9th February 2021
Dear Richard and Montserrat,
Five Eyes combined to stare into the dark of Cold War espionage and nuclear threat. Together, Australia, Canada, New Zealand, the UK and the USA allied as (FVEY) to share signals intelligence. ECHELON, their collective surveillance system, initially monitored the former Soviet Union and its Eastern Bloc. During the “War on Terror” FVEY expanded their capabilities to focus on the World Wide Web and ‘Five Eyes’ now monitor state and private communications worldwide. In protecting the West it is one of the most comprehensive espionage alliances in history spanning signals, defence, and geospatial intelligence.
In January 2020 another five eyes activated ‘J5’. Here the ‘Joint Five’, Global Chiefs of Tax Enforcement for Australia, Canada, Holland, and the UK and USA combined to apply the same vigour to international and transnational tax crime and money laundering. J5 collectively gathers and shares intelligence, and conducts operations to combat tax crime. Combining advanced analytics with multi-faceted data capture J5 gaze encompasses crypto, and other virtual currencies as well as FIAT. J5 also look at lawyers, accountants and, offshore professional enablers and, Technology Platforms.
In 2017, the ‘CumEx-Files’ revealed that on-shore European banks, traders and lawyers had used ‘dividend arbitrage’ schemes at a cost to European treasuries of some $63 billion. The J5 have taken notice!
Under their watch ‘Failure to Comply’ becomes defrauding the State; a criminal act! Where offenders see as legal the moving away from jurisdictions this can now be classed as “flight” with some embassies monitoring with de-facto Tax Attaches.
As ‘enablers’, Banks have come to Non-Prosecution Agreements with extraordinary fines amounting to thousands of millions with one institution facing a levy of $2.6 Billion. As to the professionals in this arena, by mid-2020, some 30 bankers and financial advisors had been indicted with some as fugitives and some of these surrendered with guilty pleas. They had structured transactions, assisted undeclared account holders, drafted false documents and tax returns, used insurance products to hide undeclared offshore funds as well as organizing offshore arrangements, aided and abetted money transfers, and facilitated undeclared bank accounts.
With J5 HMRC now have a significant resource with, additionally, other Treaty countries emulating the J5 approach. Full tax compliance will be an ingrained fact of life with banking caught in the cross-hairs.
Thus have your arrangements carefully reviewed and, in this, remember that Banking must be seen as a cardinal issue. Even simple out of the usual transactions can be blocked by internal procedures. Diversify your banking and where possible have a direct relationship with managers to anticipate transactions. Increasingly a privilege, banking is not an automatic right as fear of fines have overridden open banking provision; especially so for those that operate internationally.
The eyes of FVEY never close and neither do those of J5. The Glass Walls of the Institutions are thinning and the eyes that stare in now have the power to open doors and step inside.
Best Wishes,
Alistdair