Bermuda today signed an agreement to report to the US on American citizens’ bank accounts on the Island.

The intergovernmental agreement brings Bermuda in line with the US Foreign Account Compliance Act (FATCA), passed by the US government in a bid to crack down on domestic tax dodgers.

Finance Minister Bob Richards, who signed the treaty on behalf of Government, said: “It is every country’s sovereign right to design or adjust their tax collection system.

“Bermuda’s responsibility, as a responsible and respected international financial centre in the global financial system, is to respect that right — just as we expect others to respect our tax system, a system that is over 100 years old.”

US Consul Robert Settje, who signed for the US, thanked Bermuda for its cooperation and for its long-standing commitment to tax transparency.

He added: “Together we can improve international tax transparency and compliance by further building on that relationship.”

The treaty requires financial institutions in Bermuda to report on the financial affairs of US taxpayers who hold accounts with them direct to the Internal Revenue Service every year.

Failure to comply means that the US will hit offending institutions with a 30 percent tax on some US source payments like interest payments.