July 2020 Foodman website and JD Supra

In 2018, the Organization for Economic Co-operation and Development (OECD) issued a “call to action” for countries to do more to tackle enablers of tax crimes. The result of this “call to action” was the establishment of an operational alliance known as the “Joint Chiefs of Global Tax Enforcement”, also known as the “J5”, as the members are five leaders of tax enforcement authorities from Australia, Canada, the Netherlands, the United Kingdom and the United States (IRS-Criminal Investigation: IRS-CI).   On July 13, 2020, Leaders from five international tax organizations marked the two-year anniversary of the formation of the Joint Chiefs of Global Tax Enforcement.  The J5 states that offshore structures and financial instruments, where used for committing tax crimes and money laundering, are detrimental to the economic, fiscal, and social interests of countries.

Its objective is increased cross border collaboration in the fight against international and transnational tax crime and money laundering through implementing new approaches via joint efforts and sharing the results with a greater tax enforcement community. 

What does the J5 do?

  • Works together to investigate those who enable transnational tax crimes and money laundering and those who benefit from it.
  • Collaborates internationally to reduce the growing threat to tax administrations posed by cryptocurrencies and cybercrime.
  • Makes the most of data and technology.

The J5 will accomplishes this by:

  • Developing shared strategies to gather information and intelligence that will strengthen operational cooperation in matters of mutual interest, and target those who seek to commit transnational tax crime, cybercrime and launder the proceeds of crime.
  • Driving strategies and procedures to conduct joint investigations and disrupt the activity of those who commit transnational tax crime, cybercrime, and those who enable and assist money laundering.
  • Collaborating on effective communications that reinforce that J5 is working together to tackle transnational tax crime, cybercrime and money laundering.

The J5’s reflection on their two-years pursuing global tax cheats discusses the use of the FCInet platform

J5 created FCInet. The J5’s two year memo states that: “FCInet is a decentralized virtual computer network that enables agencies to compare, analyze and exchange data anonymously. It helps users to obtain the right information in real-time and enables agencies from different jurisdictions to work together while respecting each other’s local autonomy.  Organizations can jointly connect information, without needing to surrender data or control to a central database. FCInet doesn’t collect data, rather it connects data”.

Understanding FCInet

FCInet’s website states that in order to combat financial economic crimes (tax crime, corruption, money laundering, terrorism financing etc.) effective international cooperation between national services, tax administrations and law enforcement, that deal with this type of crime is crucial. “At the same time, the need to ensure the autonomy of these Financial Criminal Investigation Services (FCISs) and the privacy of (innocent) citizens is essential. Thus, FCIS’ need to be able to analyze data together and identify relevant information without unauthorized violation of privacy or autonomy”.

Taxpayers that are out of compliance ought to understand that:

Taxing authorities are enhancing their existing investigation and intelligence programs, identifying significant targets for new investigations, and improving the intelligence threat picture now and going forward.  Their goal is to reduce  transnational tax crime, cybercrime and money laundering, and create uncertainty for those who seek to commit such offenses despite the efforts of tax offenders that utilize complex methods to conceal their wrongdoings by creating structures that are split across jurisdictions.

Consult your tax specialist.