Taking a fresh swipe at transnational tax crime, the Joint Chiefs of Global Tax Enforcement (J5) recently announced a crackdown on enablers of global tax fraud and the inappropriate use of cryptocurrencies.
The J5 was formed earlier in 2018 to strengthen international prosecution of tax crime, including money laundering, offshore tax abuses, and filing fraudulent tax reports, among other criminal tax matters. The J5 is composed of organizations that include:
- US: Internal Revenue Service Criminal Investigations (IRS-CI)
- Australia: Australian Taxation Office (ATO)
- Canada: Canada Revenue Agency (RA)
- Netherlands: Fiscale Inlichtengen-en Opsporingsdienst (FIOD)
- Great Britain: HM Revenue and Customs (HMRC)
In mid-November, IRS Chief Don Fort discussed a recent initiative, noting, “we are looking at enablers that are advertising their services to individuals in multiple countries, that are advertising tools that can help you evade your taxes. You investigate and you see where the money goes - inevitably it leads you to many levels, many different individuals and many different facilitators.”
In the US, taxpayers are required to report certain types of foreign investments through annual FBAR reports. The reports disclose to the IRS the ownership, location, and value of foreign bank accounts under the control of US taxpayers. FATCA reporting, in turn, requires foreign entities and institutions to report on accounts held by American taxpayers.
These relatively recent tools improve the transparency of offshore tax holdings and the institutions who manage them for US taxpayers. In its newly announced project, the J5 hopes to identify “professional enablers,” like financial companies operating in secrecy or other jurisdictions that are facilitating hidden money. Mr. Fort noted some of those enablers could be small community banks or financial agencies.
An eye on cryptocurrencies
Cryptocurrency exchanges and digital finance are also targets of J5. States Mr. Fort, “One of the ways to track cryptocurrencies, focused on when the actual cryptocurrency enters the system - folks want their money, and when it comes out is what we are focused on.”
Following the money trail is a key function of the J5. The agency, along with the Organisation for Economic Cooperation and Development (OECD), hope the collaboration results in better cross-border deterrence of global tax evasion and other financial crimes.
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