On Monday, the US Internal Revenue Service (IRS) launched a joint effort with four other countries to investigate and prosecute cryptocurrency related tax crimes and money laundering.
The cooperative alliance, which will consist of the tax authorities in the US, UK, Netherlands, Australia, and Canada, will be called the Joint Chiefs of Global Tax Enforcement (J5) and will center around the international enforcement of money related crimes. The alliance will focus on building international enforcement capacity through a more cohesive system of cooperation by sharing information and conducting new approaches jointly.
The group formed after the Organization for Economic Cooperation and Development (OECD) called for countries to do more to inhibit tax crimes. The J5 group had their first meeting last week, bringing together leaders of the tax agencies and experts in financial crimes.
The report released by the IRS said:
“Together they developed tactical plans and identified opportunities to pursue cyber criminals and enablers of transnational tax crime. The J5 will do this through the sharing of data and technology, conducting operational activity and taking advantage of collective capabilities.”
Cryptocurrency has become a focus of tax agencies around the world after the massive profit taking that occurred during the 2017 bull run, profits that the majority have not reported to their taxing agencies. Their focus on cryptocurrencies has extended past collecting taxes for investors, and now encompasses reducing cybercrimes that have been enabled by cryptocurrencies. The J5’s website states:
“We will…collaborate internationally to reduce the growing threat to tax administrations posed by cryptocurrencies and cybercrime and to make the most of data and technology.”
Cryptocurrency allows for easy international transfers, and certain currencies possess anonymity features that can conceal the transactions, making it very difficult for law enforcement agencies to track. Cryptocurrency currently accounts for a miniscule amount of global financial crimes, but law enforcement agencies around the world are concerned that criminal organizations will increasingly use it to move and launder money.
Don Fort, Chief of the IRS-CI said:
“We cannot continue to operate in the same ways we have in the past, siloing our information from the rest of the world while organized criminals and tax cheats manipulate the system and exploit vulnerabilities for their personal gain. The J5 aims to break down those walls, build upon individual best practices, and become an operational group that is forward-thinking and can pressurize the global criminal community in ways we could not achieve on our own.”
Further updates on the progress of J5 will be released in late 2018.