Situational picture

2023 | 2022


New ways of working have significantly affected the supervision of the shadow economy and economic crime

Publication date 20 May 2024

The shadow economy and economic crime result in significant losses of income for Finnish society every year. The authorities combatting the shadow economy and economic crime consider the changed ways of working and the platform economy to have had a significant impact on supervisory activities. In supervision, data volumes have grown and especially the provision of false information for the authorities has increased. The role of the authorities is changing not only in advice, guidance, supervision and fiscal activities but also in tasks related to internal security. Criminal activities are often snuck into societal structures by pursuing them through legal business operations, for example. 

The authorities combatting the shadow economy and economic crime conducted a survey at the beginning of 2024 to identify changes in the operating environment. The survey was conducted for various authorities and organisations to collect their views and observations of changes in the operating environment regarding the shadow economy and economic crime, as well as their prevention. The situational picture on the current phenomena comprises several subareas and combines the views of different authorities to provide a comprehensive insight into the current and near-future operating environment of the authorities combatting the shadow economy and economic crime.

New ways of working have changed supervision

In labour markets, the shift away from employment relationships to various forms of entrepreneurship is still intensifying, while abuse associated with these new ways of working have increased. The information required to investigate the shadow economy and economic crime is becoming even more fragmented which ties more resources during investigations. It has become more difficult to identify responsibilities because work may involve several contracting parties. In business activities, withholding from compensation for work and enforcement proceedings are evaded by paying compensation in the form of profit shares or loans to the worker. Cooperation agreements between companies and workers are also transferred and sold forward. If agreements are sold outside official activities, tax and social insurance regarding work reported to the authorities will be targeted incorrectly.

The supervisory authorities consider the neglect of statutory obligations to have increased in companies. These include neglect in financial statements and accounting records, the lack of information about beneficiaries, and the provision of false financial information in various contexts. Furthermore, the boundaries of regulations on activities subject to a licence and the conditions imposed by the authorities are stretched. For example, it has been discovered that serving activities have been carried out with the licence of another business. These activities are considered to be carried out intentionally so that the risk of being caught and the limit at which the authorities start to act are also probed. The supervisory authorities have also discovered cases in which the necessity of the authorities has been questioned through the behaviour of customers towards the authorities.

Information and its reliability – false information threatens societal functions 

The challenges presented by digitalisation, automation and the reliability of electronic identification have increased, resulting in more opportunities for abuse in public and private services. Documents are increasingly processed in electronic format which makes it even more difficult to identify fakes. The use of AI and other similar applications in the shadow economy and criminal activities will present a challenge to all authorities. AI can be used not only to produce fakes but also to identify various loopholes and any blind spots in law.

Inaccurate information provided for the authorities may become official information in the registers of the authorities. The impact of false information multiplies when it is shared with others. For example, false information can be seen as the reporting of unfounded data to the Incomes Register. Companies also falsely correct and cancel information submitted to registers. Companies may intentionally submit large numbers of unnecessary reports that cause congestion for the authorities, potentially weakening supervisory activities.  

International factors have an impact on the supervisory environment

International political and environmental changes present new situations to the authorities. Wars and conflicts, inflation and climate change have an impact on trade carried out by companies, transport flows, and the movement of people. These changes also affect the operating areas and methods of criminals. For example, the decreased availability of raw materials increases the risk of evading regulations and making product forgeries. The grey area between legal and illegal activities is also growing. The supervisory authorities must be able, at all times, to respond to the growing number of assignments due to changes in the operating environment.

Changes in payments and logistics, combined with the increase in e-commerce, require constant responses from the authorities. The use of international e-banking services, payment terminals, payment cards and virtual currencies has increased further. In abuse situations, funds are circulated through various payment services to make their tracking more difficult. In virtual currencies, such services are used to disguise the origin and destination of assets. When companies are established and bank accounts are opened in other countries, professional assistants who provide customised services for their customers are used. These professional assistants are specialised in the use of new payment methods in hiding income and assets. The internationalisation of trading and payments often calls for cooperation between the authorities of different countries. The national and international exchange of information has increased which in turn has improved the efficiency of supervision.

