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ABA Highlights Tax Enforcement Targets

At the American Bar Association (ABA) Conference dated July 7, 2020, The Current State of International ABACriminal Tax Enforcement, it was announced that the US, Canada, The Netherlands, Australia, and the United Kingdom, (The J5), joined forces in June 2018 in Canada to share operational intelligence, best practices, and coordinate media campaigns and form a Nationally Coordinated Investigations Unit (NCIU). Their intent was to form a Data-Driven Approach to investigations, bring 5 services together, all with varying laws, authorities, and procedures to work proactively on areas of common importance.

At the conference, the following was highlighted:

They formed 4 working groups:
1. The Cryptocurrency/Virtual Currency group
2. The Offshore Professional Enablers
3. Technology Platforms
4. Data Analytics

Their Goals – to enhance investigations, identify significant targets, improve tactical intelligence, lead the wider community, and raise international awareness.
Current Priorities – International, Employment Tax and Virtual Currencies

They are going after:

  1. Lawyers – Structuring of transactions, giving assistance to undeclared account holders, drafting false documents, false streamlined submissions, etc.
  2. Accountants – Structuring of transactions, aiding and abetting false returns
  3. Insurance Companies – Use of insurance products to hide undeclared offshore funds
  4. Fiduciary Services Firms – Creation and management of offshore trusts and corporations, aiding and abetting money transfers, opening and maintaining offshore undeclared bank accounts, etc.

The IRS Criminal Investigations Field Operations International has offices in London, Frankfurt, Dubai, Hong Kong, Sydney, Mexico City, Panama City, Bogota, Barbados, Washington DC and Ottawa.

Successes:
1. Jan 23, 2020, Five Countries unite in Global Tx Evasion Crackdown – Sting implicates hundreds of Australians
2. New Zealand seizes assets over alleged vast bitcoin crime ring, police believe $140million in digital money laundering ring were held in Company owned by a Russian man who denied any involvement
3. Former Mexican Border Governor pleads guilty to money laundering
4. Founder of Russian bank, ‘Tinkoff-Saxo’, Oleg Tinkov, allegedly concealed $1Billion in assets and income when renouncing US citizenship, he is currently fighting extradition.
5. US Law firm – ‘Taylor Lohmeyer’; Fifth Circuit holds that Law Firm Cannot Claim ‘Privilege’ Over Client Identity in IRS Probe. Federal Appellate Court upholds Enforcement of IRS Summons seeking information concerning Law Firm Clients involved in foreign transactions.
6. US Lawyer ‘David Smith’, ran from the 2008 E&Y tax shelter case, gets 3 years in prison, spent 10 years in Canada fighting extradition, was returned to the USA to face a prison sentence.
7. Peter Kyriacou, former Beaufort Securities Wealth Manager (London Office), plead guilty to charges of Securities Fraud and violating FATCA in a sting operation
8. Richard Gaffey, a Massachusetts accountant, pleads guilty to Money Laundering & Conspiracy to Defraud IRS in Panama Papers info case
9. UBS Case – Unprecedented Euro 3.7 Billion Fined + Euro 800k damages, assessed by the French Tax Authorities; the amount of the fine corresponds to the amount of tax evaded & money repatriated in France by former UBS customers. The case started with allegations of French employees of possible unlawful banking solicitation in France by UBS Swiss employees. The UBS Services offered in Switzerland to French Residents(Lombard Loans, numbered accounts, offshore trusts, etc.)
10. July 2020 – Tax Advisors and lawyers are obligated to report to the German authorities any cross border tax schemes that could indicate tax avoidance based upon certain characteristics. In Nov 2019, the Ministry of Finance set up a Tax Fraud Task Force, ‘against models of tax avoidance on the capital market.’
11. Google France and Google Ireland Ltd – French Deferred Prosecution Agreement – Sept 3, 2019, a Euro 500 million fine – which included tax evaded, income over tax proceeds and punitive damages. Google Ireland sold products in France with the help of Google France, most profits were booked in Google Ireland, The French Tax Authorities and Nationwide Prosecutors Service still claim Google Ireland underpaid Google France.

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