Today’s world is more interconnected than ever before. Individuals and businesses operate across borders, and the same holds true for today’s criminals. This necessitates international cooperation among government partners to combat tax and financial crimes that touch countries around the globe.
The Joint Chiefs of Global Tax Enforcement (J5) was founded five years ago in response to a call to action by The Organization for Economic Cooperation and Development (OECD) for countries to do more to tackle enablers of tax crime. The leaders from the tax enforcement agencies of Australia, Canada, the U.K., the Netherlands and the U.S. came together to form the J5. Today, the Australian Taxation Office (ATO), the Canada Revenue Agency (CRA), His Majesty’s Revenue and Customs (HMRC), the Dutch Fiscal Intelligence and Investigation Service (FIOD) and the Internal Revenue Service Criminal Investigation (IRS-CI) work together to gather information, share intelligence and conduct coordinated operations against transnational financial crimes. The partnership that exists between these five nations has proven to be a central part of fighting international financial crimes, and the partnerships this team has formed with the private sector have proven to be invaluable.
Gathering Information
Prior to 2018, J5 countries operated with only traditional means to gather information on cases with international components. While each had access to trends taking place within their own country’s borders, external information on tax crimes was not readily available. The formation of the J5 has created relationships that can help expedite awareness and access to this information through proper legal channels.
Each country has propriety tax and financial information that proves instrumental in developing criminal cases. For instance, in the U.S., data gleaned from a variety of sources, including public-private partnerships, currency transaction records, suspicious activity reports, reporting cash transactions over $10,000, and more, may indicate criminal activity like money laundering and tax evasion. By working with the J5, the U.S. has the ability to work with foreign partners to follow the money trail for those transactions.
The J5 countries have also invested in a digital platform that is part of a decentralized computer network. This platform enables J5 partners to compare, analyze and exchange real-time data while upholding each country’s security and privacy protocols. This information proves critical in identifying risk factors and anomalies in financial transactions that could be the impetus for global investigations.
Beyond the exchange of data, the J5 partnership also serves as a means to exchange ideas. Each year, the J5 has hosted a “challenge,” which focuses on a specific topic. The challenges bring together cryptocurrency experts, criminal investigators and data scientists as part of a coordinated effort to track down individuals and organizations perpetrating tax crimes around the world. These challenges have helped gather information from experts and uncover trends that each of the five countries may be experiencing. The 2022 challenge focused on non-fungible tokens (NFTs) and decentralized exchanges, which led to greater information sharing. These challenges have resulted in nine closed cases, 27 ongoing investigations and approximately $762.5 million in criminal activity.
Sharing Intelligence
Global tax and financial crimes cannot be squashed by one entity. Combating this criminal activity requires ongoing conversations with financial institutions (FIs), government partners and taxpayers across the globe. The J5 is committed to ensuring that the intelligence it gleans can proactively be used to deter financial crimes.
Information gleaned by J5 countries is often shared with FIs in the private sector. In 2022, as a direct result of the challenge, the J5 issued a list of red flag indicators to partners in the financial industry, which provided warnings about potential areas of concern when dealing with NFTs.
Two Global Financial Institution Summits—one in the U.K. and one in the U.S.—also resulted in the sharing of intelligence. These summits began ambitious talks with some of the world’s biggest banks to see how the J5 and the private sector can tackle tax crimes together. The summit also served as an opportunity to share intelligence with private sector partners and learn more about what they are seeing on a daily basis in an effort to combat financial crimes.
Conducting Coordinated Operations
The J5 has been instrumental in the takedowns of some of the world’s most egregious darknet marketplaces and has foiled boiler-room schemes that have touched nearly half the globe. This would not be possible without the ongoing partnership between the five countries.
The J5 began seeing operational results in early 2020. A Romanian man arrested in Germany pleaded guilty in July 2020 to conspiring to engage in wire fraud and selling unregistered securities in connection with his role in the BitClub Network, a cryptocurrency mining scheme worth at least $722 million. He and his co-defendants falsified bitcoin mining earnings to recruit investors to participate in the Ponzi scheme.1
In February 2022, the U.S. Department of Justice charged Robert Leonard Booth and his co-conspirators for operating an international boiler-room scheme that defrauded victims around the world of millions of dollars. Booth was sentenced to 10 years in prison in August 2022 for his role in the scheme and laundering nearly $2 million in illegal proceeds.2
A J5 probe conducted in 2022 enabled J5 countries to tackle sales suppression software at the root of the problem by focusing on the parties responsible for its creation. By starting there, the J5 determined how the software was manufactured, where it was marketed and who purchased it. This resulted in a criminal probe with charges against individuals in the U.K. and ongoing investigations across the globe.
The J5 is one of the greatest testaments for global partnerships. By creating a host of allies on continents across the world, the J5 has created a framework to gather information, share intelligence and conduct successful criminal operations. At only five years, the J5 and its resounding impact will be felt for years to come.
Jim Lee, chief, IRS-CI
- “Romanian programmer admits that he helped create Bitclub network, a fraud scheme worth at least $722 million,” Joint Chiefs of Global Tax Enforcement, Internal Revenue Services, July 9, 2020, https://www.irs.gov/pub/irs-utl/j5-media-release-07-09-2020.pdf
- “Robert Lenard Booth sentenced to 10 years for defrauding investors in boiler room scheme,” Joint Chiefs of Global Tax Enforcement, Internal Revenue Services, August 12, 2022, https://www.irs.gov/pub/irs-utl/j5-media-release-8-12-2022.pdf
