A recent newspaper article described a criminal prosecution commenced by the United States against a Swiss Bank. The charge alleged that the bank provided secret bank accounts to US citizens for the purpose of assisting those account holders in the evasion of their US taxes. According to the article, it was anticipated that the US prosecutor would seek $75 million in fines and penalties against the bank for the offence. Also, according to the article, the bank believed it was not subject to US laws because it did not operate any branches within the United States. The bank did however maintain an account in the US and it used the account to transfer funds from Switzerland to its American account holders.
The prosecution is of interest because it illustrates both the reach of US tax laws and the determined manner in which US authorities are prepared to use those laws. However, Canadian criminal law is also able to reach outside of Canadian borders and it may be that Canadian criminal law is not as fundamentally different from US tax evasion laws as a first reaction to the article might suggest.
The reach of Canadian criminal law, including the jurisdiction to prosecute offences relating to tax evasion occurring outside of Canada, is well illustrated in Canadian proceeds of crime legislation. For example, the Criminal Code defines designated proceeds of crime offences to include tax evasion. Further, “proceeds of crime” is defined to include property within or outside of Canada that derives from a designated offence within Canada, or an act that has occurred outside of Canada that would be a designated offence if it had occurred within Canadian borders. Money obtained from tax evasion could fall squarely within these definitions.
On this basis, Canadian law could potentially be used to prosecute laundering the proceeds of tax evasion though the tax evasion occurred, and the proceeds of the tax evasion are situated outside of Canada. This reach of Canadian law is strengthened by the provision in the Criminal Code that permits the restraint of property located outside of Canada if that property may be subject to forfeiture as the proceeds of crime.
Therefore, while there are differences between US and Canadian tax evasion laws, the differences might not be as vast as one might suspect. The greater difference might lie in the manner in which the respective authorities have so far been willing to use the powers available to them.