Euro Pacific’s designation as an Australian Priority Organisation Target means police suspect Euro Pacific poses a grave organised crime threat to Australia. It is the most serious classification by the Australian Criminal Intelligence Commission.
Mr Schiff, who denies all wrongdoing, confirmed he had been visited by US tax authorities working in partnership with Australian authorities on January 24.
“We’ve complied with all sorts of requests for information,” he said. “We somehow got caught up in whatever’s going on, but there are no valid allegations against the bank. I can tell you there is no tax evasion going on at the bank. The bank is not facilitating anything.”
But the revelations, uncovered in an investigation by The Age, The Sydney Morning Herald, 60 Minutes and The New York Times, will send a shudder through the global banking world because Euro Pacific has relationships with major financial institutions who facilitate transactions for its 13,000 global customers.
Euro Pacific marketing materials list the bank’s existing or previous financial partners as Westpac and the West Australian government-owned Perth Mint, raising the possibility that the Australian institutions have facilitated the activities of organised criminals or tax evaders.
Euro Pacific’s international partners include the New York Federal Reserve, UK bank NatWest, Canada’s Bank of Montreal and Japan’s Mizuho Bank. Several of those banks have also been targeted by Operation Atlantis, sources confirmed. All declined to respond to questions.
The investigation was prompted by a major leak of the bank’s financial data which was first obtained by Dutch authorities and, later, the J5. Documents suggest Euro Pacific’s Australian clients have included Simon Anquetil, the Australian businessman jailed for engineering Plutus Payroll, the country’s biggest tax scam.
Others with Euro Pacific accounts include a Russian cyber criminal wanted by Australian and US authorities for running the world’s biggest cyber malware attack and an Australian suspected of laundering cash for a billion-dollar drug-trafficking syndicate.
Westpac, which is still reeling from its $1.3 billion fine in September for breaking money laundering laws, was a Euro Pacific banking “correspondent partner” until 2018. The relationship meant Westpac facilitated the Puerto Rican’s bank’s dealings with its Australian customers.
The Perth Mint partnered with Euro Pacific to allow the bank’s well-heeled customers to buy gold. Former federal police financial crime expert John Chevis warned that Westpac and the Perth Mint might have inadvertently facilitated tax evasion and money laundering by partnering with the Puerto Rican bank.
The Perth Mint declined to comment on its relationship with Euro Pacific but cut ties just weeks after The Age and the Herald sent it questions. Westpac declined to comment.
Mr Day refused to name the target of Atlantis, citing his ongoing inquiry and privacy laws, but confirmed Atlantis was targeting large-scale tax evasion and money laundering. Australian accountants and lawyers advising Australians were among the targets of Operation Atlantis, Mr Day confirmed.
“We were concerned about that behaviour and what it was facilitating,” Mr Day said. “We [the tax chiefs] were concerned that it was a common threat to all of our countries.”
“Tax crime is not victimless. Tax criminals take away from that revenue that supports those really important functions. That’s important at any time, but even more so during a pandemic.”
Mr Schiff is Euro Pacific’s major shareholder and key marketing asset. He is an advocate of using legal loopholes to minimise tax and has attacked terrorist and anti-money laundering regulations as overly onerous. Euro Pacific president is Mark Anderson, a former US bankrupt previously taken to court by US regulators and fined for selling dubious high-risk financial products.
Euro Pacific is marketed by some Australian lawyers and accountants because Puerto Rico offers banking secrecy, including not sharing information with the ATO under an international tax treaty. Many customers of Euro Pacific are advised to create bank accounts using front companies in other tax havens, creating labyrinthine corporate structures that are difficult for police and tax authorities to unwind.
The ongoing Operation Atlantis inquiry also highlights the failure of successive Australian governments to pass laws recommended by the world’s top financial crime taskforce and a bipartisan parliamentary committee which would force Australian lawyers and accountants to report suspicious transactions to authorities.
Australians are allowed to wire money overseas, but must declare their foreign holdings to the ATO and pay tax on any overseas earnings as if the money had been earned domestically.
Nick McKenzie is an investigative reporter for The Age. He’s won nine Walkley awards and covers politics, business, foreign affairs and defence, human rights issues, the criminal justice system and social affairs.
Charlotte is a reporter for The Age.
Joel is a producer for 60 Minutes.