10
I
Taxing Crime
operate in the informal economy and so are not registered for tax purposes. By sharing the relevant CTRs with tax authorities, financial institutions enable those authorities to more easily identify businesses operating in the informal economy and bring them into the tax framework. Anticorruption investigators may also come across information that would be useful to tax authorities as strong indicators of potential accompanying tax crimes. Although anticorruption investigators routinely investigate suspicious assets or transactions involving public officials, family members, or their associates that are not consistent with their known income, such potential corruption often also has a tax component. Indeed, assets and transactions concealed to obfuscate their illicit source or purpose (and posing a tax liability) are also unlikely to be declared to the tax authorities. Anticorruption investigations may even uncover hidden accounts or “parallel” accounting records used by companies to operate slush funds, which can reveal an array of funds and transactions unlikely to have been declared for tax purposes. For example, investigations into bribes paid by a company through offshore accounts may also uncover the use of those accounts to make other concealed payments, such as undeclared bonuses to executives. One benefit of sharing such information with the tax authorities is that in cases in which all elements required to prove a corruption offense cannot be met and the corruption charge is unlikely to succeed, the government may at least succeed in reclaiming overdue unpaid taxes on the transactions or funds, along with interest and penalties (OECD and World Bank 2018). Moreover, when LEAs use special investigative measures such as searches and electronic and telephone interceptions (wiretapping), they may uncover evidence of crimes, including tax crimes, tax administrative violations, or even relationships that may be relevant to determining the effective control of an entity or account. In addition to enabling LEAs to identify possible corruption and facilitators who often have criminal assets in their name, this information can be very useful to tax authorities. 2.3 Preconditions for Information Sharing: Overcoming Legal, Operational, and Cultural Barriers Demonstrating the practical relevance and the added value of cooperation at each stage of pursuit of crime (including investigation, prosecution, and recovery) is a crucial prerequisite to overcoming commonly cited legal, operational, and cultural barriers and establishing more effective interagency cooperation (OECD and World Bank 2018). To do so, it is useful to map out the mandate of the agencies concerned (such as tax authorities, FIUs, and LEAs) and the types of information the agencies collect (Schlenther 2017). From this, it is possible to identify the overlaps and interdependencies between agencies (Schlenther 2017), making it clearer how much more effectively each agency could carry out
