There is a system whereby foreign banks are obligated to report accounts held by Americans to the US for “anti terrorism” purposes.

Could you give me a name, or at least some link to a government website that describes the system you’re talking about?

Maybe I’m not understanding what you mean, but if someone works and lives abroad for 330 days of the year they’ll likely have a bank account established within that country so that they don’t have to deal with all of their daily financial activities being international transactions.

If you were employed by a foreign company that has no presence in the US how exactly would the IRS know whether you’ve earning more than $125k?