Labour exploitation is also part of the shadow economy

Labour exploitation causes distortion in labour markets and gives an unfounded competitive edge to certain companies. A company’s earning model may be based on the exploitation of employees through the non-payment of appropriate compensation to them. The need for foreign employees increases the risk of an increase in labour exploitation. Risks are also increased by the need for a flexible and temporary workforce, the outsourcing of services and long subcontracting chains. Labour exploitation has especially been discovered not only in seasonal work in agriculture, construction and industries but also in the restaurant, cleaning and wellness sectors. Forced and bogus self-employment and unclear legal relationships have also expanded to new sectors.

According to the authorities’ findings, shell companies have been established in the EU Member State to transfer foreign employees to other countries, including Finland, in their name. Straw buyers have been registered to work behind these companies, and many-tiered subcontracting chains are used in their activities. Employment agencies trick employees with false employment contracts that are either completely fake or copied from originals. A promised study place may also have been paid for in advance, but when arriving in Finland, students have discovered that their tuition fees have not been paid. The establishment of activities abroad or several countries makes official supervision more difficult. Various social media platforms enable exploitation, and they may even have been used to collect material to coerce victims. 

Promoting labour immigration calls for the preventive and effective combating of foreign labour exploitation. The new cooperation model for the prevention and supervision of the exploitation of migrant workers approved on 15 February 2024 tackles this phenomenon through legal amendments and intensified cooperation between the authorities. The measures seek to prevent abuse in labour markets by focusing on advisory services and providing more information at different stages of international recruitment.

Sanctions monitoring keeps the authorities busy

Sanctions have an impact on several authorities and have resulted in new monitoring activities. Situations where sanctions are evaded involve various international activities and new ways of crime. According to findings, activities have been more complex and partly more systematic. When evading sanctions, countries with which official cooperation is slow or ineffective are used in money transfers. Transport, logistics and forwarding are high-risk sectors from the perspective of sanctions. Information exchange between the authorities has increased, also internationally, which means that the ways of evading sanctions and cases involving such evasion can be identified better than before. 

In food chain abuse, activities are often carried out outside registers

In the supervision of the food chain, it has been discovered that implausible numbers of production animals have been reported as missing or slaughtered for personal use. The sale of illegal products in marketplaces and markets has been a more distinguishable phenomenon in the authorities’ supervisory activities. In the cross-border transport of goods, there are more and more suspicions of the illegal import of meat or imports without the documents required. Trade associated with the food chain is a global activity, with Finnish parties to the food chain buying various counterfeit foods or illegally made products, also without knowing it. The general price level offers hints of whether all legal provisions have been complied with in the making, farming or trading of a product or ingredient. Shadow economy operators often carry out their activities outside official registers or use companies with a short lifecycle. Demand for meat and the decreasing number of hunting licences may increase the amount of non-registered activities. There are more risks in situations where a single party covers the entire food chain from production to end products.

Organised crime exploits the structures of society

The role of networked and organised international crime is growing in Finland. Such activities involve economic crime, money laundering and the abuse of social security in addition to the illegal importing and trading of prohibited substances. The ways of organised international crime have become even more serious, including the infiltration of individuals in organisations critical for society. Criminal activities are often snuck into societal structures by pursuing them through legal business operations. Criminals are increasingly using advanced technologies and ways that increase anonymity which presents challenges in the prevention and investigation of crime.

The authorities combatting the shadow economy consider the abuse of structures to present a threat to welfare in society. The updating of the strategy for combatting organised national crime is estimated to have a positive impact on the development of information exchange and administrative crime prevention. The authorities seek to take administrative measures to prevent the conditions of serious and organised crime.

Cooperation between the authorities is organised and combatting produces successes

The authorities have various duties that require official cooperation. Information is exchanged regularly in operations and strategic activities. The establishment of national and regional cooperation networks between the authorities has improved information exchange and expanded the authorities’ skills which in turn has improved the quality and efficiency of activities. As a result of projects under the action programme to tackle the shadow economy and economic crime, the increased use of obligation compliance reports and cooperation in producing the situational picture, awareness of the benefits and necessity of cooperation between various authorities has also increased. The high availability of financial information about companies and the individuals behind them, straightforward communication channels and electronic services in information exchange between the authorities help combat the shadow economy.

