5. Conclusions and Recommendations

This report has described how tax authorities and law enforcement authorities (LEAs) are able to complement one another when they no longer work in silos, which they are still doing in many jurisdictions. Improving their cooperation will lead to progress in the fight against both “regular” financial crime and tax evasion. To improve cooperation between the tax agencies and the LEAs engaged in this effort, countries should consider the following recommendations:

1. Overcome legal barriers to information exchange by

• Facilitating cooperation through developing a legislative framework formally linking tax crimes to broader financial crimes, particularly by making tax evasion a predicate offense of money laundering and prosecuting such cases; • Enacting and implementing legislation authorizing or mandating tax authorities to disclose to prosecutors or LEAs transactions found during tax audits for which there is a reasonable basis to believe that they facilitate the commission of financial crimes; • Enacting and implementing legislation authorizing or mandating LEAs to disclose to tax authorities information and evidence found during criminal investigations when there is a reasonable basis to believe that tax evasion is committed; • Developing internal standard operating procedures governing the interagency exchange of information, specifying the nature of information to be shared, the time frame, and the exact steps to follow; and • Removing legal and administrative barriers to international cooperation between the relevant agencies and the tax authorities and financial intelligence units (FIUs) of counterpart countries.

2. Enhance the availability and collection of pertinent information by

• Enacting and implementing legal provisions to recover unexplained wealth, illicit enrichment, or unjustified resources to facilitate the recovery of assets and taxes; • Ensuring that tax forms for politically exposed persons and their close relatives include questions on whether they submitted asset disclosure forms and ensuring that tax authorities and LEAs can access these forms easily;

• Addressing tax avoidance strategies through mandatory disclosure rules (MDRs) by providing information about the types of structures adopted and striking a balance regarding the potential for disclosure to result in self-incrimination of intermediaries (noncompliance with

MDRs should result in the communication of this information to the relevant authorities as well as dissuasive penalties); and • Introducing beneficial ownership frameworks that – Cover all legal arrangements and persons, – Align definitions for all agencies obliged to collect relevant information, – Require key stakeholders to collect beneficial ownership information and enforce compliance with obligations, – Establish a systematic exchange of information between tax authorities and LEAs on beneficial ownership to support cross-verification through information matching, and – Develop the use of centralized digital registries that facilitate more cooperation between agencies and identify broad parameters for ascertaining who has effective control over legal persons and legal arrangements.

3. Overcome operational barriers to interagency exchange of information by

• Adopting formal models for cooperation between agencies such as memoranda of understanding, service-level agreements, joint investigative teams or joint task forces, and joint training interventions, among other things; • Providing the relevant agencies with training on the benefits and available methods of interagency cooperation, making them aware of red flags indicating offenses of interest to counterpart authorities and involving key representatives from each relevant authority in a network of formal and informal relationships; • Establishing secure systems for communications and exchange of information between agencies and reinforcing the security of platforms, confidentiality, and data protection, including robust measures to avoid the misuse of data; • Supporting informal channels of cooperation between agencies where ongoing relationships may be established by way of interactions during secondments of staff, use of shared databases, shared intelligence or fusion centers, and joint training sessions; • Establishing joint task forces to permit ongoing exchange and cooperation in dealing with recurring or larger crimes that involve complex layers or multiple individuals and establishing clear mandates and objectives for the task forces to ensure continued access to the shared expertise; and

• Conducting international investigations using fully integrated and coordinated interagency mechanisms maximizing the use of both informal and formal processes for the exchange of law enforcement and tax information.

4. Overcome cultural and political barriers by

• Balancing efforts to exchange information between tax and law enforcement agencies with confidentiality, privacy, and data protection concerns to promote trust and cultural buy-in; and • Using all relevant sources of information and international instruments to conduct international cooperation in tax matters and corruption and money laundering investigations.

Countries may also consider

• Introducing laws to expand information gathering possibilities, including those related to mandatory disclosure of the use of aggressive tax avoidance schemes; and • Adopting unexplained wealth or illicit enrichment laws that could provide authorities with the power to query a person’s income or wealth that has no known sources within a sound legal regime and robust good governance framework.