Global Tax Evasion Probe Targets Euro Capital Bank, Puerto Rico

Euro Pacific Bank, founded in 2017 by Peter Schiff and Mark Anderson, is said to be used by up to 400 Australian nationals, about 100 of whom are considered “high-risk”.

The Joint Chiefs of Global Tax Enforcement (known as the J5) are reportedly investigating Euro Pacific Bank in San Juan, Puerto Rico for facilitating money laundering and tax evasion linked to serious organised crime.

The J5 comprises the five chiefs of tax agencies in Australia, the US, UK, Canada and the Netherlands. The taskforce was created in 2018 in response to the 2016 Panama Papers scandal, which exposed global tax authorities as flat-footed and reactive.

An investigation by The Age, The Sydney Morning Herald and 60 Minutes, in collaboration with The New York Times, has revealed that Euro Pacific Bank is at the centre of a worldwide tax evasion investigation known as ‘Operation Atlantis’.

Euro Pacific Bank, founded in 2017 by celebrity investor and business commentator Peter Schiff and partner Mark Anderson, is said to be used by up to 400 Australian nationals, about 100 of whom are considered “high-risk”.

The investigation has found that referral agents such as accountants and lawyers have been key to Euro Pacific’s operations, and have been promoting the bank to customers for the low taxes and secrecy that can be offered in Puerto Rico, in return for a commission or client fee.

The case highlights a flaw in Australia’s AML regime, according to former Australian Federal Police officer John Chevis, who says the Australian government must pass new laws to force lawyers and accountants to report dodgy transactions to authorities.

“You would have to question why someone would place their money in a jurisdiction that’s so far away, in a bank that doesn’t pay any interest, in a bank that charges enormous fees for moving your money,” Chevis said.

The New York Federal Reserve and Canada’s Bank of Montreal are said to have allowed transfers to Euro Capital. In Australia, Euro Capital’s main partners were Westpac Bank and West Australian government-owned Perth Mint.

Westpac was Euro Pacific’s correspondent bank in Australia until 2018, enabling clients to send and receive funds from the offshore bank. Euro Pacific was not one of the correspondent banks named in AUSTRAC’s recent AUD 1.3 billion penalty action against Westpac.

Perth Mint first started working with Euro Pacific in 2002, allowing the bank’s customers to buy its bars of gold. At one stage, Euro Pacific debit cards were reportedly backed by Perth Mint gold. Perth Mint is now said to be ending its partnership with Euro Capital, after revelations of the J5 investigation emerged.

A leak of the account details of thousands of Euro Pacific customers allowed the J5 to match customer names against criminal databases held by police and tax agencies around the globe, along with their income tax declarations. The information revealed that Euro Pacific’s customers included entities and individuals with links to financial and organised crime.

Among the bank’s customers are Simon Anquetil, the mastermind behind Australia’s biggest tax fraud, and Darby Angel, a Hollywood film financier who was convicted for drug trafficking. The FBI is also said to have linked a Euro Pacific account to a Russian syndicate described as the world’s worst cybercrime group.

On 24 January, the J5 agencies simultaneously launched actions to disrupt and collect evidence about Euro Capital, the first time in the history of tax enforcement that investigators around the world have coordinated in such a way, according to Will Day, deputy commission at the ATO (Australian Taxation Officer).

UK tax authorities are said to have arrested a Euro Pacific client and issued warrants to several banks dealing with Euro Pacific. In Canada, referral agents were approached and interviewed. In the US, the IRS intercepted Schiff and Anderson for questioning.

The J5 is also said to be hunting the lawyers, accountants and financial institutions linking taxpayers to Euro Capital Bank.

The Australian Criminal Intelligence Commission (ACIC) has listed Euro Pacific as an ‘Australian Priority Organisation Target’, a designation that labels the bank as one of the most serious criminal threats to national security.

In an interview with 60 minutes, Euro Capital’s Peter Schiff denied his bank is facilitating any illegal activity, before walking out on the interview.

 

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