Economic crime report 2004 - Ekobrottsmyndigheten

ECONOMIC CRIME REPORT
Report no. 2004:1

Combating Economic Crime – Flowchart
Intelligence and surveillance
Supervision
Crime reports by
agencies
Reported crimes
Administrative
sanctions
Business information and bankruptcies
Investigation
Suspended investigations
and acquittals
Conviction and sanction

Economic Crime Report

Swedish National Economic Crimes Bureau
Reference no. 900 2003/0426
ISSN: 1404-3521
Graphic production: Ord&Form AB, Uppsala
Printers: Elanders Gotab, 2004
Translation: Stockholms Tolkförmedling AB

Government
Swedish Ministry of Justice
103 33 Stockholm
Economic Crime Report
Pursuant to Section 13 of the ordinance on the co-operation of government
authorities against economic crime (1997:899), I am hereby submitting
this report. Reviewing the past three years, the report describes
how economic crime has changed and presents the measures that have
been taken within the framework of the interagency cooperative effort
governed by the ordinance. Also included is a proposed course of action
for combating economic crime and for interagency cooperation to deal
with the problem over the next three years.
The Swedish Economic Crimes Council prepared the report in collaboration
with the Swedish National Economic Crimes Bureau (EBM),
the Office of the Prosecutor-General (RÅ), the Swedish National Police
Board (RPS), Swedish Customs, the Swedish National Council for Crime
Prevention (BRÅ), Finansinspektionen (the Swedish Financial Supervisory
Authority), the Swedish Tax Agency (SKV), and the Swedish Companies
Registration Office. A task force composed of representatives from
the agencies of the Swedish Economic Crimes Council put together the
extensive documentation included in the report.
I would like to take this opportunity to make the following additions
with respect to EBM.
During the past six years, EBM has worked on establishing appropriate
working methods, as well as combating economic crime more efficiently
and productively. Key to that effort has been the encouragement of greater
interagency cooperation in order to fight such offences in the coordinated
manner detailed by this report.
EBM is about to enter a comprehensive development phase, the purpose
of which will be to improve upon its working methods, organization,
direction and management. The initiative will also evaluate the impact
that the agency has exerted in past years on the scope, structure and dangerousness
of economic crime.

During the first step in this process, managers and experts at EBM have
summarized the results achieved over the first six years and laid the
groundwork for the upcoming development effort. From now on, the
focus will be on both an internal and external perspective for combating
economic crime. EBM will solicit the viewpoints of the agencies of the
Swedish Economic Crimes Council, courts, receivers in bankruptcy and
the like regarding how well it has met its responsibility to effectively fight
such crime during its first few years. An integral part of the development
process will be an in-depth analysis of the impact that EBM’s activities
have had in relation to the overarching goals of the effort to oppose these
offences.
In accordance with plans for examining the work of EBM, I will have the
opportunity this autumn to submit a report to the Government about
how to more effectively combat economic crime and how to improve the
agency as the heart of that enterprise. I am already clear that the spotlight
must be on strengthening the agency in dealing with the most serious
offences, often with the aid of totally new intelligence operations. The
focus must also be on designing a fundamental prevention effort aimed
at reducing crime over the long run. In order to accomplish that, a strategic
review and in-depth analysis should be followed by an initiative to
make EBM more efficient with an emphasis on substantially expanding
crime reduction activities both quantitatively and qualitatively starting
this year.
I anticipate that most of the measures that will be proposed can be implemented
without any special action on the part of the Government, i.e.,
within the framework of EBM’s mandate and responsibilities. Other
proposed measures, such as legislative amendments in certain areas, may
require such action.
Gudrun Antemar
Cc: Office of the Prosecutor-General, Swedish National Police Board, Swedish Customs,
Swedish National Council for Crime Prevention, Finansinspektionen, Swedish Tax
Agency, Swedish Patent and Registration Office

Economic Crime and
Efforts to Combat It

Introduction
Pursuant to the ordinance on the co-operation of government authorities
against economic crime (1997:899), the Swedish National Economic
Crimes Bureau (EBM) is to put together a report for the Government
once every three years on economic crime and efforts to combat it. The
report, to be prepared by the Swedish Economic Crimes Council and
submitted to the Government by 15 May, is to describe how economic
crime has changed and present the measures that have been taken within
the framework of the interagency cooperation effort governed by the ordinance.
Also to be included are proposals for the direction that the effort
to combat such offences should take over the next three years.
After preparing the report, the Swedish Economic Crimes Council has
made the following assessment of economic crime and efforts to combat
it.
1