According to the supervisory authorities, findings of certain conventional shadow economy methods decreased last year. For example, no new extensive shadow economy cases that are often commonplace in the construction sector were discovered. The supervisory authorities consider real-time field supervision to have had a positive and preventive impact on the combatting of the shadow economy. In sectors in which cash is used, receipts are offered more frequently and contain fewer errors. The merger of up-to-date information in official registers promotes supervision.

Joint projects of the authorities need to be continued

The action programme to tackle the shadow economy and economic crime has set the strategic course for combatting and distributed responsibilities for activities. Joint projects have enabled the effective dismantling of any obstacles and hindrances in the way of official cooperation. When cooperation is advanced systematically, the expertise of all relevant parties can be used. Legal amendments call for the development of information exchange and cooperation between the authorities. Then again, the development of cooperation requires legal amendments. For example, restrictions on spontaneous information exchange prevent information from being disclosed between the authorities without a request which makes official cooperation more difficult.

Combatting the shadow economy and financial crime requires concrete action. The authorities are engaged in development activities regarding the needs for combatting. In operations, the authorities allocate resources appropriately and are also considering alternative ways in which close cooperation between the authorities is a valuable asset. Changes require continuous monitoring, supervision, training and information sharing from the authorities. Projects for the prevention of the shadow economy and economic crime enable closer cooperation between the authorities and its development at a concrete level. If it were not for prior joint projects, certain shadow economy and economic crime phenomena or new combatting methods might have remained unidentified. Risks also extend to such authorities that are not primarily engaged in crime prevention. 

Economic stagnation and inflation increase the shadow economy

A weaker financial situation causes the risk of increased abuse and crime. Raw material prices have risen and companies’ abilities to obtain external funding have decreased. This may also expose law-abiding companies to engage in business with shadow economy operators, or companies may independently enter the shadow economy. A tight financial situation may tempt to use undeclared labour or abuse pay security. The financial situation in society also has an impact on the amount of bankruptcy crime in which companies intentionally leave their official obligations unfulfilled. Selling a company on the verge of bankruptcy often makes it slower to identify the actual fraudsters and for the authorities to track illegal funds. When business activities are discontinued, the aim of the fraudulent acquisition of a company on the verge of bankruptcy may be to destroy accounting records and to obtain unfounded VAT refunds, for example.

In business activities, the requirement for financial reliability is linked to the identification of shadow economy operators and the safety of consumer products. Often, the weak financial situation of operators is likely to lead to non-compliance with other business requirements. Extending the requirement for financial reliability to new provisions or licence conditions would simplify and improve official supervision. In a tighter financial situation, the importance of combatting the shadow economy should be emphasised if the aim is to ensure healthy competition between companies and a fair labour market.

Read more about the observations:

20.5.2024 Observations of the shadow economy and economic crime environment 2023 (PDF 368 kB)


Authorities consider the shadow economy and economic crime to have become more professional and international

Publication date 23 May 2023

The shadow economy and economic crime result in significant losses to Finnish society every year. The economic uncertainty, inflation and rising interests in Europe may increase bankruptcies and the shadow economy, or at least lower the threshold to slipping into the grey area. The authorities combatting the shadow economy and financial crime have found that illegal activities have become more international and professional. Examples of organised and planned shadow economy activities are the participation of several operators in extensive and varied criminal activities, and the use of shell companies and straw buyers to deceive authorities. 

The authorities combatting the shadow economy and financial crime conducted a survey at the beginning of 2023 to identify changes in the operating environment. The survey collected the authorities’ views and observations of changes in the operating environment regarding the shadow economy and financial crime, as well as their prevention. The situational picture on the current phenomena comprises several subareas and combines the views of different authorities to provide a comprehensive insight into the current and near-future operating environment of the authorities combatting the shadow economy and financial crime. 

