Insight

Five countries join forces to fight international tax crime

June 2019


In a move designed to shore up enforcement activities in the fight against those who perpetrate international tax crimes and money laundering schemes, tax enforcement authorities from five countries – the United States, the UK, Canada, Australia and the Netherlands – have come together to form the Joint Chiefs of Global Tax Enforcement, or J5 for short.

At an organisational meeting in Montreal in July, the group gathered to formalise its mission and plans for sharing intelligence and coordinating operations. Members of the J5 include tax-crime experts and senior officials from the US Internal Revenue Service Criminal Investigation (IRS CI), Her Majesty’s Revenue and Customs (HMRC) in the UK, the Australian Criminal Intelligence Commission (ACIC) and Australian Taxation Office (ATO), the Canada Revenue Agency (CRA), and the Dutch Fiscal Information and Investigation Service (FIOD).

Specifically, the group has united around a three-point mission, which states:

  • We are convinced that offshore structures and financial instruments, where used to commit tax crime and money laundering, are detrimental to the economic, fiscal, and social interests of our countries.
  • We will work together to investigate those who enable international tax crime and money laundering and those who benefit from it.
  • We will also collaborate internationally to reduce the growing threat to tax administrations posed by cryptocurrencies and cybercrime and to make the most of data and technology.

The impetus for forming the J5 was in response to a call to action from the Organisation for Economic Co-operation and Development (OECD) for countries to do more to tackle the enablers of tax crimes. The J5 will work with the OECD and other countries and organisations where appropriate. Successes, new approaches and findings from these joint efforts will be shared with the worldwide tax enforcement community.

In a joint communique from J5 members, Don Fort, Chief of the U.S. IRS-CI said: “We cannot continue to operate in the same ways we have in the past, siloing our information from the rest of the world while organised criminals and tax cheats manipulate the system and exploit vulnerabilities for their personal gain.

“The J5 aims to break down those walls, build upon individual best practices, and become an operational group that is forward-thinking and can pressure global criminals in ways we could not achieve on our own.”

Fort’s comments were reinforced by Simon York, Director of the UK’s HMRC Fraud Investigation Service. “Tax crime and money laundering are becoming increasingly global and sophisticated,” York said. “So it is crucial we continue to work with international partners to tackle these threats.

“The formation of the J5 shows our commitment to leading that fight,” he added. “Working together we are broadening the horizon of tax crime enforcement, making the world a smaller place for those seeking to exploit our systems and ensuring no one is beyond our reach.”

Forbes Magazine reported that the group will begin by focusing on operational aspects of tackling financial crimes, including sharing best practices and intelligence leads, as well as conducting cases together. The group will also use new methods to track cryptocurrency used in the commission of a crime. Finally, the group will have practices in place so that if a new data breach occurs or if a set of relevant documents is released, a structure will already be in place to address it.

Leaders of the group expect that, over time, some concrete results will come from the active collaboration they envisage, including:

  • Enhancing existing investigation and intelligence programs
  • Identifying significant targets for new investigations
  • Improving the tactical intelligence threat picture now and into the future
  • Leading the wider tax-crime enforcement community in developing its strategic understanding of the methods, weaknesses and risks from offshore tax crime and cybercrime
  • Raising international awareness that the J5 is working to reduce international tax crime, cybercrime and money laundering, and create uncertainty for those who seek to commit such offences.

During a follow-up conference call with reporters, Fort said that he and his colleagues are looking forward to sharing assets in investigations, including using the various national and multinational criminal statutes available to them. At the same time, however, he acknowledged that laws and privacy protections do vary from country to country and could prove challenging to reconcile in some cases.

Author: William F. Rucci, RBF, Boston, MA USA