What’s better than one organization fighting international and transnational crime? Try five. This week, tax authorities from the United Kingdom (UK), United States (US), Canada, Australia, and the Netherlands combined forces to put a stop to the suspected facilitation of offshore tax evasion. The operation was part of a series of investigations into an international financial institution located in Central America, whose products and services may have been used in a money laundering and tax evasion scheme for customers across the globe.
The “coordinated day of action” involved evidence, intelligence, and information collection activities such as search warrants, interviews, and subpoenas. Authorities believe that the financial institution aided clients in evading their tax obligations by using a sophisticated system to conceal and transfer wealth anonymously. Additional criminal, civil, and regulatory action is expected.
“This is the first coordinated set of enforcement actions undertaken on a global scale by the J5 – the first of many,” said Don Fort, US Chief, Internal Revenue Service Criminal Investigation (IRS-CI). “Working with the J5 countries who all have the same goal, we are able to broaden our reach, speed up our investigations and have an exponentially larger impact on global tax administration.”
Fort emphasized, “Tax cheats in the US and abroad should be on notice that their days of non-compliance are over.”
The Joint Chiefs of Global Tax Enforcement, called the J5, organized in 2018 to combat global crime by sharing resources. The J5 consists of criminal intelligence communities from Australia, Canada, the Netherlands, the United Kingdom, and the United States who are committed to collaboration in the fight against international and transnational tax crime and money laundering. Membership of the J5 includes the heads of tax crime and senior officials in tax agencies, including Australian Criminal Intelligence Commission (ACIC) and Australian Taxation Office (ATO), the Canada Revenue Agency (CRA), the Fiscale Inlichtingen-en Opsporingsdienst (FIOD), HM Revenue & Customs (HMRC) and Internal Revenue Service Criminal Investigation (IRS-CI).
This particular investigation began as a result of information obtained by the Netherlands Fiscal Information and Investigation Service (FIOD). Hans van der Vlist, Chief and General Director for FIOD, said, “This is the first outcome of an operational collaboration between five countries on tackling professional enablers that facilitate offshore tax crime.”
Prior investigations – like those involving allegations against Credit Suisse – were multinational but conducted separately. This was a first: a combined effort.
Australian Tax Office (ATO) Deputy Commissioner and Australia’s J5 Chief, Will Day, said the operation is proof that the collaboration is working. “Today’s action shows the power of our combined efforts in tackling global tax crime, fraud and evasion. This multi-agency, multi-country activity should degrade the confidence of anyone who was considering an offshore location as a way to evade tax or launder the proceeds of crime.”
“Never before have criminals been at such risk of being detected as they are now. Our increased collaboration, data analytics and intelligence sharing mean there is no place worldwide you can hide your money to avoid contributing your obligations,” Day explained.
The name of the targeted financial institution was not named by the J5 today, but some tax professionals believe that the investigation is linked to the Panama Papers.
Canada Revenue Agency (CRA) Chief Eric Ferron said, “I am very pleased with the role the CRA is playing in what will be the first of many major operational activities for the J5.” He then warned, “Tax evaders beware; today’s action shows that through our combined efforts we are making it increasingly difficult for taxpayers to hide their money and avoid paying their fair share.”
Simon York, Chief and Director of Her Majesty’s Revenue and Customs (HMRC) ‘s Fraud Investigation Service, echoed those comments, saying, “Tax evasion is a global problem that needs a global response, and that is what the J5 provides.” He continued, “International tax evasion robs our public services of vital funds, undermines economies and, left unchecked, can enrich the dishonest at the expense of the honest majority.”
York concluded, “Working together, HMRC and our J5 partners are closing the net on tax criminals, wherever they are, to ensure nobody is beyond our reach. The message to them is clear – the J5 are closing in.”
