Interesting question, and I haven't a clue what the answer might be. I've seen reference to the 1996 date but I don't have any reference to the specific legislation, which is what one needs to check the wording in terms of what it applies to. In any case, this is where I'd want a legal opinion from a lawyer.It is my understanding that FBAR is not a tax. I agree that if the relinquishing act predates the law, then the law should not apply. What I am wondering is if the law saying that the date of relinquishment is the date I notify the state department might only apply to taxes. Could people like me who committed a relinquishing act decades ago at least be off the hook as far as the FBAR's go?
FBAR penalties are penalties not taxes, as you said, and as Flaherty and CRA have announced they are NOT enforceable in Canada. (You may want to get confirmation of that with a Canadian lawyer who has examined the OECD treaty that Flaherty signed in early November though. I've emailed Flaherty and Finance separately asking about that treaty and whether it over-rides anything in the Canada-US tax treaty, and I've yet to get a reply other than a robo-acknowledgement.) Whether they're enforceable if and when you cross the border after getting a CLN is something only a lawyer (and in this case, it would probably need to be a US lawyer) can advise you properly. Assuming you want or need to cross the border after getting a CLN; I think a growing number of people are coming to the stage of cutting all the traces and ties with the US forever over this, if they can.