We receive intelligence from a range of sources, including:
- concerned community members and advisers
- our domestic partner agencies
- our international alliances and tax treaty partners.
The nature of this intelligence can vary from a simple phone call to digital files, containing millions of electronic documents. The provision of digital files with the intent of exposing confidential information is referred to as a data leak.
We are dedicated to tackling tax crime committed by the small minority who attempt to evade their obligations at the expense of the rest of the community. We work with our domestic and international partners to manage domestic and offshore tax evasion risks and deter those considering entering tax evasion schemes and arrangements.
Data leaks explained
A data leak occurs when confidential information is provided by an individual or a network, and is shared with government agencies, media outlets, or other organisations. Usually, the individual or network intends to expose individuals, groups, or businesses linked to potential criminal activity.
Data leaks normally attract public attention because of the controversial nature in which the information was obtained and the possible content of the data. They are just one of many sources that we use to detect and take action against offshore tax evasion.
Intelligence we have derived from data leaks such as the Panama Papers, Paradise Papers, and Pandora Papers has assisted us, and governments around the world, in identifying those involved in offshore tax evasion arrangements.
We work collaboratively with the Joint Chiefs of Global Tax Enforcement (J5) and the Joint International Taskforce on Shared Intelligence and Collaboration (JITSIC) to share, review and assess intelligence sourced from data leaks.
Offshore structures and accounts
It is not illegal to have an offshore business structure or bank account and there are many legitimate reasons for doing so. Appearing in a data leak does not imply wrongdoing. Taxpayers included in data leak information have reasonable explanations for structuring their assets the way they do.
However, we do take action against instances of offshore tax evasion.
Offshore service providers and professional enablers
Services offered by offshore service providers (OSPs) are not illegal. However, some professional enablers offer services that are attractive to individuals and entities that look for ways to:
- conceal their beneficial ownership of assets, or
- transfer untaxed income between jurisdictions.
Professional enablers of tax crime operate across international jurisdictions that have a lower perceived risk and a reputation for strict secrecy provisions. This enables additional levels of layering and anonymity for clients.
A small number of Australians are on the lookout for ways to evade paying tax.
We’re also on the lookout for tax evasion signs. We have international and domestic intelligence-sharing relationships to uncover even the most intricately planned tax evasion schemes. Australia has international treaties and information exchange agreements with over 100 jurisdictions. The days of the secret tax haven are increasingly numbered.
Our partnerships
We are Australia's principal revenue collection agency. We administer the tax, excise and superannuation systems that support and fund services for Australians and deliver various social and economic benefits and incentive programs. We work with domestic and international partner agencies to tackle all forms of tax crime, including those from offshore tax evasion.
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Domestic partners
A large portion of the data files we obtain are provided to us as a result of the work we have done to develop information sharing policies and procedures under the legislation. We work in collaboration with government agencies, and domestic law enforcement agencies such as the:
- Australian Criminal Intelligence Commission (ACIC)
- Australian Federal Police (AFP)
- Australian Transaction Reports and Analysis Centre (AUSTRAC)
- Australian Border Force (ABF)
- Australian Securities and Investments Commission (ASIC)
We lead the joint-agency Serious Financial Crime Taskforce (SFCT). The taskforce brings together the knowledge, resources and experience of relevant law enforcement and regulatory agencies to identify and address the most serious and complex forms of financial crime.
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International partners
Transnational transactions are an unavoidable feature of a globalised economy that tax evaders use to conceal their income and assets. This does not just affect Australia; it is a problem for governments around the world.
Tax crime is a global problem that requires a global solution. We have developed international relationships with national revenue agencies to share intelligence and expertise in financial investigations to fight tax crime.
We have a range of tax treaties and agreements with dozens of countries to help facilitate the exchange of intelligence bilaterally and multilaterally. We are heavily involved in and support a number of international tax forums.
We collaborate with international tax administrations as a member of the Joint Chiefs of Global Tax Enforcement, also known as the J5. The group leads the fight against international tax crime and money laundering, including cryptocurrency threats and those who undertake or enable global tax evasion.
The other J5 members are:
- Her Majesty's Revenue and Customs (United Kingdom)
- Internal Revenue Service Criminal Investigation (United States)
- Canadian Revenue Agency (Canada)
- Dutch Fiscal Information and Investigation Service (Netherlands).
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How we use data leaks
Some people are tempted to think that a data leak by itself is enough to commence investigations or legal action, but this is far from the truth. For example, the Paradise Papers leak that occurred in November 2017 contained over 13.4 million files.
Not every file contained in the leak was relevant to tax evasion or tax crime, so understanding what is in a data leak requires considerable logistical and analytical modelling. While we respond to a data leak the same way we respond to information received from informants or other jurisdictions, large data leaks require a significant amount of man-hours and technical sophistication to process.
As technology advances, we are further refining and developing skills and techniques to analyse information more rapidly. Not everyone who has offshore entities, structures or bank accounts is linked to criminal activities.
It is legal to enter into some of these arrangements. But we know many people opt to use the secrecy afforded by offshore jurisdictions to hide their income. After the data has been assessed, we identify and review names, entities, addresses, phone numbers and link other details to form a complete picture of the behaviour of the individuals and entities contained in the leaks.
Once this is done, we determine which entities identified in the data leak are:
- acting lawfully and meeting their tax obligations
- associated with existing investigations
- appearing on our radar for the first time.
Data leak activities
We often have multiple audits or investigations in progress, most of which are not known to the public. There are some investigations which capture the interest of the community. The following cases are good examples of our approach.
