24 Jan 2020
A Central American financial institution is suspected of helping clients worldwide evade taxes and launder money, according to tax investigators from the U.S., the Netherlands and three other nations coordinating a crackdown.
Clients at the unidentified firm “may be using a sophisticated system to conceal and transfer wealth anonymously,” the group of tax enforcement agencies said in a statement on Thursday.
Through a “coordinated day of action” this week, tax authorities shared intelligence and used search warrants, subpoenas and interviews to build their cases, according to a statement by the Joint Chiefs of Global Tax Enforcement, or J5. Each country is expected to take criminal, civil and regulatory actions as the investigation grows, the statement said.
“This is the first coordinated set of enforcement actions undertaken on a global scale by the J5,” said Don Fort, chief of the U.S. Internal Revenue Service Criminal Investigation Division. “Working with the J5 countries who all have the same goal, we are able to broaden our reach, speed up our investigations and have an exponentially larger impact on global tax administration.”
It wasn’t immediately clear why the J5 publicized the operation before taking public action in court. The other nations involved are the U.K., Australia and Canada.
The revelation draws parallels to Panamanian law firm Mossack Fonseca & Co. In 2016, millions of documents leaked to a consortium of journalists showed how the firm’s lawyers worked with European banks to create more than 200,000 offshore shell companies for rich clients, including world leaders, 140 politicians and public officials, star athletes and criminals that were used to hide wealth. The files, known as the Panama Papers, dated back decades and involved billions of dollars in client transactions. The firm ultimately shut down.
By Laura Davison and David Voreacos, Bloomberg, 23 January 2020
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