In a combined briefing with the Joint Chiefs of Global Tax Enforcement, known as the J5, ATO deputy commissioner Will Day revealed that 14 Australians have since been engaged by the ATO for their possible involvement with a Central American bank suspected of facilitating money laundering and tax evasion for customers across the globe.
The unnamed international financial institution, located in Central America, is believed to be using a sophisticated system to conceal and transfer wealth anonymously to evade clients’ tax obligations and launder the proceeds of crime.
Mr Day said the Tax Office fears that many other Australians could be caught up in the investigation or other similar arrangements.
“We are learning more about the arrangements from these engagements, and we expect to receive information from our J5 partners from the day of action that will help us to identify the extent of Australian involvement, that may be using this financial institution to evade their tax obligations,” Mr Day said.
“The investigation into this financial institution and its clients is just one example of the work we’ve been doing with the J5 to investigate Australians who may be using sophisticated systems to evade their taxation obligations.
“Tackling the abuse of correspondent banking arrangements was at the heart of our direction last month, and we are looking beyond just a single financial institution in Central America. And again, I have fears that there may be many hundreds of Australians caught up in these types of arrangements.”
Small minority of accountants facilitating evasion
Her Majesty’s Revenue and Customs (HMRC) director Simon York said the complexity of tax evasion has increased, with people now turning to a number of professionals, including accountants, to hide their affairs from tax authorities.
“In the past, they have been using a single offshore bank account — a Swiss bank account, for example — but people are now using a mixture of trusts, crypto assets, complex corporate structures, the banking system, and all the value transfer systems involved,” Mr York said.
“We’re also seeing people arranging their affairs over multiple jurisdictions — so a bank account somewhere, a company somewhere else, a trust somewhere else, living somewhere else, and considerably more complex arrangements than that.”
He added: “I think because of those two things, they are needing to use the professional services of accountants, lawyers, tax specialists and a range of other professionals.
“It is probably worth saying at this point, though, that accountants, lawyers, etc… The fact is the majority of them are a huge force for good in supporting us as tax authorities and ensuring compliance of their clients, but there are a small minority that work actively to help their clients evade tax and not pay what they owe.”
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Jotham Lian is the editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.
Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.