Find out about
Panama Papers
What happened
In 2015 an anonymous source leaked 11.5 million financial and legal documents from Mossack Fonseca, the fourth largest offshore law firm operating globally with headquarters in Panama. The firm specialised in trusts, investment services, and international restructuring. The informant stated he had become disillusioned with what he considered to be the criminal complicity of the firm and provided the data to a German newspaper Süddeutsche Zeitung. The newspaper quickly realised it would not be able to review all 11.5 million documents and approached the International Consortium of Investigative Journalists (ICIJ) for assistance.
The database consisted of the names of 200,000 offshore entities and over 2.6 terabytes of data in the form of emails, bank accounts and trust documents. All this information was unstructured.
After the ICIJ conducted their own investigative work into the data, they published the first stories about the information contained in the data in April 2016. The stories revealed a number of linkages to high profile individuals from around the world.
At the same time, Joint International Taskforce on Shared Intelligence and Collaboration (JITSIC) member countries also obtained publicly available data, and incorporated the data with their own intelligence to identify risks.
What we did
As the chair of JITSIC, Commissioner Chris Jordan led members of the taskforce in developing a coordinated approach to investigating the Panama Papers. This collaboration clarified how resources would be combined and led to an agreed strategic approach on how to identify taxpayers using offshore institutions to evade tax.
The effect of JITSIC's information sharing agreements came into force. Overall, there were a total of 736 exchanges of information. This includes a number of unprompted exchanges, meaning a member country identified information relevant to a partner nation's investigations, and forwarded it on for their consideration. Individually, Australia delivered 52 outgoing exchanges in order to assist its partners with their own investigations.
Six months after the ICIJ published its first report about the Panama Papers, we made 15 unannounced access visits throughout Australia and informed the community that more than 100 taxpayers would be contacted and advised they were subject to compliance action. We also advised we had detected taxpayers and advisers linked to:
- tax evasion
- illicit fund flows
- corruption.
Results
During our early investigations, we discovered approximately 1,400 Australians who were identified in the Panama Papers. Upon further analysis, we found that around 600 individuals had already come forward to advise us of their tax position and meet their tax obligations. We then identified approximately 570 taxpayers to undergo compliance assessments.
Our work with the Panama Papers has resulted in significant numbers of compliance actions against tax evaders and vast improvements in our understanding of how to approach these investigations.
For the Panama Papers, as at 31 December 2022 there has been:
- more than $242 million raised in liabilities
- more than $60 million collected in cash
- more than 535 audits and reviews finalised.
International Consortium of Investigative Journalists
The International Consortium of Investigative Journalists (ICIJ) is not associated with any tax agencies. They are an organisation of international journalists who collaborate on in-depth investigative stories in order to produce articles about issues that cross international boundaries.
Swiss bank tax evasion involvement
What happened
In 2017, the ATO and other domestic agencies were notified by our international partners that they had information relating to a group of managers working with a prominent Swiss Bank who appeared to be facilitating tax evasion for their clients. Our international partner agencies had received information which indicated these managers were responsible for maintaining thousands of unnamed and numbered bank accounts.
In March 2017, authorities from the Netherlands and the United Kingdom executed arrest warrants on the facilitators of the secret bank accounts. After this, we notified the community that our partners had supplied us with intelligence connecting 346 Australians with the facilitators of these bank accounts.
What we did
As soon as we received the data leak from our European partners we commenced an investigation into the information contained in the data. The investigations team pursued multiple lines of enquiry using our existing intelligence resources to link individual taxpayers to the accounts provided to us.
Results
As a result of the investigation, we expanded the initial number of individual taxpayers suspected from 346 to 578.
During our investigation, we found the vast majority had complied with their tax obligations. However, we identified 106 taxpayers where a range of immediate compliance action was needed. Compliance action may include investigations of financial circumstances and audits to determine if they have used sophisticated systems of numbered accounts to conceal or transfer wealth to evade their tax obligations in Australia.
Working with our domestic partners, we have identified more than 5000 cross-border transactions worth more than $900 million in total. The transactions are undergoing further analysis to determine any potential offshore tax evasion risks.
Finally, the complex process of investigations occurred quickly and has resulted in further improving our investigative skills and capability. The success of our network of treaty partners, and our ability to share intelligence is a clear message to those who devise or participate in tax evasion schemes, you will be caught.
Paradise Papers
What happened
In 2017, media outlets around the world published stories about the largest data leak in history. The media attention concerned 13.4 million files downloaded from Bermudan law firm Appleby, Singapore based Asiaciti Trust, as well as corporate registries in 19 recognised tax havens around the world.
The leak came about as a result of a breach of Appleby's database by an anonymous actor. The data was provided to a German newspaper that provided it to the ICIJ. The files included emails, statements, and other financial records dating back as far as 1950.
The data contained personal details of high-profile individuals and corporations from around the world. Many of the media stories covered specific cases of the tax structures and the use by multinationals to divert profits away from their country of origin.
What we have done so far
Hours after learning of the leak we met with our partners in JITSIC to discuss the approach to the Panama Papers. Projects were allocated to individual member nations. We were assigned to lead a data working group and marshalled resources from member countries to assist. The methods and the lessons we learned during the Panama Papers were applied to the Paradise Papers and we have been able to identify individuals and entities more easily.
Results
A detailed analysis of the data is almost complete. From our vigorous processes, we have found there are a small number of cases with a potential tax risk that require ongoing inquiries.
We have used the Paradise Papers to develop a better understanding of the business models used by promoters of tax evasion. For example, firms like Appleby and Mossack Fonseca provide services focusing on registration and administration. They market the services to promoters and facilitators who design the tax evasion scheme, and task these firms with the mundane paperwork.
JITSIC plans to use information like this as well as its significant collective resources to disrupt the business model of the individuals who peddle these illegal schemes to their clients.
Make a tip off
If you suspect that tax evasion or other illegal activities are being undertaken in your community, you can report it anonymously to us by:
- making a tip-off
- phoning 1800 060 062.
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