In 2022, a total of 2,085 economic crime cases were reported to the police, up by roughly 6% from the previous year. The cases involved 3,904 separate offences. The number of open, i.e. investigated, criminal cases (3,497) increased by nearly 10% from the previous year (2021: 3,182). The number of open economic crime cases has already shown a growing trend in the long term, being a good indicator of the increasing workload in the investigation of economic crime.
Last year, the police recorded a considerable amount, €26.7 million, in recovered assets, i.e. criminal proceeds. The figures of criminal proceeds and damage related to economic crime demonstrate that economic crime causes significant harm in society. In the criminal cases closed last year, criminal damage totalled €197 million. The statistics on criminal damage and proceeds cannot be compared with one another, as their compilation principles are not compatible. Criminal damage is not always at the same level as criminal proceeds – after all, an environmental offence that produces very little in proceeds may cause significant damage. Economic crime cases also involve indirect societal consequences which is why their investigation is important.
Better identification of labour exploitation is reflected in economic crime investigations
The Police of Finland and cooperation between the authorities have focused on identifying and investigating labour exploitation which is reflected in the number of cases involving extortionate work discrimination, which has increased for the last four years. Overall, the activity of crime prevention authorities and their measures have an impact on the quality and quantity of economic crime cases reported to the police, as most crimes are reported by other economic crime prevention authorities.
In 2022, accounting and tax offences, various offences involving debtors, and fraud and money laundering cases also showed an increase from the previous year. Last year, the police recorded roughly 30% more tax offences than in the year before. Offences involving debtors (dishonesty by a debtor, aggravated dishonesty by a debtor, favouring a creditor, fraud by a debtor, aggravated fraud by a debtor) increased by roughly 11% from 2021. Fraud and aggravated fraud cases increased by a quarter from the previous year.
Coronavirus subsidies paid to companies have involved the risk of using the subsidies contrary to their purpose. During 2021 and 2022, the police recorded some individual offences related to coronavirus subsidies. Coronavirus-related subsidy fraud cases are probably reported to the authorities after a delay, and it is possible that the authorities will discover more subsidy fraud cases related to coronavirus subsidies in the near future.
The origin of criminal funds disguised using legitimate business structures
Professional and organised crime exploits legitimate business structures to disguise the origin of criminal funds. The exploitation of legitimate business structures and corruption play a key role in serious and organised crime. This can partly be explained by the aim to disguise significant criminal proceeds in seemingly legitimate activities. Money can be laundered using actual business activities, shell companies, various buffer companies and related parties, and even opportunities offered by the platform economy and virtual currencies to blend criminal funds with legitimate funds. According to Europol, the scope and range of money laundering in the EU have previously been underestimated. Last year, the police recorded significantly more money laundering offences in economic crime cases than in the previous year. This increase can be explained by the investigated crime cases that have involved systematic money laundering.
Customs protects tax revenues, combats the shadow economy, and uncovers and investigates economic crime
The taxes collected by Customs in 2022 for the EU and the State of Finland amounted to approximately €0.4 billion. The statistics illustrate the impact of tax collection and both administrative and crime prevention operations by Customs. Customs statistics should be examined by comparing them with the observations and statistics of other authorities presented in this snapshot. This makes it possible to determine the correct scales and weights of issues and phenomena.
Customs promotes fair competition and takes effective action against irregularitie
Customs controls goods and collects taxes on them. Customers can only take possession of goods after paying taxes and duties, except for credit customers.
New phenomena, such as circumvention of the sanctions against Russia and Belarus imposed by the EU due to the war in Ukraine, as well as international economic crime involving e-commerce and intra-EU trade, are increasingly encountered by Finnish Customs in their fight against economic crime. The Internet is also being used increasingly often in the marketing and sales of highly taxed products to customers, while also circumventing the tax provisions applying to such products.
Customs focuses its control measures on operations associated with substantial tax interests. Real-time customs control of various modes of transport and related goods, vehicles and passenger flows also plays a central role in ensuring correct taxation and, consequently, combating the tax gap. The measures for preventing economic crime that fall under the investigative responsibilities of Customs also aim at reducing the tax gap.
The percentage of unpaid taxes relative to total taxes and parafiscal charges varied between 0.05 and 2.1% in 2013–2022. In 2022, the amount of tax arrears came to about €0.9 million, which is 0.2% of the approximately €0.4 billion of the total taxes and parafiscal charges collected by Customs (Figure 1).
Customs conducts corporate audits and document controls
The audits carried out by Customs ensure the fiscal correctness of customs and taxation matters, facilitate and safeguard smooth foreign trade, and protect society by, for instance, weakening opportunities for shadow economy operations.
The audits carried out by Customs in 2022 covered customs procedures, fairway dues, agricultural and internal market aid paid by the EU, and the tax boundary between Åland and mainland Finland. In addition, Customs still carries out controls of tax-free warehouses relating to excise duties on behalf of the Tax Administration.
Audits are nationwide and carried out both in real time and on an ex-ante and ex-post basis. In addition to corporate audits and document controls, Customs also performs, for example, warehouse controls as well as controls of accounting and goods. Audits and controls are carried out on a statutory basis and as based on risk analysis. Risk-based selection of audited and controlled entities is supplemented by random sampling.
A corporate audit covers the operations, organisation, administration, internal control, business systems and accounting materials of a company. Most corporate audits involve a company visit. A corporate audit may be conducted on an ex-ante basis before a licence, permit or position is granted, as well as before approval of a change in a licence or permit. The purpose of an ex-post corporate audit is to review the
company’s operations and the correctness of its business transactions and customs declarations after a customs clearance or taxation.
Document controls refer to controls on business transactions carried out after customs clearance or the taxation process. Usually, the controls are targeted at a large number of customs clearance or taxation decisions. The number of document controls also includes controls involving licences and administrative executive assistance.
