Tackling Fintech-Enabled Tax Evasion: Key Takeaways from the J5 Report

The global financial landscape is evolving rapidly, propelled by innovation in financial technology. Yet with that innovation comes new opportunities for abuse. In May 2025, the Joint Chiefs of Global Tax Enforcement (J5) published a report on “Misuse of Fintech to Enable Tax Evasion and Money Laundering,” designed to help entities focused on preventing, uncovering, addressing, and proactively reducing risks to the integrity of the global financial system. In the report, the J5 found that fintech tools are increasingly being used to obscure financial flows, conceal beneficial ownership, and enable sophisticated tax evasion schemes.

IVIX, with its advanced data intelligence and risk modeling capabilities, is uniquely equipped to help tax authorities uncover these digital shadows. The platform directly aligns with the J5’s identified risk areas and supports proactive enforcement and regulatory intelligence.

Let’s examine the key takeaways from the report, as well as how tools like IVIX can help.

Identifying Typologies of Fintech-Enabled Tax Evasion
The J5 outlines the primary ways fintech is being misused in tax crimes. IVIX provides targeted capabilities to detect and mitigate each.

1. Virtual Assets and Pseudo-Anonymity: The use of cryptocurrencies, mixers, privacy coins, unhosted wallets, and cross-chain bridges enables pseudonymous storage and transfer of illicit funds. Techniques like "peel chain layering" and co-mingling complicate the tracing of transactions and conceal taxable income.

IVIX cross-references pseudonymous blockchain activity with web behavior, domain data, and infrastructure reuse to uncover the actual identity behind transactions, thus allowing tax authorities to leverage blockchain forensic tools to trace cryptocurrency flows and identify interactions with blacklisted services or unreported gains..

2. Fiat On- and Off-Ramps: Tools such as crypto ATMs, centralized exchanges, and peer-to-peer platforms facilitate the conversion between fiat currency and cryptocurrencies. These mechanisms often lack traceability, allowing funds to move quickly and across borders, undermining jurisdictional oversight.

IVIX monitors merchants and individuals who rely disproportionately on high-risk ramping tools and compares tax filings against inferred lifestyle or digital asset flows to detect discrepancies.  IVIX also identifies the various fintech platforms that e-commerce vendors accept as forms of payment on their sites (fiat and cryptocurrencies).

3. Storage of Undeclared Income: Assets like non-fungible tokens (NFTs) and stablecoins can be used to store untaxed wealth. While these tools have legitimate uses, their misuse is outpacing regulatory safeguards, especially in environments with weak anti-money laundering (AML) and know your customer (KYC) frameworks. 

IVIX analyzes metadata from online platforms and virtual economies to surface high-value behavior and reveal hidden wealth through links between asset holdings and reported income, while also identifying the true identity of the asset holder.

These methods highlight the evolving challenges that fintech poses to global tax enforcement efforts.

Addressing Systemic Fintech Vulnerabilities with IVIX Intelligence
The J5 report identifies several systemic vulnerabilities exploited by criminals. These include:

• The sheer volume and speed of transactions - Fintech platforms enable rapid and large-scale financial transactions, which can outpace the monitoring and regulatory capabilities of tax authorities.
• The borderless nature of the financial system - The global nature of fintech allows for cross-border transactions that can obscure the origin and destination of funds, complicating jurisdictional oversight.
• Pseudo-anonymity - Certain fintech services offer users a degree of anonymity, making it challenging to trace transactions back to individuals or entities.
• Weak AML controls - Some fintech platforms lack robust AML measures, providing opportunities for illicit financial activities to go undetected.
• Regulatory gaps  - The rapid evolution of fintech has outpaced the development of comprehensive regulatory frameworks, leaving exploitable gaps.
• Nested services - The use of layered or nested financial services within fintech platforms can conceal the true nature of transactions and the identities of those involved.

IVIX provides mitigation support through real-time data pipelines that detect anomalies at scale. Its tools can map cross-border trade flows and detect discrepancies in reported income. IVIX also correlates entities using domain, social, and registration data, helping tax authorities overcome challenges related to pseudo-anonymity.

To address weak AML controls, IVIX scores fintech platforms based on their compliance footprint and highlights suspicious activity in loosely governed jurisdictions. In tackling nested services, it uses entity resolution to untangle hidden infrastructure layers and uncover the full scope of fraudulent financial networks.

Key Mitigation Strategies Recommended by the J5
Through their Global Financial Institutions Partnership (GFIP), the J5 have outlined several key mitigation pathways to combat the misuse of fintech in facilitating tax evasion and money laundering. These mitigation strategies aim to address the evolving challenges posed by the integration of fintech in financial systems and to enhance the global response to related financial crimes.

1. Enhanced Monitoring and Data Collection:  The report emphasizes the importance of real-time monitoring and comprehensive data collection to detect and prevent illicit financial activities facilitated by fintech platforms. 

IVIX functions as a data fusion platform, aggregating and normalizing public and proprietary data into actionable intelligence.

2. Strengthening Education and Public-Private Collaboration: The J5 advocates for increased education and collaboration between public entities and private sector participants to enhance the collective understanding and response to fintech-related financial crimes.

IVIX partners with tax authorities, regulators and anti-money laundering watchdogs to share typologies and insights, co-develop detection frameworks, and contribute to policy sandboxes for emerging fintech environments. 

3. Development of Merchant Risk Scoring Systems: Creating risk scoring models for merchants can aid in assessing the likelihood of involvement in tax evasion or money laundering, allowing for targeted investigations and interventions.

IVIX offers merchant risk scoring, using web signals—such as website traffic, product listings, and marketing activity—to infer revenue and compare it against reported tax data. Here’s an example of the IVIX Risk Scoring feature.

IVIX in Practice: Amplifying the J5’s Vision‍

IVIX enables the detection of hidden income and untaxed digital activity, the mapping of complex fintech obfuscation typologies, and the prioritization of enforcement using real-world data.

As the J5 report concludes, defeating fintech-enabled tax evasion will require synergy between the public and private sectors, risk-based tools, and intelligence-led enforcement. IVIX delivers all three and is well-positioned to support J5 jurisdictions and other tax authorities in this critical mission.

Learn more at https://www.ivix.ai/