Economic Crime
– Current Status and How It Has Changed
Suspected tax violations and crimes against creditors account for the majority
of economic crimes that are reported and prosecuted. The number of
tax offences rose by 30% from 4,459 in 2001 to 5,817 in 2003. With
respect to crimes against creditors (Part 11 of the Penal Code), bookkeeping
offences increased by 20% from 4,846 in 2001 to 5,850 in 2003.
Other reported crimes against creditors were up by a modest 13% from
729 in 2001 to 824 in 2003.
Prosecuted tax offences in 2003 totalled 403, a figure that has remained
relatively stable since 1998. Prosecuted crimes against creditors, including
bookkeeping offences, numbered 990 in 2003, also fairly steady since
1998.
Reported violations of the Insider Penal Act increased from 3 in 2001 to
15 in 2003. Reports of improper influence on share prices rose from 2 in
2001 to 6 in 2003. Reported EU fraud cases were up from 8 in 2002 to
26 in 2003.
Thus, reported economic crimes have increased over the past three years.
But since so many cases go unreported, it is difficult to draw any reliable
conclusions from the above figures. Most probably the number of crimes
has not significantly increased or decreased. In any case, neither SKV nor
the other agencies – primarily EBM, the police, Customs and the Office
of the Prosecutor-General – that work together in combating economic
crime have noticed any such tendencies. Nevertheless, certain trends can
be identified, although it is to early to tell whether they are affecting the
number of prosecutions.
The first trend is that economic crime has become harder to investigate.
The offences are being planned more carefully and involving a greater
number of people. Both the globalization process and accelerating technological
progress further complicate the matter.
The second trend is that even people who commit other offences are
engaging in economic crime. Links to other serious crime are becoming
more and more common. As a result, a growing number of economic
offences are attributable to organized crime. Characteristic features of
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such criminality are that it includes several types of illegality, is international
in scope and is carried out by closely-knit groups or networks.
A third trend is that the offenders place themselves out of reach by
appointing fictitious foreign individuals to corporate boards and engaging
in other similar ruses.
Due to advances in information technology, capital can be moved across
national borders to an extent that was unheard of before. It is no exaggeration
to maintain that today’s sophisticated IT is well suited for the
commission of economic crime. E-commerce, particularly over the Internet,
can aggravate any attempt to identify the seller or establish a fiscal
domicile. The Internet is not only a marketplace, but a vehicle for worldwide
funds transfer. Thus, technology has provided economic offenders
with a tool for both committing crimes and laundering the proceeds that
their acts generate.
An important phenomenon to keep an eye on is how young people feel
about economic crime. The 1998-2001 periodic attitude surveys conducted
by the Swedish Tax Agency (SKV) noted an increasing acceptance
of undeclared work by young people. A series of similar studies commissioned
by EBM have shown that young people take a more lenient stance
on undeclared work and economic crime than did previous generations.
A somewhat different perspective emerged following an informational
drive aimed at 16-20 year olds that SKV carried out in 2002-03. In order
to measure the impact of the campaign, a preliminary survey was conducted
in the spring of 2002. Following a year of activities, a new study
in the spring of 2003 indicated that more young people had an unfavourable
view of and rejected undeclared work. Now that the informational
effort has proceeded for another year, the results of a third survey are in
the process of compilation. Preliminary findings suggest that attitudes are
continuing to change. Thus, SKV has established that such campaigns
can change the way that people look at these matters.
Our understanding of young people’s views on economic crime is neither
unambiguous nor complete. How they feel about such offences is key to
predicting future crime trends. Thus, more in-depth information needs
to be gathered in this area.
3

Economic Consequences of Economic Crime
SKV estimates that uncollected 2002 tax revenues totalled SEK 105
billion, of which SEK 70 billion was due to undeclared work. There is
insufficient data to quantify the harmful economic effects of other economic
crime. Such offences in connection with bankruptcies, primarily
the crimes against creditors, hurt not only the state in terms of tax and
fee evasion, but also banks, other lenders, suppliers and landlords, all of
which suffer major losses. Similarly, not enough information is available
about the economic impact of financial crimes.
4

