J5 Countries (Including The U.S. And UK) Are Laser-Focused On FINtech Companies

This week the Joint Chiefs of Global Tax Enforcement (J5)
brought together investigators, cryptocurrency experts and data
scientists in a coordinated push to track down individuals and
organizations perpetrating tax crimes around the world. The J5
(which is comprised of the Australian Taxation Office (ATO), the
Canada Revenue Agency (CRA), the Dutch Fiscal Information and
Investigation Service (FIOD), Her Majesty’s Revenue and Customs
(HMRC) from the United Kingdom and the U.S. Internal Revenue
Service Criminal Investigation Division (IRS-CI)) has been working
together since 2018 to gather information, share intelligence and
conduct coordinated operations in each country’s fight against
transnational tax crime.

The annual meeting (referred to by the J5 as “The
Challenge”) was focused this year on Financial Technology
(FINtech) companies. In its press release issued March 25
(IR-2021-64), the IRS acknowledged that many FINtech companies have
adopted compliance regulations and are partnering with governments
and law enforcement in prohibiting financial crime. However, the
IRS cautioned that due to the online nature of the products, the
novelty and the lack of regulation and compliance in some areas,
the FINtech industry can be used by tax avoiders and money
launderers to commit crimes.

This year the J5 Challenge was held virtually and split into
multiple phases. In the first phase of the Challenge, legal experts
from the five countries discussed the fiscal, compliance and
criminal options that each country had regarding FINtech companies.
During the second phase, the five countries developed a list of
specific companies where leads suggested criminal behavior. By the
conclusion of the Challenge, the IRS press release stated that each
country identified specific companies that will be a part of their
investigations.

The IRS press release also touted two successes this month
resulting from J5 collaboration – the early-March indictments
of the CEO and an associate of Sky Global on charges that they
participated in a criminal enterprise that facilitated the
transnational importation and distribution of narcotics through the
sale and service of encrypted communications devices, followed by
the ten-count indictment earlier this week charging Jason Peltz
with securities fraud, money laundering, tax evasion and a variety
of other offenses.

This appears to be just the beginning of the J5’s
coordinated efforts to clamp down on the use of the FINTech
industry by those seeking to evade taxes and committing financial
crimes. For more on the J5, visit the IRS website.

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