The shadow economy is often international

The operating environment of shadow economy activities and economic crime is international even if the related business activities are only carried out in Finland. Such international activities are related to the free movement of capital or international transactions, virtual currencies, or other electronic forms of payment. Assets are transferred across borders through cash withdrawals, third-party individuals, and company bank accounts. Opening bank accounts outside Finland or wallets for virtual currencies and using these is fast and simple, whereas receiving comparison data or carrying out recoveries is often slow or impossible for the authorities. These international activities may not even seem international on the outside, since companies registered outside Finland recruit customer service employees who speak Finnish. International monetary transactions and non-Finnish companies are also used for debtor offences and money laundering, for example.

Authorities have encountered professional facilitation of illegal entry and labour exploitation

In their supervisory activities, the prevention authorities have encountered the professional facilitation of illegal entry into Finland and abuse related to workers’ rights. Individuals who enter Finland for work or the parties pretending to be their employers have provided the authorities with different types of information when the entry into Finland is registered with the aim of expediting the granting of a personal identity code or residence permit. For example, workers from outside Finland have bought small shares of their employer organisation to seemingly prove their status as entrepreneurs, whereas to other authorities, the same individuals have stated that they are only employees. A residence permit for an employed person may also be replaced with a residence permit for an entrepreneur to save costs, but it may also be done with the intent to disguise an employment contract as a commission agreement. Workers entering Finland may also be paid more on the surface to ensure they are granted a residence permit, while the worker has agreed to return a share of the pay to the employer. Such activities may also include undeclared work and abuse of social benefits.

Russia’s invasion of Ukraine has increased the number of people entering Finland entitled to temporary protection. Those under temporary protection may have a higher risk of falling victim to labour exploitation, since the residence permit application process does not include examining the terms and conditions of employment. Signs of abuse have already been observed in the employment of such individuals. In particular, seasonal workers are recruited from countries where workers are less aware of their rights than European workers on average. These jobs are often subject to a fee, which means the workers pay the employer for being recruited in their country of origin. The seasonal work of workers from outside Finland is often associated with offences related to shift work, working hours and pay. Reports on work discrimination have also been on the rise.

The supervision of authorities and increased awareness have resulted in an increase in the discovered cases and police reports. As labour immigration increases, the risks associated with employment also increase; the authorities should therefore be provided with the necessary means to prevent illegal activities, carry out effective supervision, and exchange information. In the authorities’ view, the correct and current content of official registers is the basis for the effective targeting of prevention measures and information-based leadership.

Invoicing services have been misused and used for shadow economy activities in many ways

In the past year, the number of employed people who become ‘light entrepreneurs’ or self-employed increased, and so did the issues related to this. The supervisory authorities have found that individuals using invoicing services to invoice their work now come from a wider range of nationalities and they do not always even speak any Finnish. These individuals are vulnerable to becoming victims of abuse such as bogus or forced self-employment. The risks are particularly high in cases where the initiative for the employee to become self-employed comes from the party that commissions the work. The price of work can be lowered by outsourcing the mandatory employer’s contributions to the person that carries out the work. This means the person carrying out the work also receives more money, if they never even intended to pay the statutory contributions. Misuse has been observed in the construction and shipbuilding sectors, for example, but the phenomenon has extended to the cleaning and home care industries as well 

In addition to the invoicing services already on the market, new invoicing service companies have been established that do not report their actual line of business during registration to avoid the supervision of authorities, for example. The authorities have found that some invoicing services do not use strong authentication to verify the identity of their customers, which means that the taxation of work invoiced through the service can be intentionally targeted at the wrong person, and the monetary compensation for the work may be paid to a party other than the individual that carried out the work. There have also been observations of professional facilitation, where a third party refers, helps and guides workers from outside Finland to become light entrepreneurs and to use invoicing services. The third party is compensated for this by the company that used the third party’s service. In the most serious cases, human trafficking and extortionate work discrimination have also been suspected.

Authorities have discovered a lot of deficiencies in company accounting – accounting crime is on the rise

The prevention authorities have increasingly found that companies do not take care of their accounting as required by law, that their accounting is materially deficient, or that accounts are made only after the authorities request to see them. Neglect of accounting responsibilities by Finnish limited liability companies subject to the obligation to have an audit carried out has become relatively common. Deficiencies in accounting can hinder, slow down or prevent investigating the company’s financial situation. For example, the authorities view acquiring access to accounting data saved in a cloud service challenging in situations where the party subject the obligation to keep accounting records has not paid the fees for the use of the cloud service. The increase in the findings made during supervision, e.g. unjustified withdrawals of a limited liability company’s assets, were assessed to be a result of less strict accounting supervision and companies’ inability to ensure that the obligations a limited liability company is subject to are met.