Resources for Combating Economic Crime
The graph below illustrates the resources that have been available for
efforts to combat economic crime. By transferring resources from other
activities, SKV has gradually strengthened its tax crime units. That development
has been accompanied by a reduction of the resources that the
police’s economic crime squads have at their disposal.
The graph specifies the costs associated with combating economic crime.
The overall impact has been a steady increase in resources that the anticrime
effort has at its disposal. But given wage and price growth during
the period, the total expansion of resources is less than the graph suggests.
Costs for combating economic crime, 1999–2003
400000
350000
300000
250000
259 211
283 500
304 307
317 767
317 869
200000
150000
100000
50000
0
147 600
39 000
32 795
138 200
56 000
38 681
125 300
76 000
38 308
166 653
135 631
97 000
92 000
38 000 29 000
1999 2000 2001 2002 2003
Total costs 478 606 516 381 543 915 588 398 614 522
EBM Other ÅM RPS SBE
Agencies have various kinds of resources, such as SKV’s special divisions,
in addition to those included in the graph, that help combat economic
crime.
5

Interagency Cooperation Measures
That Have Been Taken
Agencies largely rely on cooperation with each other in their ongoing
effort to combat economic crime. The partnership, often informal in
nature, is continually evolving. Structured, overarching and functionally
oriented collaboration through the Swedish Economic Crimes Council
and its task force, as well as through regional cooperating agencies for
combating economic crime (SAMEBs) – supplements that arrangement.
Examples of More Formal Operational Cooperation
• A national interagency monitoring project carried out in 2000 to
thwart VAT carousel fraud significantly reduced the number of such
offences in Sweden, as opposed to many other European countries
– including Britain and France – that are still wrestling with an
extensive problem.
• A similar nationwide effort to deal with VAT fraud in connection
with crossborder trade in food products began in 2003 and is
expected to continue through 2005.
• A report on shelf companies was submitted in 2003. On behalf of
the Swedish Economic Crimes Council, the project team is still in
the process of coordinating implementation of the report’s proposed
measures to reduce abuse of shelf companies.
• The SAMEBs have carried out a number of regional and local monitoring
projects, primarily in the construction, restaurant, taxi and
transport sectors.
Cooperative Crime Prevention
Crime prevention measures have included such direct action as various
kinds of contact with businesses, agencies, organizations and the public,
as well as indirect action like investigations and information gathering
efforts that may serve as the basis of future direct action.
• Prevention projects are under way or have been completed within
a number of sectors in partnership with the agencies that combat
economic crime, the Swedish Trade Union Confederation, the Con-
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federation of Swedish Enterprise, and many other organizations,
municipalities and county councils. The purpose of such initiatives is
to raise the consciousness of such institutions concerning the importance
of prevention.
• Some SAMEBs have cooperated on prevention with other organizations,
particularly trade unions. The SAMEBs have also conducted
informational campaigns aimed at new businesses and the like.
Among other activities have been coordinated courses and seminars
to provide agencies with additional skills and increase their familiarity
with different types of crime prevention measures.
• A task force has examined trading prohibitions and how they are
supervised, a report on which was submitted in the spring of 2004.
One purpose of the project is to make prohibitions more effective in
preventing crime.
• An EBM-designed system (Ekobanken) to store and share knowledge
and experience has the long-term goal of supporting all agencies that
are involved in combating economic crime. Ekobanken will set the
stage for improving skills and methods development in the area of
crime prevention as well.
The objectives of crime prevention initiatives are normally long-term in
nature. No follow-up or evaluation has yet been performed on the measures
taken thus far – in most cases, special action will be required in order
to do so.
Other Cooperative Projects
• The Swedish Economic Crimes Council has launched a special
project that develops models and working methods to take advantage
of existing ways of tracking and recovering proceeds of crime.
• Begun in 1994 under the title of Rubicon (Routines, criminal investigations
in bankruptcy), the initiative resumed in 2000 and led to a
nationwide seminar series in 2002.
Threat Analysis
The Swedish Economic Crimes Council started an interagency seminar
series to work up a threat analysis in the area of economic crime. The
effort was initially sweeping in scope, but the Swedish Economic Crimes
Council subsequently decided that the first phase should concentrate on
the following areas.
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Undeclared Work
• Employers who hire undeclared labour in cash sectors
• Undeclared work and staffing companies
VAT Fraud
• Particular focus on crossborder trade
Agents Who Aid Economic Crime
• Spurious advisers and tax havens
• Spurious founders of shelf companies and abuse of legal forms of
business entity
8

