Taxes: The End of The Don’t Ask, Don’t Tell Policy


Banks - along with financial companies, real estate agencies, exchanges and, possibly, even lawyers - will keep an eye on how you pay your taxes. The Financial Action Task Force (FATF), the world’s main anti-money-laundering body, has revamped its list of recommendations to include tax evasion in predicate offences, crimes that precede money laundering. The FATF's press release states that, ‘This will bring the proceeds of tax crimes within the scope of the powers and authorities used to investigate money laundering’.

The FATF’s recommendations are mandatory for its member states; Russia has been a member of this organisation since 2003.

Anti money laundering methods will now apply to tax offenders, as well as those suspected of tax evasion, all of whom will automatically be scrutinised for involvement in money laundering and terrorist financing.

Organizations dealing with money or property will be required to report transactions that may indicate tax evasion. This is a dramatic shift in policy. At present these organisations follow a kind of ‘if they don’t ask, we don’t tell’ policy in tax matters: they inform authorities about their clients’ affairs only when they are asked.

In Russia, money laundering is a more serious crime than tax crimes. The maximum prison term for tax evasion is just three years or, if corporate taxes are involved, six years (articles 198 and 199 of Russia’s Criminal Code). The maximum sentence for money laundering is seven years (articles 174 and 174.1).

The scale of money launder