Australian tax lawyer and rock singer Patrick Flynn, once a quiet suburban lawyer, has been thrust into the forefront of a major tax scandal involving allegation of wealthy Australians having their money funnelled into offshore accounts that echoes the Panama Papers episode that enveloped law firm Mossack Fonseca.
The Melbourne Age newspaper reports that 54-year-old Australian lawyer has built a booming international legal practice by advising Australians how to exploit them to minimise their tax but who is now facing intense scrutiny from the Australian tax office who are struggling to track the untaxed money leaving Australia for offshore bank accounts.
The Age, The Sydney Morning Herald, 60 Minutes and The New York Times revealed how a secretive international operation, codenamed ‘Atlantis’ targets Australian taxpayers who use a Puerto Rican bank, Euro Pacific, co-owned by American celebrity stockbroker and radio personality Peter Schiff.
Euro Pacific bank provides offshore banking facilities for clients and has operated for some time handling such transactions globally.
An undercover media investigation has created controversy in Australia and has prompted calls for new laws in Australia and better enforcement.
Financial crime experts in Australia are calling for the federal government must introduce long-stalled laws that would force Australian lawyers and accountants to report their clients to authorities if they move money in a suspect fashion, including offshore.
The experts claim that advisers like Flynn highlight the need for changes to ensure lawyers and accountants face the same obligations as banks and money remitters to report suspicious transactions. Instead, they are advising how not to leave a money trail.
On one recording, Flynn says to a person who he thinks is a potential client: “I say to clients all the time, ‘Look, there’s no reward without risk. You’re wanting to set up a tax-free situation, to avoid information exchange [with tax authorities] … There’s no perfect world, mate’.”
Moving From Suburban Law to Seychelles
The allegations say that Flynn had received a call from a former university colfriend who had worked in London working for international financial firms and talking about the offshore tax and financial business.
“Hang on a second, I can make more money setting up off-shore companies, [with] a lot less stress than I can working as a litigation lawyer slash commercial lawyer in London. F— that,” Flynn said on one recording.
His London friend was looking for referrals to his new business in the Seychelles – the tax haven that boasts of “solid secrecy and attractive offshore business laws”. According to Flynn, “I straight away saw the opportunity, and I said, ‘Mate, is there room for two?'”
He made a dash to the Seychelles before returning to Brisbane, selling his law firm and moving to the Indian Ocean home where he pitched for clients and spent spare time playing rock ‘n roll gigs in hotels across the island with his band The Red Trees.
Although there is no suggestion Flynn broke the law, he certainly had worked the laws to ensure the business deals flowed through his network.
In his conversation with an undercover operative posing as a representative for an Australia-based multinational businessmen, Flynn also describes “a number of banking jurisdictions” where “we can open up a bank account for your clients” that will not share information with tax authorities.
“There’s no risk. There’s absolutely zero risk of bank account information sharing,” he says.
In his pitch, Flynn speaks of his relationships with dozens of offshore banks, and a partner in his firm, says Flynn, is a chartered accountant who specialises in setting up offshore accounts.
Puerto Rico is another favoured destination for such planning because it has both low or zero taxes. Flynn has been “working with” Euro Pacific – the bank at the centre of international tax evasion probe Operation Atlantis – “for about eight years”.
For Flynn, the bank’s greatest selling point is the fact it doesn’t automatically share information about its Australian customers with other countries’ tax authorities, because Puerto Rico and the US are not signatories to an international treaty designed to prevent tax evasion.
Flynn says this means Euro Pacific offers “a totally private bank account. That’s the big advantage.” Flynn has his own account at Euro Pacific, linked to a currency trading company in Panama.
Financial crime experts such as Erskine and former Australian Federal Police detective John Chevis say advisers such as Flynn are far too lightly regulated. This is despite a bipartisan parliamentary committee in 2015 calling for laws that would make lawyers and accountants becoming money laundering “reporting agents”. The laws are also being pushed on Australia by the Financial Action Task Force, a global intergovernmental financial crime agency.
Erskine says Australia’s anti-money laundering regime as it stands is “designed to fail. Accountants and lawyers need to be treated as reporting agents for this to change.”
Australia’s top money laundering and tax haven expert, Professor Jason Sharman, directs his criticism towards a federal government that “doesn’t really care about most financial crime”. In Sharman’s view, Operation Atlantis and other major probes are exceptions to a mostly passive financial crime law enforcement environment, according to the Age report.
Source: Melbourne Age
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