Proposed Direction and Measures for the
Next Three Years
The following section starts with an overall discussion of the direction
that the effort to combat economic crime should take over the next three
years. After that is a detailed presentation of the most promising ways to
deal with the types of threats described above.
To begin with, cooperation must continue and expand on the operational
level, including the joint development of new methods to more effectively
fight economic crime.
A second primary task is to broaden the prevention effort on the basis
of close, multilevel collaboration among the agencies concerned, as well
as the private sector and other interested parties. Young people, many of
whose attitudes toward undeclared work and economic crime need working
on, are a key target group. More suitable methods must be developed
to wield that kind of influence.
A third task is to maintain the focus on threat analyses. Next on the agenda
is a 2005 interagency review of the EU’s enlargement. Another essential
step is to build upon intelligence activities in the area of economic crime.
Links to organized crime should receive particular attention.
Cooperation is the key to success. Secrecy issues often come up in this
connection. SAMEB reports frequently argue that secrecy legislation
erects barriers to combating economic crime in several different areas,
particularly before a pretrial investigation or audit is launched. A more
general problem is that agencies often cannot provide information to
other agencies or receivers in bankruptcy unless expressly requested to do
so. The party that needs the information is frequently unaware of its existence.
Overhauling this kind of legislation would appear to be urgent.
9

A CLOSER LOOK AT UNDECLARED WORK, VAT FRAUD AND
AGENTS WHO AID ECONOMIC CRIME
(SPURIOUS ADVISERS AND TAX HAVENS)
Undeclared Work
Although available resources required that the first phase of the threat
analysis focus on cash sectors, undeclared work is also a phenomenon in
invoicing sectors, particularly the construction industry in its broadest
sense. Logically speaking, the next phase should examine the other sectors
as well.
This type of crime involves withholding and failing to declare cash
income, thereby affecting not only income tax assessment, but VAT and
social security payments as well. One serious consequence is that companies
hire undeclared labour to reduce costs and thereby become more
competitive vis-à-vis legitimate businesses. The particular ways of concealing
such income are highly specific to each sector.
SKV is conducting a nationwide project to determine the extent to which
major construction efforts throughout Sweden use undeclared labour.
A report issued by the project notes that certain segments of the construction
industry have incorporated tax evasion in a way that may be
described as the organized contracting out of such labour. The use of
various constellations of independent contractors – subcontractors, staffing
companies and other intermediaries at different level – makes it more
difficult for SKV to detect and investigate tax evasion schemes. The phenomenon
is not new in itself. Previous reports on contracting sectors have
also revealed widespread tax evasion calling for legislative changes. The
current statutes on how labour is contracted out have made SKV’s job
even harder when it comes to heading off this type of evasion.
The project has found evidence of widespread payment of undeclared
wages in the construction industry. The assessments that have been made
so far suggest that such wages amount to SEK 2.5-3 billion annually in
the areas covered by the project. While declining to estimate the extent
of undeclared work in the industry as a whole, the report stresses that
it is clearly unsettling. As the result of uncollected payroll tax, personal
income tax, and VAT, the state loses annual revenue amounting to 85%
of undeclared wages, or SEK 2-2.5 billion. The scope of this problem has
distorted competition in some cases.
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The proposals of a Construction Commission appointed by the Government
in February 2002 are now under consideration by the Government
Offices. It is important that the upcoming legislative proposals be designed
so as to have a real impact on undeclared work. Otherwise, there is a clear
danger that spurious segments of the construction industry, including
elements of professional crime, will grow ever stronger.
Since it became legal to contract out personnel, staffing companies have
become active in many sectors. Some of the companies are spurious, i.e.,
their business concept is to provide undeclared labour. Since they hold
business tax certificates, employers who use their services can deny ever
having hired such workers.
Trends Over the Next Three Years
Attitude surveys, which are described in more detail above under “Economic
Crime – Current Status and How It Has Changed,” suggest that
young people today do not have the same fundamental principles and
taxpayer morale as previous generations. That shift in values may pose a
threat to the Swedish tax system. Unless the trend is reversed, the state is
likely to lose even more tax and fee revenue in the future.
Proposal
• It is essential that the legislative work currently under way with
respect to withholding taxes for subcontractors in the construction
industry be completed as soon as possible, and that similar systems
are implemented in other sectors characterized by chains of subcontractors.
• When it comes to cash sectors, laws that require the introduction of
type-approved cash registers are of great urgency.
• Based on what SKV has learned from its special campaign, informational
efforts should be carried out to reshape the lenient attitude of
young people toward certain kinds of undeclared labour.
• Interagency crime prevention projects have been conducted in cooperation
with unions, employer organizations, trade associations,
municipalities and county councils. Such activities must continue,
expand and spread to other sectors that are involved. Furthermore,
special initiatives are planned to increase the participation of
SAMEBs and to engage local crime prevention councils in preventing
undeclared work.
11

