He told the newspaper the suspension order related to “insufficient capital” but made no mention of money laundering or tax evasion.
According to the Bank’s unaudited financial statements, as of December 31, 2021, Euro Pacific had approximately US$66 million (US$97 million) in cash, US$31 million (US$45 million) in precious metals and US$110 million in dollars ($161 million) in deposits.
“[Euro Pacific] got numerous chances but didn’t want to give up.”
OCIF Commissioner Natalia Zequeira Diaz
The regulator launched an eight-month investigation into Euro Pacific in October 2020 after customers claimed they had used the bank to launder money and evade taxes in their home countries.
The results of the audit are confidential, but Zequeira Diaz said the regulator found a number of “deficiencies” in the way the bank operated.
Euro Pacific agreed to make board changes and raise additional capital to ensure it complies with Puerto Rican laws, but Zequeira Diaz said the bank failed to provide key documentation and violated local regulations.
Zequeira Diaz said the regulator decided to suspend the bank to prevent “irreparable damage” to the interests of its customers and Puerto Rico’s reputation as a global financial center.
The local regulator independently investigated Euro Pacific Bank but joined forces with the J5. Jim Lee, chief of the US Internal Revenue Service and J5, said the closure “shows the world the power of coordination, collaboration and partnership.”
“There is no doubt that OCIF’s work sends a strong message to others that the Puerto Rican financial industry will not be a haven for tax evaders or illegal conduct. We stand here together today to demonstrate the strong partnership we have with OCIF and to commend their leadership for taking decisive action,” Lee said.
Lee said there were more than 100 active and ongoing civil and criminal investigations around the world as a result of Operation Atlantis, but did not confirm whether Schiff was the subject of a proceeding.
“Tax crime is not victimless.”
ATO Deputy Commissioner Will Day
Will Day, deputy commissioner of the Australian Taxation Office and J5 chief, said the agency had screened more than 100 Euro Pacific-affiliated Australians and taken action against about half of the bank’s customers in Australia, including further tax hikes and the application of tax penalties in some of these cases.
He said the criminal investigation was ongoing and the taskforce was working with criminal authorities including the Australian Federal Police and the Australian Criminal Investigation Department.
“Our work continues at both the civil and criminal investigation stages,” he said. “Tax crime is not victimless.”
Day said he couldn’t quantify the extent of offshore tax evasion in Australia but said the closure of the Euro Pacific Bank was an “important milestone” for Operation Atlantis.
“The cessation of a financial institution’s operations prevents it from facilitating suspected tax evasion and money laundering,” he said. “When we launched the J5, we were determined to make the world a smaller place.”
British tax chief Simon York estimated that hundreds of millions of dollars were invested in Euro Pacific’s operations alone.
The investigation through The Age, Sydney Morning Herald, 60 minutes and New York Times discovered that hundreds of Australians were implicated in the global tax evasion investigation, including Sydney businessman Simon Anquetil, the man behind one of Australia’s largest tax evasions.
Others previously identified as having Euro-Pacific accounts included a Russian cybercriminal wanted by Australian and US authorities for conducting the world’s largest cyber-malware attack and an Australian suspected of stealing money laundering for a billion dollar drug trafficking syndicate.
Western Australian state-owned companies Perth Mint and Westpac have also been implicated in the investigation for allegedly backing the bank’s credit card with gold and acting as correspondent banks in Australia for Euro Pacific.
Day declined to confirm whether any of the institutions are still under investigation for confidentiality reasons, but said the ATO has “good relationships” with financial institutions in Australia and works with major banks to help fight tax evasion and money laundering .
Westpac ended its correspondent banking relationship with Euro Pacific following the media investigation.
OCIF has scheduled a hearing with Euro Pacific and its shareholder Schiff within 10 days to discuss whether the bank’s business suspension order will stand.
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