Officials from the Internal Revenue Service’s Criminal Investigation division are meeting with tax enforcement leaders from Australia, Canada, the Netherlands and the United Kingdom this week in an annual challenge to share information and strategies and investigate leads for combating tax crimes tied to technologies like cryptocurrency.
The Joint Chiefs of Global Tax Enforcement, also known as the J5, are holding their annual Cyber Challenge meeting, this year in Brisbane, Australia, bringing together over 30 investigators, analysts, crypto experts and data scientists from the five member agencies and each of the five country’s Financial Intelligence Units for five full days of lead development. The mission is to optimize data from a variety of open and investigative sources available to each country, including offshore account information.
Representatives from each country are divided into teams where they use analytical tools and new data provided to them through the challenge to generate criminal leads and identify tax offenders who use cryptocurrency. Each country uses data and tools available to all J5 countries to develop leads exchange tools, identify trends and determine methodologies. This is the sixth Cyber Challenge. Each year, the event focuses on a different set of challenges, and this year the investigators examined over-the-counter cryptocurrency trading desks, online cryptocurrency casinos and cryptocurrency payment platforms.
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The J5 looked at money laundering and tax evasion risk factors associated with such businesses. More than 30 leads were prepared or developed by the J5 member countries and their partner Financial Intelligence Units as part of the challenge.
“These challenges have been incredibly fruitful over the past few years, and we’ve been able to replicate the model that we’ve used in other areas of our operations,” said IRS Criminal Investigation chief Guy Ficco during a press conference. “In a sense, it’s about innovation, coordination and a whole lot of pressure that we put on these people. We basically take the smartest people in government and business and proverbially put them in a room and lock the door and see what comes out. What’s been coming out has been some really good stuff over the last couple years and this year as well. These challenges, though, really do serve as an excellent example of international collaboration.”
He noted that in previous challenges, the J5 uncovered a $1 billion Ponzi scheme, as well as dozens of other leads that have turned into real investigations every year. Several investigations from previous challenges are currently underway and have proven invaluable in helping the J5 combat international financial crimes. This week’s challenge focused on data involving over-the-counter cryptocurrency trading desks, online cryptocurrency casinos and cryptocurrency payment platforms.
“We began this week with more than 30 leads from the United States and our partner countries, and that’s a great starting point that will make a huge impact on future investigations,” said Ficco. “In addition to lead generation, we also use these challenges to produce advisories for the financial and tax industries, and as we have done in years past, the J5 hopes to issue advisories about over-the-counter cryptocurrency trading desks and cryptocurrency payment processors based upon information that was exchanged during this challenge.”
The J5 has experienced some of its biggest operational successes in the past several months, Ficco added, including the indictment in July of a former defense contractor and his wife for a decadelong scheme to defraud the United States and evade taxes of more than $300 million in income. That same month, the J5 released its first ever
The crimes investigated by the group have a far-reaching impact across the globe. “What we’re looking to do is collectively and together work the largest and most impactful cyber crime investigations related to cryptocurrency that we can in the entire world,” said J5 cyber group lead Michael Wheeler, a special agent with IRS Criminal Investigation. “Our scope certainly focuses on our tax evasion, money laundering and other related financial crimes that affect our core J5 member countries. But in today’s global environment, in the cybercrime landscape, money readily and quickly moves from country to country. Our investigations include conduct within our J5 member countries, but also beyond.”
The 30 participants have been busy working on over 30 different leads in this year’s challenge. “We continue to work on impactful leads today, and we’ll continue doing that going forward,” said Wheeler.
One of the leads relates to a cryptocurrency service provider with over $1 billion in volume that shows indications of tax evasion and money laundering. Other leads relate to darknet markets, as well as over-the-counter cryptocurrency trading desks, crypto casinos and crypto payment solutions providers, in keeping with the theme of this year’s challenge.
Planning for this year’s challenge started well ahead of this week, including absorbing the lessons learned from past challenges.
“What we wanted to do for this year is really take advantage of the full five days, and we’ve done that,” said Wheeler. “We made sure that we collected our leads beforehand, shared our leads well in advance of arriving here in Brisbane, so that information can be shared across the J5 member agencies, amongst our Financial Intelligence Units, and any information responsive to those leads could be collated and shared well in advance. And we can actually come together here in Brisbane with some background, with some context on these leads, and really just dive into working on them side by side, and that’s really what we accomplished from day one.”
The Australian Taxation Office hosted this year’s Cyber Challenge. “This Challenge builds on the momentum of previous years where our top investigators and experts come together to collaborate and identify quality leads to stop cybercrime cryptocurrency fraud,” said John Ford, deputy commissioner at the Australian Taxation Office, in a statement. “This is the power of the J5 alliance. Together with our public and private specialist partners we are getting ahead of the criminals in a rapidly changing cyber ecosystem.”
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