effective inter-agency co-operation in fighting tax crimes and other financial crimes

380 Pages·2013·4.6 MB·English

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EFFECTIVE INTER-AGENCY T EFFECTIVE INTER-AGENCY
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CO-OPERATION IN FIGHTING TAX CO-OPERATION IN FIGHTING TAX
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CRIMES AND OTHER FINANCIAL CRIMES E CRIMES AND OTHER FINANCIAL CRIMES
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Second Edition
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Financial crimes are increasingly growing in sophistication. Criminals accumulate significant P
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sums through offences including drug trafficking, fraud, extortion, corruption and tax R
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evasion. Different government agencies may be involved in detecting, investigating and T
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prosecuting these offences and recovering the proceeds of crime. This second edition of
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Effective Inter-Agency Co-operation in Fighting Tax Crimes and Other Financial Crimes I
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describes the current position in 48 countries with respect to the law and practice of F
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domestic inter-agency co-operation in fighting tax crimes and other financial crimes. It
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outlines the roles of agencies in different countries, legal gateways to enable these agencies T
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to share information and other models for co-operation, such as joint investigations and the G

establishment of intelligence centres including officials from different authorities. The report T
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identifies a number of successful practices based on countries’ experiences and makes X

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recommendations for how inter-agency co-operation may be improved R
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In addition to greater country coverage, improvements since the first edition include: S

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• analysis of legal gateways in countries for sharing information with the customs D

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administration, which is a key authority in the prevention, detection and investigation
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of illicit flows;
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• an outline of measures that have been introduced since the first edition was released R

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in June 2012; and I
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• country-specific sections, which contain more detailed information on the position in A
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each of the 48 countries covered by the report. C
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Contents I
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Background and Introduction

Chapter 1. Key findings and recommendations

Chapter 2. Organisational models for agencies fighting financial crime

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Chapter 3. Models for sharing information e
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Chapter 4. Models for enhanced co-operation o
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Chapter 5. Country information d

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www.oecd.org/ctp/taxcrimes
EFFECTIVE INTER-AGENCY
CO-OPERATION IN FIGHTING TAX CRIME
AND OTHER FINANCIAL CRIMES

Second Edition
2013

ORGANISATION FOR ECONOMIC CO-OPERATION
AND DEVELOPMENT

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Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel,
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TABLE OF CONTENTS – 5

TABLE OF CONTENTS
Background and Introduction 7
CHAPTER 1 Key findings and recommendations 13
A. Introduction 13
B. Organisational models for agencies fighting tax crimes and other financial crime 13
C. Models for sharing information 14
D. Models for enhanced co-operation 17
E. Models adopted since the first edition 18
F. Successful practices 20
G. Recommendations 26
CHAPTER 2 Organisational models for agencies fighting financial crime 29
A. Tax administration 30
B. Customs administration 33
C. Police and other law enforcement agencies 36
D. Financial Intelligence Unit 37
E. Prosecution authority 39
F. Financial regulators 42
CHAPTER 3 Models for sharing information 43
A. Introduction 44
B. Arrangements for sharing information through legal gateways 45
C. Analysis of the existing gateways 47
D. Information held by the tax administration 49
E. Information held by the customs administration 64
F. Information held by the police or public prosecutor 72
G. Information held by the Financial Intelligence Unit 82
H. Information held by the financial regulator 93
CHAPTER 4 Models for enhanced co-operation 103
A. Joint investigation teams 104
B. Inter-agency centres of intelligence 110
C. Secondments of personnel between agencies 118
D. Other strategies 120
CHAPTER 5 Country Information 125
Australia 126
Austria 134
Azerbaijan 138
Belgium 142
Brazil 147
Burkina Faso 156
Canada 159
Chile 166
EFFECTIVE INTER-AGENCY CO–OPERATION IN FIGHTING TAX CRIMES AND OTHER FINANCIAL CRIMES – © OECD 2013
6 – TABLE OF CONTENTS

Colombia 170
Costa Rica 175
Czech Republic 181
Denmark 185
El Salvador 188
Estonia 191
Finland 195
France 205
Germany 211
Ghana 216
Greece 219
Hungary 223
Iceland 229
India 233
Ireland 241
Italy 245
Japan 252
Korea 256
Latvia 260
Lithuania 266
Luxembourg 276
Malaysia 281
Mexico 285
Netherlands 289
New Zealand 296
Norway 300
Peru 302
Portugal 306
Serbia 311
Singapore 318
Slovak Republic 322
Slovenia 326
South Africa 331
Spain 336
Sweden 342
Switzerland 349
Turkey 352
Uganda 357
United Kingdom 366
United States 371

