Global tax fraud news update

global tax fraud news

11th April 2023

Global tax authorities around the world, from the US to the EU, are not stopping in their quest to clamp down on tax fraud, tax evasion and money laundering in their ferocious fight against the perpetrators of financial crime. Whether you’re a global recruitment business or contractor, remaining tax compliant should always be a prime area of concern to avoid landing in trouble with local tax authorities. As our examples reveal, the consequences of not adhering to regulations can be severe, not only in terms of financial penalties but it can also lead to prosecution and conviction.

It is perhaps appropriate to start with Credit Suisse, which was recently taken over by fellow Swiss banking giant and rival UBS with the involvement of the Swiss Government, following its worst losses ever in 2022 amid a string of scandals. The acquisition, the largest merger in the sector since 2008, has created the fourth largest banking institution in the world with $5bn of assets and 120,000 global employees. The embattled bank continues to be at loggerheads with the US, having contravened the $2.6bn plea deal it entered into with the US Justice Department back in 2014.

The report investigations found that there had been an ongoing tax evasion conspiracy to defraud American authorities, which involved hiding nearly $100m off assets belonging to super rich US-Latin American citizens in offshore accounts. US Senate Finance Committee Chair, Senator Tom Wyden, was scathing in his comments, saying, “At the centre of this investigation are greedy Swiss bankers and catnapping government regulators, and the result appears to be a massive, ongoing conspiracy to help ultra-wealthy US citizens to evade taxes and rip off their fellow Americans.”

Staying across the pond, Mark Gyetvay, a former deputy chairman and CFO of Novatek, Russia’s  largest independent gas producer with close to 6,000 employees, has been convicted of tax evasion. Gyetvay, a US citizen, had dismissed the accusations as “baseless” when arrested in September 2021. He was well known to the western investors, representing his company over a period of more than 10 years during quarterly conference calls to discuss earnings and performance. Gyetvay was also a respected and sought-after speaker at energy industry conferences and events.

“According to court documents and evidence presented at trial, from 2005 to 2015, Mark Anthony Gyetvay of Naples, Florida, concealed his ownership and control over substantial offshore asset and failed to file and pay taxes on millions of dollars of income,” explained a US Department of Justice press release. Gyetvay opened two separate accounts in Switzerland with a total asset value of $93m and “took steps to conceal his ownership and control over these funds”. He is scheduled to be sentenced for the charges in September 2023 and could face a lengthy prison term.

Global authorities clamp down on tax evasion

Meanwhile, French authorities have also been combating tax evasion and money laundering. Their focus is on the German ‘Cum-Ex’ scandal in which financial institutions took advantage of a loophole (since closed) to enable multiple investors to claim back tax refunds on the same dividend payments – defrauding tax authorities of billions of euros in tax revenue. As part of the investigation by France’s finance prosecutor (PNF), several of the country’s biggest banks have been raided, including Société Générale, BNP Paribas, HSBC, Natixis and Exane, which became a subsidiary of BNP in 2021.

While not able to attribute a precise figure to the fraud, the PNF estimates that the banks face compensation claims in excess of $1bn, which include penalties and interest payments. The enormity of the scale of the operation is such, that as well as significant human resources being pulled in on the French side, six German prosecutors are also assisting with the investigation. “The ongoing operations, which have required several months of preparation, are being carried out by 16 investigating judges and over 150 investigation agents,” a PNF statement revealed.

The cases from the US and France that we’ve highlighted above signal the intent of global tax authorities to target both organisations and individuals who are implicated in tax fraud, tax evasion and money laundering. And as we’ve seen time and again, the penalties will not only hit the purse strings but can result in convictions and imprisonment. The message for global contractors and the recruitment businesses that place them is crystal clear – you must be tax compliant or face the consequences. Should you need advice, our 6CATS International specialists are here to help.

6CATS International is part of 
WorkwellTM Group

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