Gail Alexan­der

Tax eva­sion in T&T has reached the ex­tent of be­ing among the top five cat­e­gories of sus­pect­ed crim­i­nal con­duct lead­ing to mon­ey laun­der­ing.

Tax eva­sion prac­tices and in­di­ca­tors have been seen by the Fi­nan­cial In­tel­li­gence Unit which has sent near­ly 300 sus­pect­ed cas­es to the Board of In­land Rev­enue in the last sev­en years, says FIU di­rec­tor Su­san Fran­cois.

She spoke about the sit­u­a­tion on Wednes­day when a Spe­cial Se­lect Com­mit­tee of Par­lia­ment in­ter­viewed stake­hold­ers on the In­come Tax Amend­ment bill.

The SSC re­ports to Par­lia­ment to­day on the bill which the Op­po­si­tion has re­fused to sup­port in cur­rent form. The bill seeks to com­ply with Glob­al Fo­rum tax in­for­ma­tion ex­changes to pre­vent tax eva­sion.

The Caribbean Fi­nan­cial Task Force (CFATF,) which is al­so seek­ing im­ple­men­ta­tion of the bill, has set to­day as the dead­line for pas­sage.

Fran­cois said the bill will as­sist FIU with tax­pay­er in­for­ma­tion to de­ter­mine if earn­ings are le­git­i­mate. She not­ed that tax eva­sion is crim­i­nal con­duct which can lead to mon­ey laun­der­ing of­fences.

“Based on FIU analy­sis over the years, we’ve en­coun­tered many cas­es of sus­pect­ed tax eva­sion and we’ve seen in­di­ca­tors,” she added.

Tax eva­sion in­di­ca­tors not­ed by FIU, she said, in­clud­ed:

• Co-min­gling of funds: putting busi­ness process­es in­to per­son­al ac­counts.

• Large de­posits of cash put in­to per­son­al ac­counts with un­ver­i­fi­able ex­pla­na­tions.

•Re­port­ing en­ti­ties may not get clear ex­pla­na­tions for the source of funds.

•De­pos­i­tors may use night safe mech­a­nisms for cheque/cash de­posits.

• Busi­ness funds repa­tri­at­ed abroad with no rea­son­able ex­pla­na­tion of why the mon­ey is go­ing that way.

• Struc­tured de­posits to beat the re­port­ing thresh­old fund lim­its: us­ing nu­mer­ous/re­peat­ed de­posits that get past that thresh­old.

• Com­plex trans­ac­tions which hide who ac­tu­al­ly owns the mon­ey so tax li­a­bil­i­ty is avoid­ed.

Fran­cois added, “FIU analy­sis over 2011 to now has con­sis­tent­ly iden­ti­fied tax eva­sion as among the top five cat­e­gories of sus­pect­ed crim­i­nal con­duct lead­ing to mon­ey laun­der­ing.”

“From 2011 to 2018 we sent near­ly 300 re­ports to the BIR chair­man on sus­pect­ed cas­es of tax eva­sion and the amount of mon­ey in sus­pect­ed cas­es is pret­ty high. In terms of cat­e­gories, it’s gen­er­al­ly Num­ber Three or Four in Il­lic­it Pro­ceeds,” she said.

Fran­cois spoke about FIU’s re­cent re­port of en­coun­ter­ing about (TT) $22 bil­lion worth of Sus­pi­cious Trans­ac­tion Re­ports (SARS) go­ing through the bank­ing sys­tem and the im­pli­ca­tions of this.

She said the $22 bil­lion iden­ti­fied in­volved both com­plet­ed and an at­tempt­ed trans­ac­tion, which to­geth­er to­talled ap­prox­i­mate­ly (TT)$20 bil­lion.

“The fact that the re­port­ing en­ti­ty was able to stop the at­tempt­ed trans­ac­tion from en­ter­ing in­to the fi­nan­cial sys­tem shows the ex­tent of their due dili­gence and im­ple­men­ta­tion of their le­gal oblig­a­tions un­der the An­ti-Mon­ey Laun­der­ing and Counter-Ter­ror­ism oblig­a­tions,” she said

One was a fraud­u­lent trans­ac­tion and the oth­er, a com­plet­ed trans­ac­tion. How­ev­er, she said there was in­suf­fi­cient found by the re­port­ing en­ti­ty and FIU to reach the thresh­old of rea­son­able grounds to sus­pect the trans­ac­tion was re­lat­ed to mon­ey laun­der­ing.

“We’re deal­ing with it as a Sus­pi­cious Ac­tiv­i­ty Re­port and it’s un­der­go­ing analy­sis as we get more in­for­ma­tion. The FIU’s man­date is to fol­low the mon­ey from the source and iden­ti­fy where it came from and its ul­ti­mate des­ti­na­tion, to de­ter­mine if it’s le­git­i­mate earn­ings, whether from crim­i­nal con­duct or if it’s in­tend­ed for use by ter­ror­ists,”

She said a SAR doesn’t al­ways mean the per­son at is­sue is per­pe­trat­ing a crim­i­nal act but was meant to de­ter­mine if to clear the per­son or pass the in­for­ma­tion on to law en­force­ment.

On the ef­fects of mon­ey laun­der­ing on coun­tries like T&T, Fran­cois said, mon­ey laun­der­ing orig­i­nates from crim­i­nal pro­ceeds from crimes: hu­man traf­fick­ing, traf­fick­ing in arms/am­mu­ni­tion, cor­rup­tion, ex­tor­tion, mur­der, bribery, kid­nap­ping fraud, rob­bery, theft.

“All these crimes gen­er­ate mon­ey which can be laun­dered. If the crim­i­nal is al­lowed to be suc­cess­ful in mon­ey laun­der­ing what hap­pens is the old adage—crime re­al­ly pays,”

“So there will be noth­ing to stop peo­ple from con­tin­u­ing to do crime be­cause ben­e­fits are be­ing reaped. Too of­ten it’s said mon­ey laun­der­ing is a ‘white col­lar crime’ but mon­ey laun­der­ing oc­curs af­ter a crime which gen­er­ates the mon­ey. With­out the first crime, there can be no mon­ey laun­der­ing. So one has to con­sid­er the con­se­quences of crime go­ing unchecked and crim­i­nals ben­e­fit­ting with­out any­one stop­ping them—that’s the con­se­quences we face.