Category Archives: Tax Evasion

What’s Old Is New Again: DOJ’s New Corporate Criminal Enforcement Policies Equip Prosecutors with More Tools and Information

by Alicyn Cooley and Matthew Levine 

The approach of the Biden Justice Department to corporate and financial crime continues to emerge—or re-emerge. Corporations with federal criminal exposure must now, again (PDF: 463 KB), provide information on all individuals responsible for misconduct in order to receive cooperation credit from the Department of Justice. And corporations which resolve that exposure pursuant to Deferred Prosecution Agreements (DPAs) or Nonprosecution Agreements (NPAs) with DOJ will also now face the increased likelihood of independent monitorships—the use of which waned considerably in recent years, even before the Trump administration explicitly discouraged imposing them in 2018 (PDF: 4.9 MB).

In keynote remarks delivered yesterday at the American Bar Association’s National Institute on White Collar Crime, Deputy Attorney General Lisa Monaco announced these and other new DOJ policies and initiatives, all of which are reminiscent of the Obama Administration’s approach to corporate criminal enforcement. In particular, companies and practitioners should take note of DOJ’s stated commitments to: (1) equipping prosecutors with more information and tools—including monitors—to root out corporate crime and ensure corporations comply with the law and the requirements of their agreements with DOJ; (2) proactively using data accumulated about past corporate resolutions, including taking into account corporations’ full criminal and regulatory histories; and (3) standardizing approaches to corporate enforcement across DOJ and the U.S. Attorneys’ Offices.

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Three Key Takeaways from the DOJ Fraud Section’s 2020 Annual Report

by Andrew Weissmann and Tali R. Leinwand

Last week, the Fraud Section, part of the U.S. Department of Justice’s (DOJ’s) Criminal Division, released its annual year-in-review report.[1] In this post, we highlight three key takeaways from the 2020 report.

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Congress Passes Anti-Money Laundering Legislation Banning Anonymous Shell Companies

by Andrew Weissmann, David Bitkower, Tali R. Leinwand, Sarah F. Weiss, E.K. McWilliams, and Wade A. Thomson

Last week, a law designed to thwart the use of US shell companies by drug traffickers, terrorists, foreign adversaries, and others seeking to shield the provenance of their funds cleared Congress with bipartisan support. The Senate joined the House in overriding President Donald Trump’s veto of the National Defense Authorization Act for Fiscal Year 2021 (NDAA), which includes a variety of reforms to anti-money laundering (AML) laws.

The key reform requires certain companies to disclose their ultimate owners to the Treasury Department’s Financial Crimes Enforcement Network (FinCEN), making it harder for certain criminals to manipulate shell companies to launder money or evade taxes.[1] Although the law has various loopholes, it enhances the government’s ability to detect and deter the use of shell companies to commit crime.

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DOJ Issues Cryptocurrency Enforcement Framework

by J. Christopher Giancarlo, Elizabeth P. Gray, Justin L. Browder, Conrad G. Bahlke, and Richard M. Borden 

On October 1, 2020, the Cyber-Digital Task Force (“Task Force”) of the United States Department of Justice (“DOJ”) issued a Cryptocurrency Enforcement Framework (“Framework”).[1]  The Framework summarizes threats posed by illicit uses of cryptocurrency, the applicable laws that the DOJ and other federal regulatory agencies apply in seeking to identify and mitigate such threats, and the ongoing challenges faced by the DOJ in prosecuting criminal conduct in the digital asset ecosystem.  The Framework details an extensive array of federal, state, and international laws and regulations that apply to cryptocurrencies and reflect the emerging approach to cryptocurrency regulation and enforcement by federal and state governments.  While the extensive patchwork of regulations suggests a need for harmonization, the Framework refrains from calling for any new or amended legislation, regulation, or other rules.  It also does not discuss the government’s use of sophisticated technology to track cryptocurrency transactions and develop its cryptocurrency-related cases.  Importantly, the Framework does not advocate for legal or regulatory suppression of cryptocurrency, as some initial commentators suggested.

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France Boosts Tax Fraud Prosecution

by Antoine F. Kirry, Frederick T. Davis, Eric Bérengier, Alexandre Bisch, Robin Lööf, Aymeric D. Dumoulin, Alice Stosskopf, Fanny Gauthier, and Line Chataud

On October 23, 2018, the French Parliament enacted a law aimed at combatting fraud (the “Law”).[1] The most innovative provisions of the Law change key procedural aspects of tax law enforcement, which is likely to result in an increased number of criminal tax fraud prosecutions against both individuals and legal entities. The Law also addresses customs and social security frauds.

Tax Fraud Prosecution: Open the Floodgates Continue reading →

English Litigation Privilege in Internal Investigations: Not Quite Dead Yet?

by Kelly Hagedorn

Following the decisions in The RBS Rights Issue Litigation[1] and Serious Fraud Office v Eurasian Natural Resources Corporation Limited[2] (“ENRC”), it was thought that the prospect of claiming legal professional privilege in English proceedings over interview memoranda generated during internal investigations was slim (see our client alert on those two cases (PDF: 172 KB)).  However, a recent decision of the English High Court in Bilta (UK) Limited and Others v (1) Royal Bank of Scotland Plc (2) Mercuria Energy Europe Trading Limited[3] (“Bilta”) has refused the disclosure of interview memoranda on the basis of litigation privilege, providing a glimmer of hope for corporates who seek to protect such documents from disclosure. Continue reading →

External Statistics, Undeclared Assets held Abroad and Tax Evasion

by Valeria Pellegrini, Alessandra Sanelli, and Enrico Tosti

Offshore financial centers and tax havens remain a popular means for businesses and wealthy individuals to reduce their domestic tax burdens by keeping money abroad. This issue has attracted significant attention from policy makers, who have attempted to eliminate the “international tax gap” — lost domestic tax revenue due to undeclared assets held abroad — by enhancing information exchange among national tax authorities. The value of undeclared assets held abroad has been estimated to be in the range of $5-$7 trillion. But due to the inherent nature of tax evasion — non-reporting and concealment of assets — there is a lack of specific information about the size of the international tax gap and the role that offshore financial centers and tax havens have played in widening that gap.

In a recent study published by the Bank of Italy, we have tried to provide new insight on the magnitude of the international tax gap by analyzing investment position and balance of payments statistics. The paper provides an overview of how tax havens are used as hubs in international financial transactions. Continue reading →