The Australian Tax Office (ATO) are currently investigating several tax avoidance schemes in an effort to more effectively regulate economic activity in the modern era. The schemes were detected though the global sharing of resources dedicated to preventing cryptocurrency abuse, which forms part of the Joint Chiefs of Global Tax Enforcement’s (J5) investigations.
Formed in the wake of the Panama Papers, the J5 is a collaborative effort by 5 governments – Australia, Canada, the Netherlands, the UK, and the US – to investigate tax crimes on a global level through the sharing of information and resources.
Organisations which make up the J5 include:
- The Australian Criminal Intelligence Commission (ACIC)
- The Australian Tax Office (ATO)
- Her Majesty’s Revenue & Customs (HMRC)
- The US Internal Revenue Service Criminal Investigation (IRS CI)
- The Canada Revenue Agency (CRA) and
- The Dutch Fiscal Intelligence (FIOD)
According the Australian Financial Review, the unprecedented collaboration between these tax bodies around the world has led to more information exchange in the first year since formation than in the entire decade prior. This large-scale sharing of information is helping its members work more efficiently to tackle tax crimes, reducing the amount of time it takes to open and close cases.
According to Will Day, Deputy Commissioner of the ATO, the J5 are currently involved in nearly 60 investigations around the world, with Australia directly involved in around a dozen. In addition to these, 50 more investigations are currently in the pipeline.
These investigations target criminals hiding proceeds of crimes through cryptocurrencies, but other methods of criminal activity are being actively examined as well. Banks and financial advisors are also kept under close scrutiny.
Day also stressed the concerning links between money laundering and cryptocurrencies, which are exploited by many criminals to avoid detection. While there “definitely legitimate use for investment in cryptocurrencies,” investigators were “also seeing the use of them to facilitate tax crimes,” he said.
Don Fort, head of the IRS CI, suggested that the J5 partnership could lead to real success. “We do hope in the next six months to be able to point to some public success, particularly in the enablers phase,” he said. Enablers in this case refer to individuals – particularly accountants, banks, and law firms – who help aid tax evasion.
In order to protect the Australian economy, the ATO are also targeting enablers both domestic and internationally. The Sydney Morning Herald reports that of the ATO’s 12 investigations, at least one is looking into “a ‘global financial institution’ and its intermediaries, which are believed to have enabled taxpayers to hide assets and income details.”
To mark the 1-year anniversary of their formation, representatives from across the J5 met in Washington DC earlier this month. According to Forbes, the meeting coincided with a Global Cyber Training event held at the World Bank by the United States. This training session covered emerging threats within the dark web, blockchain technologies, as well as virtual currencies. Participation in the training session by J5 members shows that cyber threats make up a significant part of their area of focus.
Cryptocurrencies are a major concern for the J5, with the FIOD recently having taken down a major cryptocurrency ‘mixer.’ Mixers refer to services that take cryptocurrencies of different users and mix them together to obscure their original source. This process increases anonymity, making the owners harder to identify and track down.
The FIOD are currently analysing the information seized from the shutdown, to share their findings with the other J5 members.