Author: oselle Selva (Selva Ozelli), international tax lawyer and auditor who writes frequently about tax, legal and accounting issues for TaxNotes, Bloomberg BNA, and other publishers.
Concern with the increasing use of cryptocurrencies in illegal activities are becoming more and more — almost competes with stories about volatility.
In January more than sixty financial investigators from Interpol and Europol from 30+ countries participated in a seminar on cryptocurrency to discuss measures that can be taken to combat the abuse of digital currencies, criminals.
According to Rob Wainwright (Rob Wainwright), the head of Europol, every year through cryptocurrency laundered about $5.5 billion.
Although the block chain provides a public Ledger of all transactions, the criminals use so-called cryptohalite mixers (mixing services) to hide the trail and the original source of funding.
The new cryptocurrencies such as Cloakcoin, Dash, PIVX and Zcoin, services mix is built into the blockchain network. Monero, a cryptocurrency favorite of drug traffickers, due to the privacy-oriented design of the blockchain provides complete anonymity without mixers.
Therefore, it is necessary to make greater efforts to monitor cryptocurrency with features of privacy or streptomitsetov, as they can impede the collection of taxes and the fight against money laundering.
After this seminar, many regulatory bodies worldwide, including USA, EU, Japan and Australia, have intensified the fight against “financial crimes” using cryptocurrency.
The European Union
A Committee of 45 members of the European Parliament will launch an investigation in cases of money laundering and tax evasion related to the digital economy.
7 February 2018, the EU Parliament voted to establish a Committee, tentatively named “Taxe 3”. It will investigate tax breaks offered by Portugal, Italy, Malta, UK, Cyprus and British possessions outside the United Kingdom, and overseas territories.
Because the power to levy taxes is Central to the sovereignty of the member States of the EU countries provided the EU only limited competence in this area, therefore, the right Taxe 3 investigate financial crimes for the next twelve months will be confirmed by plenary vote in March.
Service for investigation of financial crimes of the Department of the Treasury (The US Department of the Treasury’s Financial Crimes Enforcement Network, FinCEN) regulates cryptocurrency exchanges in accordance with the current legislation for companies providing money transfer services. It also requires U.S. residents who have a financial interest in foreign accounts (including accounts in bitcoin), submit a report entitled “FinCEN 114” in that case, if at some time during the calendar year the total amount in the accounts exceeded $10 000. FinCEN warned that “aggressive” prosecuting people who evade paying taxes with cryptocurrency, and platforms that have no reliable internal controls against money laundering — even those who are outside the United States.
The enforcement division of the IRS (Internal Revenue Service-Criminal Investigation, the IRS-CI) announced that it has strengthened its state ten new investigators to simplify the tracking of people who evade paying taxes with cryptocurrency.
Immigration and U.S. customs (Immigration and Customs Enforcement, ICE) reported that the use of undercover agents to infiltrate the crypto currency exchange, which usually laundered with the help of mixers.
After hackers stole exchange Coincheck $530 million (this is considered one of the biggest liberogrande in history), the financial services Agency (Financial Services Agency, FSA) initiated inspections in all of cryptocurrency exchanges.
The Australian reporting and analysis centre transactions (Australian Transaction Reports and Analysis Centre, AUSTRAC) December 13, 2017 amended the legislation to combat money laundering and the financing of terrorism with the use of cryptocurrencies. In accordance with these amendments cryptomerias need to more accurately identify customers and to report suspicious transactions. AUSTRAC is currently undertaking consultations with representatives of industry.