Financial crimes are global crimes — this isn’t anything new. What is new is how the leaders from five nations plan to handle it. Criminal intelligence communities from Australia, Canada, the Netherlands, the United Kingdom and the United States, collectively known as the J5, announced that they have created a united operational alliance, the Joint Chiefs of Global Tax Enforcement.
Bruce Zagaris — partner at Berliner Corcoran & Rowe who advises individuals, entities and governments on international business, including regulatory and enforcement aspects and tax implications — offers his analysis. (Note: This article originally appeared on the International Enforcement Law Reporter Blog.)
On July 2, Her Majesty’s Revenue and Customs announced an alliance on tax enforcement between the United Kingdom, Canada, the Netherlands, the United States and Australia to combat international tax crime and money laundering. Members include the heads of tax crime and senior officials from the Australian Criminal Intelligence Commission (ACAC) and the Australian Taxation Office (ATO), the Canada Revenue Agency (CRA), the Dutch Fiscal Information and Investigation Service (FIOD), Her Majesty’s Revenue & Customs (HMRC), and the US Internal Revenue Service – Criminal Investigation unit (IRS-CI).
This group will build on existing international cooperation by sharing intelligence and expertise, and it will cooperate on joint operations to investigate individuals who are enablers of tax crime.
At their first meeting, the J5 brought leading experts in tax and other financial crimes from each of the five member-countries to develop tactical plans and identify opportunities to pursue cyber-criminals and enablers of international tax crime.
Purpose of the Alliance
According to HMRC, the new alliance will help to build on work that has obtained more than £2.8 billion from offshore tax evaders since 2010.
The J5 was formed 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 crime. All five countries have similar threats: organized crime groups and wealthy offshore tax evaders who are well resourced and have access to professional enablers to hide income and assets using the global financial system.
According to IRS Criminal Investigation division chief Don Fort, the J5 will have three areas of focus:
- professional enablers;
- cybercrimes and cryptocurrencies; and
- increased use of data analytics and new investigation technology.
J5’s Link to JITSIC
The J5 has similarities to the Joint International Tax Shelter Information and Collaboration (JITSIC). On October 24, 2014, at the 9th meeting of the Forum on Tax Administration (FTA) held in Dublin, Ireland, 38 countries agreed to establish the JITSIC. The JITSIC Network focuses specifically on cross-border tax avoidance. JITSIC has the goal to deter the promotion of, and investment in, abusive tax schemes by: i) increasing the community’s awareness of the potential risks of promoting and investing in tax schemes; ii) sharing ideas on how to identify and address abusive tax schemes; iii) enhancing compliance and enforcement efforts through coordinated ‘real-time’ exchanges of information; iv) developing new internet searches and other techniques for the early identification of promoters and investors involved in abusive tax schemes; v) identifying emerging trends and patterns to anticipate new abusive tax schemes; and vi) improving knowledge of techniques used to promote cross-border abusive tax schemes.
The J5, unlike JITSIC, will engage in joint tax investigations and use increased data analytics and investigation technology in its work.