EFFECTIVE INTER-AGENCY CO–OPERATION IN FIGHTING TAX CRIMES AND OTHER FINANCIAL CRIMES – © OECD 2013
BACKGROUND AND INTRODUCTION – 7
BACKGROUND AND INTRODUCTION
Financial crimes are growing in sophistication and criminals accumulate significant
sums of money through offences such as drug trafficking, investment fraud, extortion,
corruption, embezzlement, tax evasion and tax fraud. The nature of financial crime means
that the same activity may violate a number of different laws. Different government
agencies may be involved at various stages of tackling financial crimes, including the
prevention, detection, investigation and prosecution of offences and the recovery of the
proceeds of crime. Tax offences are often intrinsically linked to other financial crimes as
criminals fail to report their income from illicit activities for tax purposes. Conversely,
criminals may over-report income in an attempt to launder the proceeds of crime. The
Financial Action Task Force (‘FATF’) has explicitly recognised the linkages between tax
crimes and money laundering by adding tax crimes to the list of designated predicate
offences for money laundering purposes in the 2012 update of its Recommendations.
Where criminal activity does cross national boundaries, the amounts involved can be
staggering. A 2011 UNODC report1 estimates that in 2000 to 2009 total proceeds from
transnational organised crime was the equivalent of 1.5% of global GDP, or USD 870bn
in 2009. Issues of financial crime are of concern to all countries, but particularly to
developing countries. Illicit financial flows resulting from financial crimes strip resources
from developing countries that could finance their long-term development. Although it is
difficult to estimate the total amounts at stake, experts agree that the amounts at stake are
vast.
The OECD has been active in this area for many years, encouraging countries to take
action to strengthen their legal, regulatory or administrative provisions and their powers
of investigation for the detection and prevention of tax evasion, with regard to both their
domestic and international aspects. In 1998, further work was initiated in response to a
call by G7 Finance Ministers which encouraged international action to enhance the
capacity of anti-money laundering systems to deal effectively with tax related crimes. The
OECD and the FATF subsequently strengthened co-operation in areas of mutual concern
and, since 2003, the OECD has held Observer status at FATF meetings. In July 2009, the
G8 Leaders called for further efforts in combating illicit financing, and acknowledged the
progress being made by the FATF in improving the standards for combating money
laundering and the financing of terrorism and by the OECD on international standards of
transparency.
In its 20092 and 20103 Recommendations, the OECD advocated greater co-operation
and better information sharing between different government agencies involved in the

1. United Nations Office on Drugs and Crime, Estimating Illicit Financial Flows from Drug
Trafficking and Other Transnational Organised Crimes (October 2011).
2. OECD Council Recommendation on Tax Measures for Further Combating Bribery of Foreign
Public Officials in International Business Transactions, 25 May 2009, C(2009)64.
EFFECTIVE INTER-AGENCY CO–OPERATION IN FIGHTING TAX CRIMES AND OTHER FINANCIAL CRIMES – © OECD 2013
8 – BACKGROUND AND INTRODUCTION
fight against financial crimes both domestically and internationally. These
recommendations are reproduced in the box at the end of this chapter. The OECD has
also developed practical guidance in the form of handbooks to better enable tax officials
to detect bribes and instances of money laundering.4 These handbooks have been
translated into many languages and are being used by tax administrations around the
world.
It was against this backdrop that Norway hosted the first international Forum on Tax
and Crime, held in Oslo in March 2011. The purpose of the Forum was to find more
effective ways to use a ‘whole-of-government’ approach to counter financial crimes by
harnessing the skills and knowledge of different agencies through better domestic and
international co-operation. Inter-agency co-operation can enhance financial integrity and
good governance by improving the effectiveness of countries’ abilities to fight financial
crimes. In a world where criminals operate in a complex financial environment and across
geographic boundaries, effective domestic and international inter-agency co-operation is
the only viable response. The Forum asked the OECD, working with other international
organisations and interested parties, to focus on improving inter-agency co-operation by
mapping out different models of co-operation, their advantages and challenges with a
view to developing best practice standards, and with a particular focus on the contribution
that tax administrations can make in this regard. The importance of inter-agency
co-operation was also underlined by the G20 Finance Ministers Communiqué of February
2012, which called for an update by the OECD, together with the FATF, on steps taken to
prevent the misuse of corporate vehicles and improve interagency co-operation in the
fight against illicit activities.
The first edition of the OECD Report on Effective Inter-Agency Co-operation in
Fighting Tax Crimes and Other Financial Crimes (the Rome Report) was prepared by the
Task Force on Tax Crimes and Other Crimes (TFTC) and launched at the second
international Forum on Tax and Crime, hosted by the Guardia di Finanza in Rome in
June 2012. That report contained the first in-depth analysis of inter-agency co-operation
in fighting financial crimes in 32 countries. The first edition of the Rome Report was very
well received by countries and international organisations, and has directly contributed to
the debate within countries on how inter-agency co-operation may be improved. In part as
a result of this work, a number of countries have already implemented changes, some of
which are outlined in Chapter 1. This second edition of the Rome Report builds on this
success with a number of enhancements.
• Customs administrations are a key agency in preventing, detecting and investigating
financial crime, with sophisticated systems for monitoring the movement of people,
goods and funds across national borders. Customs administrations also maintain
records on individuals, companies and transactions for use in the administration of
customs and excise duties and, in many cases, indirect taxes such as VAT or GST.
This edition contains an analysis of gateways used in different countries to enable
the customs administration to share this information with other agencies for use in

