a reasonable person holding your documents should have known.

For an American living in London with substantial UK balances, that change matters most at one point: deciding whether you can honestly sign the non-wilful certification on Form 14653 and use the Streamlined Foreign Offshore Procedure. This guide sets out where the line now sits, which facts move a UK case towards it, which facts move it away, and how the choice of route follows from that analysis. If you are already sure you have a Missed FBAR problem and want the filing pack built, our streamlined team can start from your bank records. If you are not yet sure which side of the line you sit on, read on before you sign anything.

One point first. This is compliance framing, not a legal opinion on any individual's state of mind. Whether particular conduct was wilful is a question of fact. Where the facts are genuinely close, the certification decision should involve US tax counsel, and Jungle Tax works alongside counsel in those cases rather than in place of them.

What did the Reyes decision actually decide?

In United States v. Reyes, No. 24-2333, decided on 7 January 2026, the Second Circuit upheld civil FBAR penalties assessed under the wilful penalty provision, 31 U.S.C. § 5321(a)(5)(C). It held that civil willfulness under that provision includes recklessness, and that recklessness is assessed on an objective basis. It also upheld the late-payment penalty that had built up on the unpaid assessment.

Public commentary on the decision describes facts at the serious end of the range: a long-held Swiss-booked account holding most of the couple's liquid wealth, bank mail held outside the United States, a bank form declining US tax documentation, a Schedule B foreign-account question answered "no", and an accountant's questionnaire about foreign accounts that was never returned. Courts rarely see a cleaner set of red flags. The reasoning, though, reaches further than those facts, and that is why the case matters to London-based clients whose facts look nothing like it.

The broader point is consistency. Several federal circuits now hold that recklessness can satisfy civil FBAR willfulness, and commentators read Reyes as bringing the Second Circuit into line with them. For compliance purposes, assume the reckless standard is the working rule wherever a civil FBAR penalty case could be heard.

Does a US appeals court decision bind someone who lives in the UK?

No circuit court decision "binds" a UK resident in any direct sense, and the Second Circuit's ruling applies within its own circuit. The practical effect is different. FBAR penalties are assessed by the IRS and enforced in US federal courts. If several circuits apply the same objective-recklessness test, that test is the realistic benchmark the IRS will apply when it reviews a streamlined certification, wherever you live. The decision tells you how a non-wilful narrative will be read, not which court will read it.

What does "objective recklessness" mean in plain terms?

Reckless conduct, in the civil sense now applied to FBARs, is conduct that creates an unjustifiably high risk of breaching a known legal duty, where that risk was either known to you or so obvious that it should have been known. Three features matter.

• It is objective. The test asks what a reasonable person in your position would have understood. A sincere belief that "the FBAR was for people hiding money" does not answer it if the documents in front of you said otherwise.
• It is about risk, not certainty. You do not need to have known the form was called FinCEN 114. It is enough that the risk of an unmet US reporting duty was obvious and you did nothing to resolve it.
• Sophistication cuts against you. The reasonable person is judged in your position. A regulated financial professional, a founder with a family office or someone with a long-standing private-bank relationship is expected to notice more than a newly arrived graduate with one current account.

Wilful blindness, meaning a deliberate choice not to learn facts that would confirm a duty, has long been treated as wilful. Recklessness goes further. It covers the person who did not set out to avoid knowledge but ignored warnings a prudent person would have followed up.

Where does the non-wilful line sit now?

The IRS streamlined filing compliance procedures define non-wilful conduct as conduct due to negligence, inadvertence or mistake, or conduct resulting from a good-faith misunderstanding of the law. That definition has not changed. What has changed is how firmly the courts have marked its upper edge. Picture a spectrum:

• Inadvertence and mistake: you did not know the FBAR existed and nothing reasonably put you on notice. Clearly non-wilful.
• Negligence: you should have been more careful, for example by not asking your preparer about UK accounts, but no specific warning reached you. Still non-wilful.
• Recklessness: a specific warning or obvious risk reached you and you disregarded it. After Reyes, treat this as wilful territory.
• Knowing or intentional conduct: wilful on any test.

The streamlined certification is honest only where your conduct sits in the first two bands. The hard cases sit at the boundary between negligence and recklessness. Most London cases that need careful thought fall there.

Which fact patterns should a high-net-worth UK resident take seriously?

The red flags below come up again and again in files for Americans in the UK. None is decisive alone. Each changes how a reviewer will read your narrative, and several together can make an honest non-wilful certification untenable.

A relationship manager raised US reporting

Private banks and wealth managers in London routinely flag US status at onboarding. If a relationship manager told you, in a meeting or an email, that as a US person you had "US reporting obligations" or should "speak to your US tax adviser", that is notice of a risk. The question becomes what you did next. Passing the message to a preparer who then failed to act is very different from filing it away.

