Money Laundering and (not or) Tax Evasion

A review – J. C. Sharman. (2011). The Money Laundry: Regulating Criminal Finance in the Global Economy. New York. Cornell University Press. The author ‘…is Professor in the Centre for Governance and Public Policy, Griffith University.’

Reading the book jogged my memory about the International Compliance Association Diploma in Anti Money Laundering (AML) completed a few years back. I took it over a couple of years so I experienced its evolution to include more focus on tax evasion.

Well, it was incredulous to find on p.32 that Swiss law does not necessarily treat tax evasion as a criminal offence but merely an administrative issue. You can cross reference the details at this Transparency International (Switzerland) page. {with the following definitions – Tax Fraud n. [effort to reduce the amount of tax payable by means of a false declaration of income], a criminal offence. Tax Evasion n. [the taxpayer ‘forgets’ to declare part of his/her income], a violation of the law subject to administrative sanctions}.

Though AML systems can aid the fight against tax evasion, in the (roughly) ten years before 2011, they were largely not utilised. (p.32) There was however a sudden spike in tax information sharing (during 2009/10) as terrorist financing; tax evasion; and money laundering became seen in the same light. Yet, it appears those efforts were not truly effective. The recent expose by the so called Panama Papers (leaked documents from the law firm Mossack Fonseca) has just led to the resignation of Iceland’s Prime Minister. Likewise, the Indonesian government was considering on 6 April, the idea of luring back tax revenues (see the video on Channel Newsasia) by offering lower tax rates for evaders…

The ‘…most common international tax evasion is holding share portfolios in the name of foreign shell companies to avoid capital tax gains…'(p.91); and unfortunately it is the US which leads the pack in generating these shell companies at 2 million a year. (p.72)


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