Misuse of shareholder wage income has increased and avoiding debtor’s obligations has become more international

The risk of leaving the wages and income of shareholders and full-time self-employed individuals undeclared has increased. The authorities also assess that the number of one-person limited liability companies has increased. Misuse related to shareholder wage income has increased and according to the observations, some shareholders recorded their wages as shareholder loans in the company’s accounting or made other entries that were not factual. The authorities have also encountered shareholders who withdraw money for the cash register throughout the year and only correct the amounts as wages at the end of the year. In some one-person limited liability companies and general or limited partnerships, the company account is also used for the individual’s private expenses and living expenses are recorded as entertainment expenses. Disguised dividends are often comparable to undeclared wages paid to the shareholder rather than actual dividend. Partners of general and limited partnerships and self-employed individuals making withdrawals from their company’s account and shareholders who do not withdraw wages also make recovery harder, because no wage income eligible for enforcement is paid.

The avoidance of debtor obligations has become more international, as transactions go through non-Finnish banks and other money transfer services from which acquiring information is more difficult. Employees with debts may acquire non-Finnish companies and become self-employed to avoid enforcement. This way the debtors can keep working for their previous employer, but instead of pay, they issue invoices for non-wage compensation for work. In situations involving misuse, the debtor can withdraw wages from their company only to the amount of the portion protected from enforcement and then invoice large reimbursements for expenses from their company. Paid advance wages can later be corrected to be reimbursements of expenses and if necessary, the company can grant loans. In the payment-free months of enforcement, significantly larger wages or bonuses may be withdrawn.

In situations involving misuse by a debtor, it has been observed that wages are reported to the Incomes Register late and that the reports are corrected or deleted entirely. Withholding taxes from an entrepreneur’s wages may be carried out with a percentage that is too low, which results in intentionally incurred additional debt. Percentages that are too high are used to artificially to make the individual ineligible for enforcement. In a limited partnership, profit shares paid to limited partners do not need to be reported to the Incomes Register, which means that the authorities do not have real-time access to the actual amount of income received.

Cash and straw buyers are still popular tools in the shadow economy

Banks have made their practices for accepting cash stricter, and the authorities have found that this has increased the transport of cash away from Finland. Not all limited liability companies have a bank account; instead, they carry out their activities with cash and through the bank accounts of shareholders and other parties. Some employees have a condition in their employment contract that they must let the employer use their personal bank account, which has then been used to disguise the economic operator and its activities. The use of cash is seen in the shadow economy as missing cash transactions, wages paid in cash and left undeclared, and disguised dividend paid in cash. Cash is still extensively used in many lines of business although its use is declining in some industries. With the increase in alternative electric payment methods, the shadow economy activities previously handled in cash have partly been transferred to these new services.

In international activities, the significant use of cash and signs of money laundering have been observed. If the identification in accordance with the Act on Preventing Money Laundering and Terrorist Financing of a customer using cash is not carried out properly, it is possible that the accounting records and data reported to the authorities also include assets acquired illegally. After the relevant sanctions entered into force, an increase in transporting euros in cash from Finland and other EU Member States to Russia has been observed at the eastern borders. Cases involving smuggling of cash have also increased. 

Straw buyers are used in shadow economy activities and financial crimes in several ways, and both private individuals and companies act as straw buyers. Companies with debt or who have neglected their statutory duties often continue their operations under a new company with an employee or similar of the previous operator serving as the responsible person. The moveable property of companies with payment difficulties can be sold through an ostensibly legal transaction to a completely new external party through a straw buyer. Straw buyers also offer their services on their own initiative and collect a fee for them.

