IRS partners with other countries to detect tax evasion among fintechs
The Internal Revenue Service’s Criminal Investigations Division is teaming up with overseas tax authorities to spot signs of tax evasion, targeting fintech companies and cryptocurrency.
The IRS-CI has coordinated with tax authorities in four other countries in a group known as J5. They include the Australian Taxation Office, the Canada Revenue Agency, the Dutch Fiscal Information and Investigation Service and Her Majesty’s Revenue and Customs in the UK. They have been hosting challenges every year since 2018 focused on various forms of tax evasion. This year they are focusing on fintech and crypto (see the story).
Fintech companies are mostly law-abiding, developing new and innovative systems that use cryptocurrency and other digital opportunities offered by the internet, such as payment processing software, loan crowdfunding. and insurance technology. By developing innovative products, FinTech companies are able to tackle large, traditional financial institutions such as banks and insurance companies and earn billions of dollars in profits. Not surprisingly, this type of technology can attract criminals.
“We’re not saying that FinTech companies are involved in tax evasion, but new financial innovations in businesses are allowing people to keep their money out of sight of authorities,” said Tom Logtens, who heads the cybergroup for Dutch taxation. Information and investigation service, at a press conference on Thursday. “This is what we found. Looking at this year’s challenge, we were basically looking to get together, but due to the COVID outbreak and travel regulations, it took longer than initially expected, and we started planning a virtual event. . “
He and the rest of the group worked together online for three days this week to see how they could investigate cases of international financial technology and cryptocurrency tax evasion. “It’s really promising what we have found and how we can continue,” added Logtens.
They coordinated with cyber experts and investigators in all their countries. “The cybergroup and the challenge are new to all of us,” said Oleg Pobereyko, J5 Cyber Manager and Supervisor of the Western Zone Cybercrime Unit. “Every year we try to have an impact on the system. The difference with this year’s challenge is that we’ve tried to focus on the big picture rather than looking at specific individual threat actors. We try to learn from our mistakes and stay more focused and productive. In past challenges, we have tried to identify threat actors who were actively in J5 jurisdictions, be it money laundering or tax evasion. This year the focus has been on fintech companies that still meet the same geographic criteria as money laundering and tax evasion, but we believe this year’s challenge will be more successful due to the global impact.
Fintech companies can be drawn into such surveys. “Any of these FinTech companies could potentially be the target of an investigation if we uncover any conspiracy-type material where it appears they were not complying with regulations or somehow conspiring with them. a taxpayer or a criminal for committing criminal activity, ”Ryan said. Korner, executive special agent in charge of the Los Angeles office of the IRS criminal investigation. “By the time the 2019 challenge came out, we had 17 fully developed tracks and about a dozen operations underway. “
Earlier this month, one such investigation led to indictments against the CEO and an associate of Canadian tech firm Sky Global, accused of participating in a criminal enterprise aimed at facilitating transnational importation and distribution. narcotics via encrypted communication devices.
“This company was using encrypted communications and potentially facilitating many other criminal activities,” Korner said. “Not only did we investigate the company, but we also followed the tentacles and found other criminal enterprises and tax evaders that we should be looking into.”
IRS Criminal Investigation has also investigated cases of COVID-19-related tax evasion schemes in coordination in some cases with its international partners, but now primarily within U.S. borders. “For a while we had a COVID task force within J5 that looked at the types of programs you see here in the US that CI is doing,” said Justin Cole, director of the United States. communication and education at IRS Criminal Investigation. “We are seeing hundreds of cases and hundreds of millions of dollars affected. What we found in the J5 is that while we generated leads, those leads were best exploited individually by countries. So the leads that have been developed have been sent back to the countries to work individually, and when necessary when there is an international link, there is ongoing coordination and information sharing, but there is no has more specific group targeting COVID fraud for J5. They are worked by individual countries.