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I
Taxing Crime
Therefore, in many countries, tax authorities should at least be encouraged not only to identify, report, and investigate tax avoidance, but also to refer cases where the tax violations appear to be a warning sign of other criminal offenses, including corruption, bribery, embezzlement, and money laundering.8 Although ensuring tax compliance will obviously remain the primary goal of tax officials, it is imperative that they also share a responsibility for fighting crimes more broadly. This objective is generally pursued by establishing a legislative mandate to report suspicious cases to the appropriate LEAs. Both the legislation and the guidance provided to tax authorities should require more diligence on their part. To overcome legal barriers and to generate the political will required to enact legislative change, it is necessary to raise the awareness of policy makers and legislators about the gains such an expansion of mandates will produce. It is a good practice to enact special legislation mandating or authorizing information sharing to avoid uncertainties about and challenges to the legitimacy of criminal investigations based on transmissions from tax authorities (a topic explored later in this chapter). Ensuring the integrity of all agents involved is another important precondition. This report does not go into detail about the mechanisms needed to ensure the integrity of agents, but, without a doubt, the relevant agencies must be staffed with professionals having the utmost integrity and competence. 2.4 Legal Frameworks for Cooperation at the Domestic Level A building block for successful interagency cooperation is an appropriate legal framework. In this context, creating the overall framework for information sharing as well as specific provisions for beneficial ownership are essential to ensuring effective cooperation.
2.4.1 Creating the Legal Conditions for Information Sharing First and foremost, domestic laws must enable information sharing between agencies in the same jurisdiction.9 Beyond exchanging information, it is also worthwhile to consider laws that better enable information gathering, such as the inclusion of tax crimes as predicate offenses to money laundering, mandatory disclosure rules (OECD 2015b), and legislation targeting unexplained wealth orders (UWOs)10 and whistleblower protection. Many such laws are now more widespread, and some even are accepted as best practice. 2.4.1.1 LAWS ENABLING INTERAGENCY INFORMATION SHARING As global recognition of the links between tax crimes and other financial crimes has increased, efforts to implement laws that enable the relevant government agencies to share information have also accelerated (OECD and World Bank 2018). The inclusion of tax crimes as predicate offenses to money laundering