3. OECD Council Recommendation to Facilitate Co-operation between Tax Authorities and Other
Law Enforcement Authorities to Combat Serious Crimes, 14 October 2010, C(2010)119.
4. The OECD Money Laundering Awareness Handbook for Tax Examiners and Tax Auditors
(2009) and the OECD Bribery and Corruption Awareness Handbook for Tax Examiners and Tax
Auditors (2013).
EFFECTIVE INTER-AGENCY CO–OPERATION IN FIGHTING TAX CRIMES AND OTHER FINANCIAL CRIMES – © OECD 2013
BACKGROUND AND INTRODUCTION – 9
the fight against financial crime, as well as for the customs administration to obtain
relevant information from other agencies.
• Chapter 5 of the Report now contains detailed country-specific sections to
complement the comparative information contained in Chapters 2 to 4. These
country sections include additional information on key agencies as well as
mechanisms for sharing information and co-operation between agencies in
combating financial crimes.
• Since the first edition, the number of countries that have provided information and
are covered in the Report has increased from 32 to 48. This allows the comparison of
mechanisms for inter-agency co-operation in developed and developing countries,
and in all geographic regions. The countries included in this edition of the report are
Australia, Austria, Azerbaijan, Belgium, Brazil, Burkina Faso, Canada, Chile,
Colombia, Costa Rica, the Czech Republic, Denmark, El Salvador, Estonia,
Finland, France, Germany, Ghana, Greece, Hungary, Iceland, India, Ireland,
Italy, Japan, Korea, Latvia, Lithuania, Luxembourg, Malaysia, Mexico, the
Netherlands, New Zealand, Norway, Peru, Portugal, Serbia, Singapore, the
Slovak Republic, Slovenia, South Africa, Spain, Sweden, Switzerland, Turkey,
Uganda, the United Kingdom and the United States.
This second edition of the Rome Report was presented and launched at the third
international Forum on Tax and Crime, held in Istanbul on 7-8 November 2013 and
hosted by the GIB (the Turkish tax administration), VDK (the Turkish Tax Inspection
Board) and MASAK (the Turkish Financial Intelligence Unit).
This report is not an end point but the next step in a series of work. Financial crime is
an issue for all countries around the world. Future work may be conducted to further
enlarge the country coverage and to deepen the level of analysis, with a view to providing
maximum insights into the most effective ways of fighting financial crimes. Further
reports may also be prepared to measure progress and enable countries to benchmark their
systems internationally. The ongoing objective is to identify ways in which agencies can
work together in combating financial crime to deliver better results, in shorter time
frames and with lower costs. Improvements on domestic inter-agency co-operation will
also have a positive impact on cross-border international co-operation. While this report
is limited to domestic co-operation, future reports may also cover aspects of international
co-operation, a topic on which work is also underway in the TFTC.

EFFECTIVE INTER-AGENCY CO–OPERATION IN FIGHTING TAX CRIMES AND OTHER FINANCIAL CRIMES – © OECD 2013