OECD – EFFECTIVE INTER-AGENCY CO-OPERATION IN FIGHTING TAX CRIMES AND OTHER FINANCIAL CRIMES THIRD EDITION. Part I: Analysis, Key Findings and Recommendations Part II: Country Information. 1. 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. 2. 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. 3. 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. 4. In its 20092 and 20103 Recommendations, the OECD advocated greater co-operation and better information sharing between different government agencies involved in the 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. 5. 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. 6. 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 OECD 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 and was followed by a second edition launched as the third OECD Forum on Tax and Crime, held in Istanbul in November 2013. These reports were very well received by countries and international organisations, and have 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 third edition of the Rome Report builds on this success with two key enhancements. 7. In 2015, the United Nations agreed 17 Sustainable Development Goals as part of the 2030 Agenda for Sustainable Development. These Goals include a specific target of substantially reducing corruption and bribery in all their forms. The Ministerial Council Statement issued following the Meeting of the OECD Council at Ministerial Level, held in Paris on 1-2 June 2016, expressly supported the Sustainable Development Goals, and specifically emphasised the importance of dealing with fraud and tax evasion by strengthening the international tax system and addressing corruption and money laundering. In light of these international priorities and clear message from the OECD Council, the scope of the Rome Report for this edition has been extended to include collaboration involving anti-corruption authorities. Chapter 2 now contains a description of the organisational models for corruption investigation used in different countries, while Chapter 3 analyses the legal gateways which exist to enable authorities responsible for the investigation of corruption offences to share information with other agencies for use in the fight against financial crime, and for these authorities to obtain relevant information from other agencies. In addition to this, since the first edition the number of countries that have provided information and are covered in the report has increased from 32 to 51. 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, Ecuador, El Salvador, Estonia, Finland, France, Georgia, Germany, Ghana, Greece, Hungary, Iceland, India, Ireland, Israel, 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. 8. This third edition of the Rome Report was presented and launched at the fifth OECD Forum on Tax and Crime, held in London on 7-8 November 2017 and hosted by HM Revenue and Customs. 9. 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 in domestic inter-agency co-operation will also have a positive impact on crossborder international co-operation. While this report is limited to domestic co-operation, work on improving the effectiveness of international co-operation is also underway in the TFTC.
OECD (2017), Effective Inter-Agency Co-operation in Fighting Tax Crimes and Other Financial
Crimes – Third Edition, OECD Publishing, Paris.