Financial Crime: Inter-Agency Models

A number of key agencies are involved in the different stages of combating financial crime, and the organisational models adopted by these agencies vary from country to country. These models form the framework around which arrangements for interagency co-operation are built.

Taking into account the different agency models applied, the Organisation for Economic Co-operation and Development (OECD) report Effective Inter-Agency Co-Operation in Fighting Tax Crimes and Other Financial Crimes identifies the key factors involved in enabling effective inter-agency co-operation.

 

Organisational models for agencies fighting tax and other financial crimes

Strategies for combating financial crimes comprise a number of key stages, including the prevention, detection, investigation and prosecution of offences, and the recovery of the proceeds of crime. Depending upon the circumstances, these strategies can involve a number of government agencies. A range of organisational models exist for structuring each of these agencies and allocating responsibilities amongst them.

Model 1 – The tax administration has responsibility for directing and conducting investigations. This is the model applied in Australia.

Model 2 – The tax administration has responsibility for conducting investigations, under the direction of the public prosecutor.

Model 3 – A specialist tax agency outside the tax administration, typically but not always under the Ministry of Finance, has responsibility for conducting investigations.

Model 4 – The police or public prosecutor has responsibility for conducting investigations.

 

Inter-agency models for sharing information

In the course of their activities, different government agencies collect and hold information on individuals, corporations and transactions which may be directly relevant to the activities of other agencies in combating financial crime. Mechanisms to enable this information to be shared improve the prevention and detection of financial offences, enable investigations to be conducted more effectively and efficiently, result in faster and more successful prosecutions, and increase the likelihood of the proceeds of crime being recovered. In order for information to be shared, legal gateways must exist between the relevant agencies.

The OECD report presents key findings in relation to inter-agency sharing of information. The results vary significantly by country, but the below presents a general picture of the situation in most countries. Even where information gateways do commonly exist, there are typically variations in approach by country such as information only being provided on request, or a party having direct access to information.

 

Information held by the tax administration

  • Most countries have legal gateways to enable the tax administration (ATO in Australia) to share information obtained for the purpose of a civil tax audit or assessment with agencies conducting tax crime investigations and with the customs administration.
  • There appear to be barriers to the ability of tax administrations to share information with the police or public prosecutor (CDPP in Australia) in non-tax investigations.
  • The position is mixed regarding the ability of tax administrations to share tax information with the Financial Intelligence Unit (FIU – AUSTRAC in Australia)

 

Information held by the customs administration

Most countries:

  • Have legal gateways to allow the customs administration to share information with the tax administration for the purposes of administering taxes.
  • Have legal gateways to allow the customs administration to share information with the agencies responsible for investigating tax offences.
  • Allow the customs administration to share information with the police or public prosecutor investigating non-tax offences.

 

Information held by the police or public prosecutor

Most countries have:

  • Legal gateways to enable the police or public prosecutor to provide information to the tax administration for the purpose of administering taxes, though there is often no obligation on them to do so.
  • Legal gateways to enable the police or public prosecutor to provide relevant information to agencies conducting tax crime investigations.
  • Legal gateways to enable the FIU to obtain relevant information from the police or public prosecutor.

 

Information held by the Financial Intelligence Unit (FIU)

  • The position with respect to the availability to the tax administration of FIU information for the purpose of making tax assessments varies significantly: some countries give the tax administration direct access or require the FIU to provide information spontaneously, while in other countries the FIU does not share information with the tax administration.
  • Legal gateways are in place in most countries to enable FIUs to provide information concerning possible tax offences to the agency responsible for investigating tax crimes, though in many cases the FIU is able to exercise discretion in deciding whether to provide information.
  • Most countries provide legal gateways to enable the FIU to provide information concerning suspected non-tax offences to the police or public prosecutor.
  • In the majority of countries the FIU may share information spontaneously with the authority responsible for corruption investigations.

 

Information held by corruption investigation authorities

  • In most countries, authorities responsible for conducting corruption investigations (such as the ICAC in NSW) are able to spontaneously provide information to the tax authority for use in administering taxes.
  • Most countries allow the corruption investigation authority to provide information to the authority responsible for investigating tax crime.
  • Most countries allow the corruption investigation authority to share information with the customs administration.

 

Information held by financial regulators

  • Financial regulators (such as APRA and ASIC in Australia) are generally not obliged to provide information to tax administrations for the purpose of assessing taxes.
  • Legal gateways exist in most countries to enable financial regulators to provide information concerning suspected tax offences or customs offences to the agency responsible for investigations.
  • Most countries have legal gateways for financial regulators to provide information to the police or public prosecutor with respect to suspected non-tax offences.
  • In most countries, gateways exist to allow financial regulators to share information with the FIU with respect to suspected money laundering or terrorist financing activity.

 

Models for enhanced co-operation

Sharing information is a necessary condition for inter-agency co-operation in combating financial crime. However, countries may go further and develop operational models that make the most effective use of gateways. Several countries have done so and have developed models for enhanced co-operation which enable agencies to work together to their mutual benefit.

The OECD report identifies a number of main models, all of which are used in Australia.

 

Joint investigation teams

These enable agencies with a common interest to work together in an investigation. In addition to sharing information, this enables an investigation team to draw on a wider range of skills and experience from investigators with different backgrounds and training. Joint investigations may also help to avoid duplication arising from parallel investigations.

 

Inter-agency centres of intelligence

These are typically established to centralise processes for information gathering and analysis for a number of agencies. They can focus on a specific geographic area or type of criminal activity, or have a wider role in information sharing.

 

Secondments and co-location of personnel

These are an effective way of enabling skills to be transferred while allowing personnel to build contacts with their counterparts in another agency. Seconded officials share their skills, experience and specialist knowledge while participating directly in the work of the host agency.

 

Training

Training programs provide an important opportunity for officials from different authorities to build personal relationships and benefit from each other’s experiences in dealing with common problems, as well as sharing information on trends in financial crime, guidance on investigative techniques and best practice in managing cases.

 

Other models

Other strategies include the use of shared databases, dissemination of strategic intelligence products such as newsletters and intelligence briefs, and joint committees to co-ordinate policy in areas of shared responsibility.

 

Conclusion

The knowledge and skills required to combat financial crime are often spread across a range of government agencies, including the tax administration, the customs administration, the FIU, the police and specialised criminal law enforcement agencies, the public prosecutor’s office, authorities responsible for corruption investigations and financial regulators. Successfully addressing financial crime requires effective co-operation amongst these parties, through information sharing and additional methods such as models for enhanced co-operation.

 

 

Nyman Gibson Miralis specialise in all aspects of white collar crime law, including laws concerning serious financial crime, money laundering, fraud, tax offences and bribery of foreign public officials. If you require assistance, contact one of our expert criminal defence lawyers.