VAT Fraud
There is always a risk that output VAT will not be reported as required or
that improper deductions will be claimed for ingoing VAT.
VAT fraud can be committed in four basic ways.
• A transaction is not declared and no VAT payment is made. As a
result, no income tax is paid for any profit associated with the transaction.
Nor is any selective purchase tax collected.
• VAT is declared but not paid, a frequent occurrence when bankruptcies
are being planned.
• Based on false grounds, excess input VAT is declared so as to extort
tax revenue from the state.
• Goods are smuggled into Sweden from non-EU countries in order
to sell them without having to pay income tax on the proceeds. As a
result, no VAT is paid either.
Both criminological research and government agencies in their daily work
are highly familiar with the fraudulent methods employed in connection
with VAT. Nevertheless, there is no doubt that attempts by the agencies
to monitor such fraud have given rise to new methods.
No reliable estimate is available as to the scope of VAT fraud. Consumers
often fail to consider the issue when they purchase a good or service that
is “exempt from VAT” at an unreasonably low price. Furthermore, competition
becomes distorted when some businesses can offer lower prices
than their rivals by virtue of not paying VAT. That has a ripple effect in
that companies may turn to crime in order to survive.
A special type of evasion, involving “missing traders,” has raised a great
deal of concern within the EU. Also involving VAT carousel fraud, such
activities have risen to a totally unacceptable level in countries like Britain
and Germany. As a result, the European Commission undertook a special
project to combat this type of VAT evasion.
According to EU’s basic treaties, the Member States share the responsibility
of monitoring harmonized indirect taxes. Analyses conducted in some
EU countries suggest that uncollected revenues may exceed 15% of the
taxable base.
The final report of the Commission’s project concluded that VAT carousel
fraud would continue to pose a risk for the foreseeable future. Despite
indications that Sweden is no longer always the country that suffers the
loss of tax revenue, it remains one station through which the carousels
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pass. Thus, other Member States ask for Swedish assistance during various
investigations of distribution and payment channels, etc.
Trends Over the Next Three Years
VAT will continue to represent a clear risk area, particularly in relation to
crossborder trade.
The enlargement of the European Union on 1 May 2004 to include ten
additional countries is expected to affect VAT fraud associated with EUrelated
trade. However, the new Member States are working on strategies
to deal with these problems.
Proposal
• Indirect taxes in connection with crossborder trade deserve special
attention.
• International cooperation among various agencies is needed to more
effectively monitor this area.
Spurious Advisers and Tax Havens
Dealings through tax havens have many different purposes and contexts.
SKV has charted and described a number of such methods as part of various
monitoring projects.
Tax havens have been around for a long time. Prior to the deregulations
of the 1990s, they were very expensive and complicated to use. Since that
time, they have become much cheaper and simpler to use, while many
sources of advice and offers are now available on the subject. The projects
discussed above indicate that the utilization of tax havens is on the rise,
particularly among small, profitable businesses. In recent years, most
transactions have been conducted through facade companies in countries
like Britain and the Netherlands.
Estimates for Sweden put annual uncollected tax revenues related to
international transactions at SEK 20-35 billion, of which SEK 2-5 billion
stems from company formation through tax havens and SEK 8 billion
primarily from investments by private individuals in low-tax countries
that provide insufficient supervision.
International tax evasion differs from other types in that the taxable basis
is often lost forever. No revenue is ploughed back into the Swedish economy
to create additional income.
13