Crime in the food chain is diverse and includes security risks

In the weak economic situation and as the price of raw materials rises, the amount of forged food products and products manufactured or transported in inappropriate conditions are expected to increase. Already, forbidden additives, inaccurate labelling and designations of origin, and issues in the microbiological quality of products have been found in supervision. Activities not covered by the supervision of authorities have also increased, or at the least, operators engaging in such activities are more often recognised. Food products produced outside the scope of supervision of the authorities are sold to gain financial benefit and used to avoid other fees related to food control. In addition to the economic impact, food control has a social impact by ensuring consumer safety and preventing the spread of animal diseases. Citizens have also reported their suspicions of illegal activities more than previously. Food crime was found in the bakery industry more in the last year than in the previous year, and it was still also found in the meat, fish and fresh produce industries.  Applying for subsidies for farmers on false grounds is also a form of food crime. In addition to food and subsidy fraud, labour exploitation serves as an example of the diversity of crime in the food chain.

Authorities busy with ensuring compliance with sanctions and regulation offences

The operating environment is continuously changing due to the current security situation in Europe, which particularly affects national security of supply and securing cross-border goods transport. Traffic from the eastern border and risks associated with trade in the east have decreased, but supervising compliance with export and import sanctions and regulation offences have significantly increased. There have been many attempts to circumvent sanctions. Operators placed on sanctions lists have made arrangements to disguise who is in control and who the owners are. Companies and private individuals also try to hide their connections to Russia. Sanctions are circumvented by exporting goods to countries that are friendly with Russia or by taking advantage of the fact that transit through Russia is still allowed. Exports from Finland to some of Russia’s neighbouring countries in the south increased significantly in 2022. Private individuals smuggle forbidden goods to Russia by concealing them in their vehicles. Attempts have been made to smuggle larger batches under incorrect headings, or with incorrect customs declarations or forged certificates of origin. Transports subject to sanctions have included electronics, seafaring supplies, boats, drones, and spare parts for devices, among others. In passenger traffic control, luxury products, cash, cigarettes, and alcohol have been found. 

What threats do the authorities combatting the shadow economy and economic crime see in their operating environment?

The authorities combatting the shadow economy and economic crime view that the uncertain economic situation, rising costs, and the looming recession increase the risks associated with the shadow economy. The security situation in Europe will also be reflected in the authorities’ operating environment in the coming years as new phenomena occur and old phenomena become more prevalent. If the situation is prolonged, it may lead to an increase in regulation offences and different offences involving smuggling. The authorities must be able to react to the changes in their operating environment; the Action Plan against the Shadow Economy and Economic Crime contributes to this, for example.

The prevention authorities expect that with increasing immigration and labour exploitation, undeclared work will also increase and go increasingly undetected, especially in low-paid fields. Undeclared work reduces the amount received from both companies and employees in the form of taxes and pension and social insurance contributions. In addition to the social impact, undeclared work distorts competition between companies, and labour exploitation creates a second labour market. Undeclared work is detrimental to the safety of both customers and employees, and to the integration of workers arriving from outside Finland. Technological advancements increase opportunities for leaving work undeclared by taking advantage of international payment platforms and applications, for example. Those in vulnerable positions in the labour market can also be forced to become entrepreneurs, and the number of detected cases involving bogus or forced self-employment has been increasing. 

The social role of the authorities is changing, and lines must be drawn between guidance, customer service, access to information, and supervision. In a challenging competition situation, even honest operators may leave their statutory obligations unfulfilled. Making running a business easier and promoting the growth of companies simultaneously increases the need for supervision and the number of measures needed in supervision. Maintaining the welfare state requires credible supervision and sufficient resources for holding misusers accountable. The authorities combatting the shadow economy and economic crime must already prioritise what measures they take, even though the results of their supervision demonstrate the necessity of their activities.

Read more about the observations:

23.5.2023 Havaintoja harmaan talouden ja talousrikollisuuden toimintaympäristöstä - Torjuntaviranomaisille helmikuussa 2023 lähetetyn kyselyn tuloksia (PDF 571 kB)


Changes in the operating environment are identified quickly in combating the shadow economy and financial crime

Publication date 16 May 2022

The war in Ukraine and the resulting flow of refugees may increase the already existing cases of work-related abuse, including labour exploitation, the use of undeclared workers and even human trafficking. The authorities combating the shadow economy estimate that people in a weaker position are always at risk of abuse. International sanctions give the authorities more supervisory duties and obligate all parties.