The Schedule B foreign-account question was answered "no"

Part III of Schedule B to Form 1040 asks whether you had a financial interest in or signature authority over a foreign account, and refers to FinCEN Form 114. A "no" on a signed return, year after year, is one of the facts most often cited in wilful FBAR cases. It is strong evidence that the question was put to you. The mitigating argument, that Schedule B was never presented because a preparer completed the return without asking, depends on records showing that actually happened.

FATCA self-certification forms were signed

UK financial institutions must identify US account holders under the UK's FATCA agreement and the related international exchange rules set out in the HMRC International Exchange of Information Manual. In practice that means a self-certification form, often with a US taxpayer identification number box, and sometimes a follow-up letter explaining that account details will be reported to HMRC for exchange with the IRS. Signing such a form shows you knew the account was being treated as US-reportable. On its own it does not prove you knew of the FBAR. Coupled with a "no" on Schedule B, it is a combination a reviewer will notice immediately.

A professional said nothing, and nobody asked

This pattern cuts both ways. Reliance on a professional can support a non-wilful position, but only where you gave the professional the facts. If your US return was prepared by someone who knew you lived in London and banked there, and they never mentioned the FBAR, that supports a negligence characterisation. If the professional never knew about the UK accounts because nobody told them, the reliance argument largely disappears. Equally, if your UK accountant handled only your Self Assessment return, their silence on a US filing says little: US reporting was outside their engagement.

FBARs were filed for some accounts but not others

Partial compliance is one of the most dangerous patterns, because it proves you knew the FBAR existed. The narrative then has to explain why the omitted accounts were left out. Credible explanations exist: an ISA wrongly believed to be exempt, a workplace pension nobody treated as an account, a joint account with a non-US spouse that you thought was the spouse's, or signature authority over an employer account. Where the omitted accounts are the largest ones, or were opened after you started filing, the explanation must be documented and specific.

Other markers a reviewer will look at

• Mail held at the bank, statements sent to a third party, or e-statements opened only for UK purposes.
• Moving funds between UK institutions shortly after a FATCA letter arrived.
• Closing accounts, or reducing balances below $10,000, around the time US enforcement news circulated.
• Previous advice letters, emails or engagement terms that mention FBAR, Form 8938 or "foreign account reporting".
• Prior US filings that report UK salary but not UK interest or dividends.

Which facts point the other way?

Mitigating facts matter just as much, and in many London files they outweigh the red flags. The ones that carry weight are:

• Ordinary-purpose accounts. Salary, mortgage and household accounts used openly for UK life, with UK tax fully paid on the income.
• Full UK compliance. Every account disclosed to HMRC, UK tax paid, and nothing hidden from the country where the money sat. A person concealing assets rarely reports them in full to the tax authority next door.
• Little or no US tax at stake. Where UK tax credits or the exclusion would have eliminated most US liability anyway, there is no obvious motive.
• A preparer who knew and did not raise it. Documented disclosure of the UK accounts to the US preparer.
• Accidental or newly aware status. Someone who did not realise they were a US person until a bank's FATCA form, and who acted promptly once they did.
• Prompt action on discovery. A short, documented gap between the moment you learned of the duty and the moment you engaged a specialist.

A decision table: scoring red-flag and mitigating facts

The table below is our working triage tool, not a legal test. It weights the facts that come up most in UK files so a client and adviser can see where the file sits before any narrative is drafted. Score each fact that applies to you, then net the totals.

Fact	Direction	Weight	Why it matters
Schedule B foreign-account question answered "no" on a return you signed	Red flag	+3	Shows the question was put to you in writing
FBARs filed for some accounts but not others	Red flag	+3	Proves knowledge of the regime; omissions must be explained
Written warning from a bank or adviser about US reporting, not followed up	Red flag	+3	Classic "known risk" disregarded
Signed FATCA self-certification or US-person letter from a UK institution	Red flag	+2	Shows awareness of US reportability, though not of the FBAR itself
Accounts not disclosed to the US preparer	Red flag	+2	Undermines any reliance argument
Hold-mail, nominee or third-party statement arrangements	Red flag	+3	Looks like concealment
Regulated finance professional or highly sophisticated investor	Red flag	+1	Raises the objective standard you are judged by
All accounts fully disclosed and taxed in the UK	Mitigating	−2	No concealment from any authority
Little or no net US tax due after credits	Mitigating	−2	No financial motive
US preparer knew about the UK accounts and did not raise the FBAR	Mitigating	−3	Documented good-faith reliance
Accounts used only for everyday UK living	Mitigating	−1	Consistent with ordinary life, not hidden wealth
Acted within weeks of learning of the duty	Mitigating	−2	Behaviour of someone who did not know
Omitted account is one widely misunderstood (ISA, pension, signature authority)	Mitigating	−1	A plausible good-faith misunderstanding

How to read the net score: 0 or below generally supports a non-wilful narrative, provided the facts are documented. +1 to +3 is the boundary zone: certification may still be honest, but the narrative must deal head-on with each red flag, and counsel should review it. +4 or more means you should not assume the streamlined route is open, and the analysis belongs with US tax counsel before anything is filed. Any single fact suggesting concealment, such as hold-mail or deliberate balance management, should send the file to counsel whatever the total.

