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Law Enforcement Should Be Able to Act Against Banks that Aid Tax Evasion

March 8th, 2012

Update 5:09 – The amendment passed via unanimous consent today. Now, the House of Representatives needs to follow suit.

Today is an important day for the tax justice movement in the United States. The U.S. Senate will consider an amendment (SA 1818, Levin-Conrad) that will allow the Department of Treasury to take action against foreign financial institutions that, “significantly impede U.S. tax enforcement.” The Senate should pass this amendment.

Article 311 of the Patriot Act allows Treasury to take measures against foreign financial institutions or jurisdictions that it finds to be, “of primary money laundering concern.” This amendment would extend that same authority to foreign institutions that assist in U.S. tax evasion. The link makes sense – the Financial Action Task Force (FATF) made the same connection last month – by any reasonable standard. Foreign banks are currently afraid of ending up in Treasury’s cross-hairs regarding money laundering, and should be equally scared of finding themselves in the same spot regarding tax evasion.

The provision should be a no-brainer. This is a tool required by authorities to enforce existing laws. Treasury could use it to do things like prohibiting U.S. banks accepting wire transfers or credit cards from foreign banks who are found to actively assist in tax evasion. These types of penalties effectively all but eliminated many of the shell banks used by transnational criminal and terrorist organizations following the 9/11 attacks.

Furthermore, the amendment raises US$900 million in revenue, through better enforcement. The bill will be voted on this evening.

 

 

Written by EJ Fagan

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