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Puerto Rico bank suspended in tax evasion probe
The Tax Office and law enforcement agencies have conducted more than 100 investigations into Australian entities linked to a Puerto Rico-based bank that had its operations suspended.
Westpac, the Perth Mint and hundreds of Australian citizens have previously been linked to Euro Pacific International Bank founded by American stockbroker and financial analyst Peter Schiff. The bank reportedly had about 400 Australian clients.
ATO Deputy Commissioner Will Day: “Offshore hideaways are being targeted.” Alex Ellinghausen
Its activities were suspended by local authorities on Friday. The move comes after the separate Operation Atlantis investigation by the Joint Chiefs of Global Tax Enforcement – the national tax and revenue authorities of Australia, the US, Canada, the UK and the Netherlands, also known as the J5.
In a pre-dawn news conference, the group said the Office of the Commissioner of Financial Institutions of Puerto Rico had issued a suspension order over internal compliance control measures and low capital levels.
Will Day, Australia’s deputy tax commissioner, said about 100 Australian individuals and entities had already been investigated as a result of the lengthy Operation Atlantis, with about half requiring additional action.
“We do have criminal investigations ongoing, and that is working with agencies like the Australian Federal Police and the Australian Criminal Intelligence Commission through the serious financial crimes taskforce, but for those operational sensitivities, I can’t give you any more details at this stage,” Mr Day said.
“In some cases we have satisfied ourselves the tax obligations are being met, and in others we’ve raised additional tax and penalties. Our operations are continuing.”
Euro Pacific had previously been named as an Australian Priority Organisation, a designation by the Australian Criminal Intelligence Commission over possible organised crime links.
Mr Day said the J5 group had boosted the ATO’s data analytics and intelligence sharing capability, leaving no place for individuals seeking to hide their money across the globe to dodge tax obligations.
“Having an offshore bank account does not necessarily mean a taxpayer is not meeting their tax obligations. However, for those who do the wrong thing and do not declare offshore income, our message is clear,” he said.
“With the J5 members, and beyond, offshore hideaways are being targeted.”
Previously the J5 had announced a global day of action against an unnamed financial institution suspected of facilitating money laundering and tax evasion. Authorities believed the institution was using a system of numbered accounts to help customers to conceal and transfer wealthy anonymously, potentially facilitating tax evasion and money laundering.
Natalia Zequeira Díaz, Puerto Rico’s commissioner of Financial Institutions, said the Euro Pacific bank had “a long history of non-compliance”.
Jim Lee, the US International Revenue Service’s criminal investigations chief, told reporters he could neither confirm nor deny whether Mr Schiff was under investigation.
Details of individual investigations are routinely kept confidential by international authorities.
While Australia shares security intelligence with the US and the UK through the historic Five Eyes alliance partnership, and the ATO routinely shares tax information under tax treaties, the J5 group was established to help fill a gap sharing resources to tackle serious financial crime.
The J5 grew out of an OECD meeting in Paris in 2017, which coincided with the publication of the Paradise Papers, documents from British Virgin Islands law firm Appleby obtained by the International Consortium of Investigative Journalists.
Comment was sought from Euro Pacific Asset Management and Mr Schiff.