The authorities combating the shadow economy and financial crime conducted a survey at the beginning of 2022 to identify changes in the operating environment. The survey requested the authorities to provide their views and observations of changes in the operating environment regarding the shadow economy and financial crime, as well as their prevention. An overview of current phenomena is a sum of many parts, combining the views of different authorities.  Any weak signals identified may be an indication of a single phenomenon raising its head or the first symptom of a change that may be significant in the future or mean that a previously existing phenomenon has taken new forms.

The amount of light entrepreneurship and self-employment increasing, often showing signs of work carried out in an employment relationship

The authorities have seen that some employers have used light entrepreneurship to outsource their obligations to employees, especially among the foreign workforce. In these situations, the actual conditions of the worker, acting as a self-employed person or light entrepreneur, meet the characteristics of an employment relationship. The worker may receive work locations, working hours, tools and other work equipment required from a principal customer acting in the role of an employer at a worksite. The worker often has no other principal customers, and they act under the principal customer’s supervisory rights.

The worker may not always know that they are actually a self-employed individual or want to be one. Some workers may be under the impression that they have signed a new employment contract, although what they actually signed was a self-employed individual’s assignment agreement. Such workers who are forced into self-employment do not usually have the required linguistic skills. The worker may also have been reported as a self-employed individual retroactively, in which case the employer may aim to have the employees’ pension contributions refunded. Bogus and forced self-employment has especially been discovered not only in the construction sector, but also in transport. 

Drawing a line between self-employment and an employment relationship depends on consideration of the choice between actual self-employment and work based on an employment relationship. The legal nature of an employment relationship must be assessed based on the actual work-related conditions and the worker’s position. Arrangements made for evading legal provisions do not have any legal protection. Assigning work and working also involve significant amounts of ignorance and partly inaccurate information about which party should take care of statutory insurance related to work.

Labour exploitation increasingly subject to cooperation between the authorities

In addition to labour exploitation, the exploitation of foreign employees may also involve human trafficking, extortionate work discrimination and protection racket cases. Through the residence permit process tied to the employer, employers may have affected employees’ rights. Such an employer usually also exploits foreign employees’ insufficient linguistic skills and ignorance of Finnish law. Employees’ wages may have been recovered or forwarded to the bank account of a supervisor or shareholder through invoicing service companies. Cases of abuse involving labour exploitation are often discovered not only in seasonal work, but also in long-term employment relationships.

Abuse cases have increasingly become hot topics in public debate. Employees subject to abuse have had the courage to talk about their situation once visible measures have been taken. Victims of exploitation may not always know that they are subject to crime, or they may not want or have the courage to help investigate the case. Labour exploitation is increasingly subject to cooperation between the authorities, and the authorities are also able to better identify it, while prevention also calls for more cooperation and more exchange of information. At best, new forms of working provide many with new opportunities for working, but, in addition to their positive impact on employment, they may also involve various negative phenomena.

The impact of the war in Ukraine is already reflected in the authorities’ activities

The authorities are monitoring the development of the international refugee situation. The growing flow of refugees is providing the Finnish labour market with many new employees in different sectors. Refugees may have an urgent need to obtain income, also making them specifically susceptible to exploitation. Such employees particularly enter sectors where Finnish skills are unnecessary, including agriculture, accommodation and construction. The work offered may be short-term or seasonal work, for which the threshold for using undeclared foreign employees is low. There may also be professional criminals from various countries. In addition to employee exploitation and undeclared work, there is also the growing risk of different fundraising and other financial support fraud targeted at refugees.

The sanctions imposed on Russia as a result of the war have expanded, and suspected criminal cases related to the sanctions may increase. Evading sanctions directed at goods, people and transport may give rise to new types of crime. Supervising the sanctions calls for significant resources from the authorities. According to the authorities’ estimates, goods subject to sanctions may also be smuggled into Russia, and sanctions related to money transfers may be evaded using virtual currencies. Assets and funds subject to sanctions may also be maintained and imported into Europe through front men.  Forged documents and receipts intended for evading sanctions have already been identified.

