J5 Countries (Including the U.S. and UK) Are Laser-Focused on FINtech Companies

By Hope Krebs, Partner, Duane Morris LLP

This week the Joint Chiefs of Global Tax Enforcement (J5) brought together investigators, cryptocurrency experts and data scientists in a coordinated push to track down individuals and organizations perpetrating tax crimes around the world.  The J5 (which is comprised of the Australian Taxation Office (ATO), the Canada Revenue Agency (CRA), the Dutch Fiscal Information and Investigation Service (FIOD), Her Majesty’s Revenue and Customs (HMRC) from the United Kingdom and the U.S. Internal Revenue Service Criminal Investigation Division (IRS-CI)) has been working together since 2018 to gather information, share intelligence and conduct coordinated operations in each country’s fight against transnational tax crime.

The annual meeting (referred to by the J5 as “The Challenge”) was focused this year on Financial Technology (FINtech) companies. In its press release issued March 25 (IR-2021-64), the IRS acknowledged that many FINtech companies have adopted compliance regulations and are partnering with governments and law enforcement in prohibiting financial crime.  However, the IRS cautioned that due to the online nature of the products, the novelty and the lack of regulation and compliance in some areas, the FINtech industry can be used by tax avoiders and money launderers to commit crimes.

This year the J5 Challenge was held virtually and split into multiple phases. In the first phase of the Challenge, legal experts from the five countries discussed the fiscal, compliance and criminal options that each country had regarding FINtech companies. During the second phase, the five countries developed a list of specific companies where leads suggested criminal behavior.  By the conclusion of the Challenge, the IRS press release stated that each country identified specific companies that will be a part of their investigations.

The IRS press release also touted two successes this month resulting from J5 collaboration – the early-March indictments of the CEO and an associate of Sky Global on charges that they participated in a criminal enterprise that facilitated the transnational importation and distribution of narcotics through the sale and service of encrypted communications devices, followed by the ten-count indictment earlier this week charging Jason Peltz with securities fraud, money laundering, tax evasion and a variety of other offenses.

This appears to be just the beginning of the J5’s coordinated efforts to clamp down on the use of the FINTech  industry by those seeking to evade taxes and committing financial crimes. For more on the J5, visit the IRS website.

High-Tech Violations of International Human Rights

The United Nations was born in the aftermath of the atrocities committed leading up to World War II. The United Nations Charter is plain in its support for the development of international human rights protection.

The most fundamental human right is the right not to be killed by another human being.

Indeed, Article 6.1 of the International Covenant on Civil and Political Rights, for example, provides: “Every human being has the inherent right to life. This right shall be protected by law. No one shall be arbitrarily deprived of his life.”
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The Failure of International Organizations to Prevent War

World War I was supposed to be the “war to end all wars.” And the League of Nations and the subsequent United Nations were designed to keep countries at peace. But unfortunately, wars are still part of the international landscape, including the emerging threat of cyberwarfare.

As the UN prepares to celebrate its 69th anniversary October 24, let’s take a look at how it and the League of Nations have tried — and often failed — to prevent conflict between nations. Continue reading “The Failure of International Organizations to Prevent War”

States v. Nations: An International Challenge

The fact that states and nations do not line up neatly on the geographical global map continues to create international problems.

Under the Montevideo Convention of 1933, a state is defined as “an entity that has a defined territory and a permanent population under the control of its own government, and that engages in or has the capacity to engage in, formal relations with other such entities.”

There is no minimum size for a state. Monaco, which is only 1.5 square kilometers, is a state. The Vatican, with a population of only about 300 people, also is considered a state. Continue reading “States v. Nations: An International Challenge”

It’s a Small World After All

It just is not realistically possible for countries to be isolationist in this current era. Indeed, the entire world is interconnected by the Internet and other technologies.

Consider this fact that shows how the world is becoming smaller as we group together even more closely: 3,000 years ago there were about 600,000 independent world communities; now there are fewer than 200 such communities.

And when a disease breaks out like Ebola in Africa, with our means of transportation, such a disease can show up and infect people in distant other places.

Continue reading “It’s a Small World After All”