48
I
Taxing Crime
criminal tax evasion. Because criminal investigators or prosecutors are often authorized, and sometimes obliged, by law to disclose potential tax violations to tax authorities, this information will enable tax authorities to enforce their mandate. As emphasized in chapter 2, anticorruption authorities, financial intelligence units (FIUs), or police investigating nontax offenses may obtain information relevant to an ongoing tax investigation or that identifies a potential tax crime. In 2017, a review conducted of 50 jurisdictions by the Organisation for Economic Co-operation and Development (OECD) established that most countries provided gateways enabling police and public prosecutors to share information with tax authorities or for direct access (OECD 2017b). Successful prosecution of tax offenses or recovery of taxes can be the result of information or evidence collected by criminal investigators, as seen in high-profile cases 7 and 8 in the appendix, and some countries have specific arrangements that promote this type of coordination—see box 3.3 for a country example. Charging a defendant with money laundering when tax fraud is possibly the source of the laundered assets has another advantage in that it may help detect and prove the role of facilitators who help construct complex transactions, arrange the seemingly legitimate investment of illicit funds, and exploit tax havens and jurisdictions with weak anti-money laundering regimes (Blackham 2017). Choosing to bring a money laundering charge allows the use of specific investigative measures authorized by prosecutors or judges in the context of organized crime cases. Reliance on these measures, including wiretapping, electronic surveillance, proactive searches and seizures, and undercover operations, may be more challenging and sometimes impossible for both legal and practical reasons in the absence of money laundering charges and in cases of less serious incriminations.
BOX 3.3
When Tax Authorities Benefit from the Input of Criminal Investigators and Prosecutors
In Kenya, criminal tax investigations are carried out in a hybrid system whereby the tax audit investigators work jointly with police officers attached to the tax authority. The charges are prepared with technical input from tax auditors, internal tax investigators, and in-house lawyers. Concurrence is obtained from the director of public prosecutions on tax offenses before the police undertake the final arrest and arraignment in court. In other cases, the tax authority receives evidence collected by other agencies such as the anticorruption agency, financial intelligence unit, and asset recovery agency, among others, under the Multi-Agency Taskforce framework. This way, the tax authority takes full advantage of the input of criminal investigators and prosecutors.