Trends Over the Next Three Years
For a number of years, the OECD and EU have devoted a great deal of
effort to following and assessing the injurious effects of taxation differences
among various countries.
Labelling it unfair or harmful tax competition, the EU has concentrated
on attempts by Member States to use favourable regulations to attract
businesses, capital and individuals at the expense of other countries. The
OECD calls the phenomenon harmful tax practices, focusing on tax
havens instead. Following extensive investigation and negotiation, most
of the 40-odd tax havens that were pinpointed have pledged to amend
their regulations. One key area of reform is to make it easier to share
information and learn the identity of a company’s true shareholders.
Proposal
• The most important measures involve continuing to design monitoring
methods, following and analyzing trends in the market for
financial advice, and strengthening international cooperation, both
generally among the various EU and OECD institutions and specifically
on the purely operational level. Since spurious advisers are often
the hub of this type of economic crime, action to deal with them is
of particular urgency.
Spurious Founders of Shelf Companies
Each year, individuals and businesses in Sweden form a large number of
shelf companies that they sell for SEK 4,000-5,000 each without ensuring
that the share capital of at least SEK 100,000 is ever deposited. In
most cases, the purchasers plan to use the companies to withdraw excess
input VAT and commit various and sundry types of fraud.
Government agencies are acquainted with the spurious founders of shelf
companies who are engaged in extensive activities. There are 15-20 individuals
who manage businesses that buy and sell shelf companies in a
spurious manner. After a short while, most of the companies declare
bankruptcy and the purchasers are saddled with very high debts, both
public and private. Approximately 17,000 joint stock companies, some
3,000 by spurious founders of shelf companies, have been started annually
over the past three years.
In that way, such a company can become a vehicle for engaging in illegalities.
Sometimes these spurious founders help purchasers commit various
tax crimes and other economic offences. Shelf companies without capital
14

cover are put into the service of economic crime. The state loses major tax
and fee revenues as a result. Suppliers and creditors suffer heavy losses.
Meanwhile, having observed that government agencies are monitoring
their activities, some founders of spurious shelf companies have started
to market partnerships and limited partnerships instead of joint stock
companies.
Trends Over the Next Three Years
Despite the countermeasures that have already been initiated, and that will
be evaluated and improved upon on an ongoing basis, the risk remains
that these spurious activities will continue. The state may lose major tax
and fee revenue as a result. Suppliers and creditors are in danger of suffering
large losses.
Proposals
The Swedish Economic Crimes Council extended the mandate of the
Spurious Founders of Shelf Companies task force to work on and gather
resources for implementing the proposed measures. The measures are
broken down into two basic categories.
• Providing information on the content of the report to employees of
the cooperating agencies, founders of shelf companies, accountant’s
organizations and individual accountants for chains of shelf companies.
Hopefully that will have a preventive effect and alter the behaviour
of those involved.
• Taking advantage of existing legislation to prosecute people who participate
in spurious shelf company dealings.
15

Concluding Remarks
The purpose of the measures and activities discussed above is to reduce
economic crime and its injurious impact on the national economy, ultimately
on individual citizens. That effort must continue and expand. Particular
attention should be paid to supplementing traditional monitoring
activities, particularly crime prevention measures.
Nevertheless, the resources that agencies have at their disposal will always
be a limiting factor in terms of what they can achieve. As part of the
national budgetary process, the agencies that make up the Swedish Economic
Crimes Council will submit additional requests to the Government
on these matters.
16

Report
Lennart Berg, Anna K. Hansson, Dan Magnusson and members
of the Swedish Economic Crimes Council task force
17

Contents
1. Introduction 6
2. Current Status of Economic Crime 7
2.1 THE CONCEPT OF ECONOMIC CRIME 7
2.2 VARIOUS KINDS OF ECONOMIC CRIME 7
2.3 SOURCES OF INFORMATION 8
2.4 CRIME LINKED TO CROSSBORDER TRADE 10
2.4.1 VAT Fraud 10
2.4.2 Smuggling of Commercial Imports 10
2.5 FINANCIAL CRIME AND THREATS TO THE SWEDISH TAX BASE 11
2.5.1 Insider Crime and Improper Influence on Share Prices 11
2.5.2 Undeclared Work and Other Sector-related Crime 12
2.5.3 Traditional Tax Evasion 16
2.5.4 Evading Selective Purchase Tax 19
2.5.5 Tax Havens and Tax Evasion Linked to Foreign Financial Markets 22
2.5.6 Money Laundering 23
2.6 ABUSE OF LEGAL FORMS OF BUSINESS ENTITY 25
2.6.1 Spurious Shell Company Dealings 25
2.6.2 Spurious Founders of Shelf Companies 26
2.7 INSOLVENCY-RELATED CRIME 28
2.8 ORGANIZED CRIME 28
3. Cooperation 33
3.1 THE SWEDISH ECONOMIC CRIMES COUNCIL 33
3.2 EU FRAUD 34
3.3 THREAT ANALYSIS 34
3.4 COLLABORATION AMONG THE NATIONAL
COOPERATING AGENCIES 35
3.5 REGIONAL COOPERATING AGENCIES 37
1

