Sitharaman for strengthening global architecture to combat financial crimes

Finance Minister Nirmala Sitharaman on Sunday made a case for further strengthening of global architecture to combat financial crimes, money laundering and sharing of information about different asset classes including crypto currencies.

Addressing a 'G20 High-Level Tax Symposium on Combating Tax Evasion, Corruption and Money Laundering', the minister exuded confidence that G20 will continue to assist the jurisdictions in enhancing their law enforcement capacity.

Under the G20 Presidency, Sitharaman said, India has taken the lead for building capacity in tax and financial crime investigation in the South Asian region in collaboration with OECD.

India has decided to launch a pilot on tax and financial crime investigation in collaboration with OECD for the South Asian Region beginning at the Regional Campus of National Academy of Direct Taxes in New Delhi on July 18.

 

Observing that G20 has helped spearhead a number of reforms to the global tax, anti-corruption and anti-money laundering architecture, she said, these have helped shape the discourse towards jurisdictions not only adopting a more holistic approach to financial crimes, but also aided them to collaborate with one another.

"We hope that the G20 continues exploring the options to further strengthen the global architecture to fight financial crime and assist jurisdictions in enhancing their law enforcement capacity," she said.

The minister said that there was scope for evolving solutions that can help tackle financial crimes in a more synchronised and effective way.

The G20 has helped spearhead a number of reforms to the global tax, anti-corruption and anti-money laundering architecture, which has helped shape the discourse towards jurisdictions not only adopting a more holistic approach to financial crimes, but also aided them to collaborate with one another, she added.

In addition to increased cooperation between law enforcement agencies and enhanced capacity building, Sitharaman said, "it is also imperative that we remain alive to the emerging risks to financial transparency. In this context, the progress of work towards the development of the Crypto-Asset Reporting Framework and the update to the Common Reporting Standard is a welcome step."

Besides these, she said, "we should also examine closely whether there are any other classes of assets, in respect of which information needs to be shared in a systematic way amongst jurisdictions."

With the advancement in technologies and openness in international trade and commerce, criminals have started utilising sophisticated measures to transfer illegal proceeds across borders through multi-layered transactions involving various forms of assets including Financial Assets, Crypto Assets and Real Estate, she said.

During tax investigations, she said, tax administrations acquire access to large amounts of incriminating information obtained through tax treaties, which could have relevance for investigations in other financial crimes.

However, she said, the disclosure of such information to the other domestic law enforcement agencies is subject to seeking consent from the foreign jurisdiction for the use of such information for non-tax purposes.

In this regard, she said, "we welcome the recent report of the Global Forum that will assist interested jurisdictions to streamline the processes involved in obtaining consent for the use of information obtained through tax treaties for non-tax purposes."

The suggestions in the report would help make the process of obtaining consent from foreign jurisdictions more efficient and speedy, she said.

In leveraging the interconnectedness of investigation in tax evasion, corruption and money laundering, she said, there is scope for evolving solutions that can help tackle financial crimes in a more synchronised and effective way.