Worked example: a London-based US banker

Consider a fictional client, Daniel. He is a US citizen who moved to London in 2017 as a director at an investment bank. Every figure below is invented for illustration.

• Account A: a UK current account receiving salary, peak balance around $85,000 in each year.
• Account B: a cash ISA, peak balance around $26,000.
• Account C: a private-bank investment account opened in 2020 after a bonus, peak balance around $1.4 million.

Daniel's US returns were prepared by a US preparer. The organiser asked about foreign income but not foreign accounts, and Daniel listed his UK salary. Schedule B Part III was ticked "no" on every return. In 2020 the private bank sent a FATCA self-certification form, which Daniel signed, entering his SSN. The onboarding pack included a paragraph saying that US persons "may have additional reporting obligations" and recommending US tax advice. Daniel did not take that advice. He filed no FBARs. All UK income was reported to HMRC, and US tax after foreign tax credits was modest each year.

Scored against the table:

Fact	Score
Schedule B ticked "no" on signed returns	+3
Signed FATCA self-certification for Account C	+2
Written onboarding warning about US reporting, not followed up	+3
Regulated finance professional	+1
Full UK disclosure and tax paid	−2
Little net US tax after credits	−2
Accounts A and B used for everyday living; ISA widely misunderstood	−2
Net	+3

Daniel sits at the top of the boundary zone. Before Reyes, many advisers would have read his facts as negligence: a busy professional, no concealment, and an organiser that never asked the right question. After Reyes, the reasoning is harder. A reasonable person who had signed a US self-certification and received a written warning about US reporting obligations, and who then signed a return answering "no" to a foreign-account question, arguably faced a risk that was "so obvious it should have been known".

That does not make Daniel wilful. It means his certification, if he gives one, must honestly address the onboarding letter, explain why he read it as a general disclaimer rather than a specific instruction, explain how the organiser and Schedule B were handled in practice, and set out the chronology from the moment he understood the FBAR. If the narrative cannot do that without stretching the facts, he should not sign it. His case should go to counsel before a route is chosen. Had Daniel's preparer been sent the private-bank statements and still ticked "no", his score would fall to zero and the analysis would look quite different.

Why Bittner does not help once conduct is wilful

In Bittner v. United States (2023), the Supreme Court held that the non-wilful FBAR penalty applies per report, not per account. For a client with many UK accounts and several missed years, that sharply limits the non-wilful exposure. Our guide to the per-report cap on non-wilful penalties explains how that works.

Bittner concerned the non-wilful provision only. The wilful provision in 31 U.S.C. § 5321(a)(5)(C) is drafted differently. The statute sets the wilful maximum as the greater of an inflation-adjusted fixed amount or 50 percent of the account balance at the time of the violation, and that measure is tied to each account. So the per-report reasoning gives no protection once conduct is classified as wilful, and after Reyes that includes reckless conduct. This is why where your facts sit on the spectrum matters far more than how many accounts or years are involved. For a client with a seven-figure UK investment account, the difference between the two characterisations can be decisive.

How the analysis drives the choice of route

The route follows from the facts, not the other way round. Choosing streamlined because it is cheapest, and then building the certification to fit, is the error the IRS is most alert to.

Your position	Usual US route	What it requires	UK-side consideration
All US returns filed and all income reported; only FBARs missed	Delinquent FBAR submission procedures	Late FBARs with a reasonable-cause statement; no certification	Usually none if UK income was fully reported to HMRC
Returns or income also missing; facts clearly non-wilful; non-resident test met	Streamlined Foreign Offshore Procedure	3 years of returns, 6 years of FBARs, signed Form 14653	Check UK Self Assessment is complete for the same years
Boundary-zone facts	Decision for counsel: streamlined with a careful narrative, or a disclosure route	Counsel-reviewed chronology and evidence pack	Any UK errors found should be corrected with HMRC in parallel
Facts consistent with wilful or reckless conduct	IRS Criminal Investigation Voluntary Disclosure Practice, through counsel	Pre-clearance, full disclosure, civil penalty framework	Consider whether HMRC disclosure facilities are also needed

The detailed mechanics of each route are compared in our guide to delinquent FBAR versus streamlined versus voluntary disclosure. Two eligibility points from the IRS Streamlined Foreign Offshore Procedures page decide many London cases. You must meet the non-residency test: generally, no US abode and at least 330 full days outside the United States in at least one of the three most recent years for which the US return due date has passed. And you must not be under IRS civil examination or criminal investigation. An open examination of any year closes the streamlined door, even if the examination has nothing to do with foreign accounts.

