WASHINGTON—Leaders from the Internal Revenue Service’s Criminal Investigation unit and tax authorities from Australia, the United Kingdom, Canada and the Netherlands (the J5) met in Sydney, Australia to set priorities for the year ahead in the fight against international tax crimes.
Separately, the Swiss government has sanctioned a big bank over concerns around money laundering.
In response to a directive from the OECD Taskforce on Tax Crime, the five countries’ tax authorities have been coordinating their information, intelligence and operations to combat transnational tax criminals, Accounting Today said.
“Seeing the transformation of the J5 from a group of countries with similar challenges and similar goals to a fully integrated organization that is seeing operational successes is very exciting and should be a model for international collaboration at all levels,” said Don Fort, chief of IRS CI, in a statement. “The information shared, efficiencies gained, and investigations started based on the collaboration within this group have moved the needle by years in terms of results and successes. I expect 2020 will be a game changer for the J5 and criminals will not know what hit them.”
Global Day of Action
In January, the J5 executed a global day of action against an unidentified international financial institution the group suspected of facilitating money laundering and tax evasion. They shared evidence, intelligence and information, and executed search warrants, interviews and subpoenas in each country, garnering significant information as a result, according to Accounting Today.
“Tackling the abuse of correspondent banking arrangements was at the heart of our day of action last month, and we are looking beyond just a single financial institution in Central America,” said Australian Taxation Office deputy commissioner Will Day in a statement. “We have fears there are many hundreds of Australians caught up in these arrangements, and working with our J5 partner agencies we are continuing to tighten the net on those who are engaging in and enabling transnational tax crime.”
Switzerland Bans Big Bank
Separately, in Bern, Switzerland, the country’s Financial Market Authority (FINMA) has banned one of the largest Swiss multinational private banks from conducting any significant acquisitions after finding it failed to combat money laundering between 2009 and early 2018.
The irregularities at Julius Baer Bank involve shortcomings that arose in connection with alleged cases of corruption linked to PDVSA, Venezuela’s state-owned oil company, and FIFA, the world soccer federation, FINMA stated, according to a report by the Organized Crime and Corruption Reporting Project (OCCRP).
PDVSA was at the center of a scandal in 2017 involving more than 50 of its employees suspected of embezzling $200 million from the company’s funds, OCCRP said.
In one case, according to the statement, Julius Baer in 2014 carried out a 70 million Swiss franc ($71 million) transaction for a Venezuelan client without investigating it properly, even though the bank knew the client was facing accusations of corruption.
Swiss banks must comply with “know your customer” procedures. FINMA said Julius Baer failed to collect this data, OCCRP said.
‘Reckless’ Behavior
Authorities said the bank recklessly provided financial services to clients who were suspected money-launderers and failed to report suspicious cases, which according to FINMA, “seriously violated the rules of financial law.”
FINMA added the bank incentivized the anti-money laundering breaches by rewarding its client advisers almost exclusively based on financial targets. FINMA found irregularities in almost 70 business relationships and in some 150 Julius Baer transactions.
The Zurich bank has been instructed to reform management before it can resume all of its financial activity. FINMA has ordered new bonus and disciplinary procedures and improved hiring of client advisers to fight corruption. Until those changes are made, an independent supervisor will observe its banking activities, OCCRP said.
OCCRP noted the bank was also involved in secret offshore deals by Ukrainian officials.