Criminal money – The morality of success
Marjukka's case is fictional, but based on real-life observations of professional enabling
Marjukka, a successful businesswoman, pulls up in her luxury car in front of the hotel and steps out. She confidently strolls into the beautiful ballroom where the chink of champagne glasses and cheery greetings fill the air. Marjukka joins her entourage of business leaders. She enjoys the feeling of being part of the inner circle.
As the evening progresses, the discussion turns to money and taxation. Marjukka and other business people nod in agreement when someone mentions the excessive burden of Finnish taxation. Soon, two of them tell how they have managed to avoid high taxes by using a consultant who has organised things discreetly. "There are no risks involved," says one of them. There seem to be a lot of people using them and some well-known consultants were even interviewed on television.
Impressed, Marjukka listens and feels her enthusiasm growing. That evening, she browses the consultant's website, which in itself inspires confidence. A wide range of services are on offer, although some of them seem a bit dubious, even illegal. But if others have gone down this road, surely it must be safe. The risk is high but at a tolerable level, and the benefits seem great. She decides to contact the consultant.
The following week, Marjukka meets the consultant who listens carefully to her concerns and offers two options. The first option is based on minimising the tax burden: setting up a company in Estonia and opening a bank account, as well as company maintenance services such as post boxes and board meetings. This constitutes tax planning where the client takes responsibility and, if caught, the penalties would be mainly administrative. This option offers a significant reduction in tax burden at relatively low risk.
The second option is not tax planning as such, but direct action to conceal funds from the Tax Administration. This includes channelling money, buffer arrangements, tax evasion and the concealment of beneficiaries. In this option, the consultant is closely involved in the arrangement, and risk management and communication are carefully agreed on. This option promises the full protection of assets and minimises the risk of getting caught. "The assets are safe and the future is taken care of," assures the consultant.
Marjukka chooses the second option. The return on her investment will increase dramatically and her life will be filled with luxury. There seems to be no reason to fear getting caught, as the reassuring words of the consultant and the success stories of others make everything feel safe. Relaxing at her holiday resort, Marjukka reflects on how easy everything has been and how important the advice of people she knows has been.
One morning, however, Marjukka wakes up to her doorbell ringing. A police officer is at her door to tell her that she is the suspect in an alleged crime and that her home will be searched. The situation hits her like a cold shower, and she feels her world begin to crumble. She immediately asks for a lawyer but in her mind she knows that there is no easy way out of this.
The investigation by the authorities was based on an anonymous tip-off to the tax Administration in Marjukka's case. It was an informed tip-off shedding light on years of malpractice.
When the matter was investigated by the Tax Administration, the portfolio of the tax consultant – a professional enabler – clearly revealed illegal structures. The costliest examples range from tax planning to tax offences. The tip-off is acted upon and the alleged intentional malpractice is confirmed. Cooperation with the authorities is initiated.
With the help of the police, the devices in the tax consultant’s office are searched, as is Marjukka's home. Evidence is collected for tax purposes but also for criminal proceedings by coercive measures, i.e. without the client’s cooperation.
Marjukka's idea that the matter could be handled by tax increases was wrong. Marjukka faces an unconditional prison sentence. On top of that, she loses her job and ends up with a criminal record, so the damage to her reputation will be long-lasting.
The professional enabler, the tax consultant, is suspected of involvement in tax fraud, which can prove to be either complicity or aiding and abetting. The tax consultant also faces administrative penalties for non-compliance with tax reporting obligations, the amount of which is affected by the number of clients that he has.
In Marjukka's case, it was always likely that she would be caught and that the penalties would be heavier than just money, meaning that a mere tax increase would not suffice. In hindsight, Marjukka's trust in the consultant’s expertise backfired.
The development of control by the authorities is increasing the risk of getting caught, as the range of control methods is diverse and constantly evolving. Such methods include the analysis of cash flows and intelligence-led investigation.