In 2022, Customs conducted a total of 298 corporate audits and document controls (Figure 2). Year-on-year variation in the number of audits and controls is the result of the priorities approved for the audits and controls each year, the areas audited and controlled, and the increasing use of electronic materials. In 2022, the customs procedure audits focused on import and special procedures.
The total sum of debited taxes based on post-clearance recovery resulting from tax audits amounted to €4.5 million at the end of 2022. The annual variation in the amount of post-clearance recovery depends on the auditing and control priorities, risk analysis and critical selection criteria used in the selection of entities, the proportion of entities subject to statutory audits and controls, the size of the companies audited and controlled, and the scope of audits and controls. Even a single larger entity audited or a major error will have a significant impact on the annual post-clearance recovery total.
A total of 18 corporate audits and document controls were carried out in 2022 on shadow economy targets. These were based on either a criminal offence, the AM communications of OLAF, or reporting to the police.
Customs supervises goods infringing intellectual property rights pursuant to Council Regulation (EU) 608/2013. The purpose of the supervision is to protect customers from exposure to products that may endanger their health and safety, as well as safeguard tax revenue and the financial interests of rights-holders. The control is largely based on cooperation between Finnish Customs and the right holders, since the crimes involving counterfeit goods that infringe intellectual property rights are complainant offences. Most of the counterfeit products detained by Customs infringe a registered trademark or design. Products that infringe patents are also occasionally detained. The supervision takes place in connection with, for example, physical inspections.
The number of counterfeit goods detained by Customs and their calculated value have been decreasing (Figure 3) between 2013 and 2022. The fluctuation in the number of detained counterfeit goods and their value is completely normal and strongly connected to the resources available at the time. The long-term trend clearly indicates a decline in large-volume detentions. This is because there is currently no eastbound transit traffic, which means Finland is no longer a transit country for counterfeit goods. Today, detentions are completely focused on postal and express freight traffic, and these now reflect the situation of counterfeit goods in Finland better than before. The increase in online trade has a significant effect on the import of counterfeit goods. Online purchases are mostly transported in postal or express packages, which in turn has a direct effect on the size of the shipments, i.e., they are mostly small. A similar trend has been observed in other EU countries.
The large volumes of postal traffic make its supervision challenging. Identifying counterfeit goods requires a more detailed inspection of the goods, and usually, X-ray imaging is not helpful, as it does not show trademark markings, for example. More than 95% of the articles detained in Finland infringe a registered trademark. With the volume of packages constantly increasing, the resources allocated to supervising postal traffic have not permitted Customs to focus on the identification of counterfeits among arriving goods. At the end of 2022, Customs intensified the control of counterfeit goods in postal traffic by developing e.g. the risk analysis of postal traffic.
Investigation of economic crime
Customs investigates suspected economic offences that fall under its jurisdiction. Economic crime refers to crime that is committed in connection with legal business operations with the aim of obtaining financial gains. The main offence usually involves tax fraud or aggravated tax fraud. Customs also investigates offences involving forgeries as well as customs clearance, environmental and accounting offences. Customs also classifies the smuggling of products subject to excise tax (alcohol, snus and cigarettes) as economic crime when it is comparable with business and professional activity, and even when it is not disguised as business activity.
The societal impact of economic crime prevention by Customs in 2022 totalled €18.2 million, while the figure for the previous year was €20.6 million (Figure 4). The impact comprises the sum of damages resulting from the cases investigated, i.e. evaded taxes, damages resulting from cases under or pending investigation (sequestration and prohibition of transfer), assets recovered by Customs, and assets assigned to the enforcement authority or another official. The value of recovered proceeds of economic crime totalled €2 million. In the previous year, it was €4.6 million. The amount of recovered proceeds of crime varies from year to year.
In 2022, Customs investigated a total of 582 tax fraud cases, which is 14 cases more than in 2021. A total of 122 cases of aggravated tax fraud were detected, which is 26 cases more than the previous year.
Customs collaborates with the Tax Administration and law enforcement authorities in other countries to combat the growing phenomenon of Intra-Community VAT fraud.
The sanctions against Russia and suspicions of their evasion present a new phenomenon. In 2022, some 20,000 cases of goods transport between Finland and Russia were processed under sanctions monitoring based on customs declarations, of which more than 1,000 were inspected. The number of regulation of-fences increased significantly in 2022: Finnish Customs registered 306 regulation offences of various degrees regarding sanctioned activities. In previous years, Finnish Customs has only investigated rare cases of regulation offences. Through effective export control, Customs will ensure, for its part, that the EU’s common foreign and security policy measures are effective and that the objectives set out for them are achieved in full.
In the case of shadow economy phenomena, this means that the prosecutor decides whether there are grounds for deeming that the preconditions of a criminal offence have been met. As a rule, the prosecutor must press charges when there are probable grounds for doing so on the basis of the evidence gathered in the pre-trial investigation. A criminal case is initiated in a District Court on the basis of an application for a summons and progresses to the main hearing after the related preparations.
Source: Ministry of Justice
The number of cases of financial crime decided by district courts has remained level in recent years. The most common financial offence decided by district courts is aggravated accounting offence. Aggravated accounting offences are often connected to other offences, such as aggravated tax fraud. The handling time of a financial offence is influenced by factors such as the scope of the case. The median handling times of cases in district courts range from approximately 60 to 250 days, depending on the type of offence.
In 2022, the number of criminal cases submitted to district courts was roughly 9% lower than in the previous year. The processing times of all resolved criminal cases (both the median and average) also continued to increase in 2022 compared to the previous year.
More information can be found in the annual report of the National Courts Administration (in Finnish only, summary in Swedish) [.ﬁ]›.