A record amount of economic crime in 2023 – the shadow economy prevention statistics reflect the weak economic situation

The weakening economic situation is reflected in the increasing amount of economic crime, bankruptcies and tax debt. This is revealed by the statistics on control results regarding the shadow economy and economic crime in 2023. In addition, the monitoring of compliance with sanctions has increased the number of authorities’ control tasks.

In 2023, nearly 2,400 economic crime cases were reported to the police. The number is up by around 15% from the previous year and higher than ever before. More than half (54%) of all economic crime cases recorded by the police were tax and accounting offences or offences involving debtors. In particular, aggravated accounting offences, tax offences, dishonesty by a debtor and forgeries, as well as subsidy fraud cases and embezzlement cases increased from the previous year.

In 2023, more than 3,300 bankruptcy petitions were submitted, up by 24.8% from the previous year. The number of company reorganisations has also shown a significant increase since the beginning of 2023. In 2023, a total of 448 applications for company reorganisation were submitted, which is up by around 32% from the previous year. The enforcement authority collected nearly €1.2 billion, the second-highest of all time in terms of euros.

Undeclared wages, misuse of benefits and bogus self-employment

In the tax audits that the Tax Administration conducted in 2023 to combat shadow economy, a total of €95 million in unreported income and €16 million in undeclared wages were detected. The value of detected falsified documents amounted to €13 million.

The total value of Kela benefit misuse cases that led to a police investigation request was over €3.8 million. The misuse of Kela benefits is also often linked to certain shadow economy phenomena, such as undeclared wages and falsified documents. Around 85% of the cases where Kela requested police investigation resulted in a judgment.

The supervision of foreign labour carried out by the Uusimaa Centre for Economic Development, Transport and the Environment (ELY Centre) and the occupational safety and health authorities revealed that labour-related exploitation and disguised employment relationships (bogus self-employment) are still on the increase. This is particularly evident in the construction sector, but it was also detected in the cleaning sector, in garages and laundries and in seasonal work. In addition, inaccuracies were detected in working hour accounting in nearly half (46%) of the cases audited. Inaccurate working hour records make it difficult to assess whether the pay is correct as the actual hours worked cannot be determined.

The shadow economy is fragmenting – operators are increasingly small

Because of the rapid increase in the amount of economic crime, the case processing times are increasingly long. “One reason for longer processing times is fragmentation,” says Janne Marttinen, Head of the Grey Economy Information Unit.

“Changes in working life from traditional employment relationships to platform economy, light entrepreneurship and forced entrepreneurship have led to a situation where smaller and smaller operators are engaged in the shadow economy. The economic impact of a single case may be small but, nonetheless, cases must be investigated. Control and criminal investigation of these cases require as much authority resources as large cases do,” says Janne Marttinen.

New phenomena give rise to new shadow economy phenomena, and operators occupy new sectors.

“Cooperation and exchange of information between different prevention authorities are key to identifying cases of misuse and responding to them. Action Plans for tackling the shadow economy and economic crime have strengthened cooperation between authorities. This has improved competence, and phenomena of the shadow economy are now better identified,” says Janne Marttinen.

Highlights from authorities’ control activities in 2023:

• Criminal damage recorded by the police totalled €147 million. The amount of criminal proceeds from economic crime, i.e. recovered assets, amounted to €24.5 million.
• Of the partial decisions on residence permits for entrepreneurs issued by the Uusimaa ELY Centre, 48% were negative, which is 8% more than in the previous year. The most common reasons for negative partial decisions include inadequate compliance with statutory obligations and non-viable business ideas.
• The impact of the investigation of economic crime conducted by Customs was €103 million in total. Customs recorded 492 regulation offences regarding violations of EU sanctions against Russia, and 58 of them were suspected to be aggravated regulation offences. Regulation offences were up 60% from the previous year. Before this, only some individual regulation offence cases were under investigation.
• In 2023, licence holders governed by the Regional State Administrative Agencies' alcohol administration paid around €1.2 million in tax debt due to control issues, and around €610,000 due to licence issues.

Read more:
Grey economy & economic crime – Prevention statistics
Action plan 2020–2023 for tackling the grey economy and economic crime
Impact assessment of the action plan 2020–2023 for tackling the grey economy and economic crime