The war has had a significant impact on imports and prices of raw materials and foodstuffs. Low-quality or forged foodstuffs may be placed on the market to replace any deficiencies in food imports due to the war. Any rapid increase in the general price level and the prices of energy, fuels and raw materials may increase the shadow economy and financial crime to reduce other business expenses. According to the authorities’ estimates, the decline in the Russian economy will have a variety impacts on crime in the border region, for example.

An increase in virtual currencies and online payment platforms involves risks 

The virtual currency market has increased during the coronavirus pandemic. According to the authorities’ findings, the use of foreign virtual banks for the transfer of funds has increased. A single party may have up two 200 different virtual currencies. Virtual currencies are only transferred between the parties to the transfer which means that transactions are more difficult to trace than in conventional money transfers. Access to data requires international data requests, as funds are increasingly held in international bank accounts or in foreign virtual banks. Virtual currencies can be used to conceal assets and apply for social benefits higher than to which the applicant would be entitled based on their real assets.

In the platform economy, the provision of user-friendly online solutions requires that the same obligations are complied with as in any other business activity—submitting appropriate permits and reports to the authorities. On an international scale, there are signs that some companies try to evade national and international laws by only operating online. This practice may spread in the near future. The labour law position of those working via online platforms may also be unclear as the work is not tied to any fixed location or equipment. As online shopping increases, the number of foreign payment transfer service providers and various money transfer platforms will also increase, reducing the authorities’ access to information.

Offences in the food chain identified better than before

Various offences have been identified in the food chain, relating to health, marketing, registrations, industrial rights, fraud, environmental pollution and aid fraud. Food crime presents a direct risk at people’s health and safety. Food crime often involves small sanctions and a low risk of getting caught. While the identification of offences in the food chain has improved through increased training and awareness, the settlement of cases often calls for extensive international investigations and cooperation between the authorities.

According to observations, professional food preparation completely outside the scope of food control has increased during the pandemic. Often, food is also prepared in facilities unfit for the purpose. Meals prepared outside the scope of food control are delivered for retail sale, and their volumes can be significant. These activities may involve the use of undeclared employees and neglected employer obligations. Buyers of products can rarely identify food crime. 

Smuggling and sales of related products have become more professional

The decrease in passenger volumes has affected the smuggling of highly taxed products, and the import and sale of products has extensively gone online. Large volumes of alcoholic beverages are being ordered online from Central Europe, among other places, for further distribution in Finland. In illegal importing, criminals have especially used commercial goods transports, postal and courier services. Smuggling operations also involve Finnish companies that distribute goods from Finland and the EU to the black market in third countries.  The wealth of the individuals behind these companies may have come from income whose origin cannot be reliably identified, untaxed income or criminal activities.

Snus smuggling and sales of related products have become more professional, and the parties involved often play highly specific roles in smuggling chains. Operations have also been run from other countries where part of the criminal proceeds obtained from snus sales has ended up. Larger amounts of illegal snus imports have been identified along the land border between Finland and Sweden and in ferry traffic. Snus has especially been sold in encrypted snus groups and other groups on the public Internet. Snus operations also involve tax offences and illegal imports.

Changes in the operating environment also offer new opportunities for organised crime

The authorities have identified that the risk of organised crime being involved in benefit-related abuse has increased during the pandemic. There are also signs that organised crime has found its way to key procurement chains, in which buyers often need to receive their goods urgently. Operations are often international and networked.

Organised crime is broadly involved in various business activities. Criminals infiltrate reputable companies and exploit the distribution channels to import forged or unfit products into the EU market. Small transport volumes reduce the risk of getting caught. Criminals use specialists in different fields and exploit shell companies. In addition, they use invented invoicing chains and circulate goods and declaration documents. Criminals aim to avoid official obligations associated with business activities and to use business activities for money laundering purposes. High proceeds from environmental crime, the low risk of getting caught and mild consequences also attract organised crime. 

Toimintaympäristön muutoskyselyn havaintoja 16.05.2022 (PDF 383 kB)


Page last updated 5/20/2024