What the Form 14653 certification is really asking

Form 14653 asks you to certify, under penalties of perjury, that your failures were non-wilful and to give the specific reasons, including favourable and unfavourable facts. A generic narrative, such as "I was unaware of my obligations", is the weakest possible answer in a post-Reyes world, because it ignores the objective test. A strong narrative explains what you knew, when you knew it, what documents you received, why you read them as you did, and what you did as soon as you understood. Our Form 14653 narrative guide for high-net-worth filers and the companion guide on non-wilful certification for accidental Americans show how to structure it.

The certification is also checked against what the IRS already holds. UK institutions report US-person accounts to HMRC, which passes the data to the IRS under the FATCA exchange. A narrative claiming no awareness of US reporting, filed by someone whose UK bank holds their signed US self-certification, contradicts a document the IRS may already have. Draft on the assumption that every UK form you signed is in the IRS's file.

The US and UK dimensions side by side

Issue	United States (IRS / FinCEN)	United Kingdom (HMRC)
Reporting duty	FBAR (FinCEN 114) where aggregate foreign balances exceed $10,000 at any time in the year	No equivalent account-listing return; UK income and gains reported on Self Assessment
Mental-state threshold	Civil wilfulness can include objective recklessness	UK penalties turn on careless, deliberate, or deliberate and concealed behaviour
How data reaches the authority	FATCA reporting via HMRC exchange	Direct reporting by UK institutions
Catch-up route for non-wilful cases	Streamlined Foreign Offshore Procedure, delinquent FBAR procedures	Unprompted disclosure through the digital disclosure service where UK tax is also due
Typical position for a London resident	Missing FBARs, often with Schedule B and Form 8938 gaps	Usually compliant; ISA and pension reporting often fine in the UK while problematic in the US

The cross-border point that generalist guides miss is that UK compliance is often your best mitigating evidence. An HMRC record showing full, timely reporting of the same accounts is objective proof that you were not hiding them. Collect your UK Self Assessment returns, SA302 calculations and bank-issued interest certificates before drafting anything. The reverse also holds: if the US review turns up UK income that never reached HMRC, such as offshore bond gains or unreported US-source investment income, correct the UK side as well, because a disclosure in one country with an open error in the other makes a poor file.

Practical steps before you choose a route

1. Freeze the facts. Write a dated chronology of every account, when it was opened, and when you first heard the term FBAR. Do it before talking to anyone about outcomes.
2. Collect the paper trail. Bank onboarding packs, FATCA self-certifications, any letters about US reporting, preparer organisers and engagement letters, and copies of every filed US return including Schedule B.
3. Rebuild maximum balances. Gather six years of statements for every UK account, including ISAs, pensions, joint accounts and accounts where you held signature authority. Our guide to years of unfiled FinCEN 114 reports covers the account inventory, and the FinCEN Report 114 page confirms the filing mechanics.
4. Score the file honestly. Use the decision table above. If you land at +1 or higher, involve counsel before any filing decision.
5. Check eligibility gates. Confirm the 330-day non-residency test and that no IRS examination is open.
6. Only then pick the route, and draft the narrative from the chronology, not the other way round.

For an initial sense of exposure, our FBAR penalty calculator models the statutory ceilings. The IRS FBAR guidance sets out the filing threshold and the definition of a financial interest. For clients whose UK position also involves pensions, investment platforms or family structures, our high-net-worth practice handles the full US and UK filing picture.

The bottom line after Reyes

Reyes did not create a new legal duty, and it did not make the streamlined procedures harder to use for people who genuinely did not know. What it did was confirm that the non-wilful certification will be tested against documents, not good intentions. For a wealthy American in London, the documents usually exist: a bank's FATCA form, a relationship manager's email, a ticked box on Schedule B. The honest question is whether, holding those papers, a reasonable person in your position should have seen the risk. Many London clients can still answer no, and the streamlined route remains the right and efficient way to bring them into compliance. Some cannot, and for them the earlier the route is chosen correctly, the better.

If you have missed FBARs on UK accounts and want an experienced, discreet view of where your facts sit, contact our cross-border team for a confidential consultation. We will review your paper trail, prepare the returns and FBARs, and, where the facts call for it, work alongside your US tax counsel so that what you sign is accurate and defensible.