IRS ‘lacks resources’ to fully investigate super-rich sanctions evasion

In an 18 March fact sheet, the US Internal Revenue Service (‘IRS’) said that its Criminal Investigation unit (‘CI’), lacks the resources that it needs to pursue ‘financial crimes like money laundering, terrorist financing, cybercrimes, and sanctions evasion – including investigating and seizing assets of Russian elites.’

Since 2015, said the IRS, ‘CI…has built up a world-class cybercrimes program to address the exponential growth of cybercrimes impacting the tax, financial, and economic systems of the U.S. This group successfully seized more than $3.5 billion of illicit cryptocurrency in fiscal year 2021, and they have already seized more than this amount in fiscal year 2022.

‘Alongside investigating cybercriminals, CI has recently been called upon to provide its unique expertise to assist with interagency efforts to enforce sanctions related to Russia’s invasion of Ukraine, as called for in the related Kleptocapture Task Force announced by the Department of Justice. Working with law enforcement entities across government, the IRS is already in the process of investigating Russian oligarchs and those who facilitate the illegal movement of money or assets on their behalf.’

It said that CI cyber agents have also been engaged ‘in the review and investigative efforts involving cryptocurrency transactions associated with Russian-based entities for the past several months. The project, known as Sanction Evaders, is looking at blockchain transactional information associated with sanctioned countries.’

But, it says, ‘Given its sizable – and growing – responsibilities, it is important to highlight that today the IRS lacks the resources it needs to fully support these efforts. Since 2010, the overall IRS budget has fallen by nearly 20 percent, resulting in a significant decrease in the agency’s enforcement functions. This impacts compliance directly and indirectly: Rather than serving as a deterrent, a more limited IRS presence serves as an incentive to ignore compliance responsibilities, from both a civil and criminal perspective.’

It said that if given additional resources, ‘CI will be able to do much more. The IRS’s efforts in this space are imperative to helping CI target oligarchs and those who facilitate hiding their assets. More broadly, a well-funded investigations unit is critical to ensuring that the IRS has a workforce that is able to pursue the illicit behavior of highly sophisticated criminals who reap billions and billions of dollars of profits annually through complex financial crimes.’

https://www.irs.gov/newsroom/irs-spotlights-criminal-investigation-law-enforcement