4. Intelligence and Monitoring Operations 38
4.1 INTELLIGENCE 38
4.2 TAX SUPERVISION 42
4.3 SUPERVISION BY FINANSINSPEKTIONEN 46
4.4 CUSTOMS CONTROL 48
4.5 NATIONWIDE INTERAGENCY PROJECTS 49
4.5.1 Carousel 2000 49
4.5.2 Food Products Project 50
4.6 REGIONAL MONITORING EFFORTS 51
5. Reports of Suspected Crime 55
6. Crime Investigation 61
6.1 General 61
6.2 Case Handling by the Public Prosecution Authorities 61
6.3 THROUGHPUT TIME AND PROSECUTION 64
6.4 POLICE INVESTIGATIONS IN THE REST OF THE COUNTRY 67
6.5 TAX CRIME UNITS 68
7. People Convicted and the Penalties 69
8. Resources 71
9. Attachment, Collection, etc. 72
9.1 BANKRUPTCY SUPERVISION 74
9.2 TRACKING DOWN AND RECOVERING THE PROCEEDS OF
ECONOMIC CRIME 75
9.3 RUBICON (ROUTINES, CRIMINAL INVESTIGATIONS
IN BANKRUPTCY) 76
10. Crime Prevention Efforts 77
10.1 GENERAL 77
10.2 EBM’s STRATEGY 77
10.3 SKV’s CRIME PREVENTION EFFORT 79
10.4 CONTACT AND INFORMATION 80
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10.5 NATIONAL CRIME PREVENTION PROJECT 82
10.6 REGIONAL CRIME PREVENTION ACTIVITIES 82
11. Study of Adherence to Trading Prohibitions 85
12. International Contact and Cooperation 86
13. Skills and Methods Development 88
13.1 EKOBANKEN 88
13.2 TRAINING 88
13.3 METHODS DEVELOPMENT 89
14. Research on Economic Crime 91
15. Problem Areas and Future Threats 96
15.1 THEORETICAL BACKGROUND FOR THE ANALYSIS 96
15.2 PUTTING TOGETHER A THREAT SCENARIO 98
15.3 UNDECLARED WORK IN CASH SECTORS 100
15.4 VAT FRAUD 102
15.5 AGENTS WHO AID ECONOMIC CRIME 104
15.5.1 Spurious Founders of Shelf companies 104
15.5.2 Spurious Advisers and Tax Havens 105
Appendix 1 108
Glossary of Agencies, Committees and Organizations 111
Glossary of Abbreviations 112
TABLES AND GRAPHS
Table 1
Percentage of businesses by sector that believe that
they are subject to unfair competition 13
Table 2 Schematic calculation of the total amount of tax error in
1997 and an updated calculation for 2000, SEK billion 18
Table 3 Estimated tax error linked to international transactions 19
Table 4 Assessed selective taxes, 2003, SEK billion 20
Table 5 Decisions on liquidation (number) 28
3

Table 6 Overview of changes in organized crime 30
Graph 7 Reports of money laundering, 1998–2003 39
Table 8 Money laundering reports in 2000-2003 by informer 40
Graph 9 Number of pretrial investigations, 1998–2003 40
Table 10 Types of crimes in pretrial investigations, 2001–2003 41
Graph 11 Number of new registrations with SKV, 1999–2003 43
Graph 12 Annual workforce for SKV’s supervision, 1998–2003 43
Graph 13 Number of audits, 2000–2003 44
Graph 14 Number of tax rulings on the basis of audits and desk
reviews, 2000–2003 44
Graph 15 Amounts in SEK million in tax rulings due to audits and
desk reviews, 1999–2003 45
Graph 16 Number of tax surcharges, 2000–2003 45
Table 17 Number of insider investigations 47
Table 18 Number of investigations of improper influence on
share prices 47
Table 19a Alcohol 48
Table 19b Tobacco products 49
Table 20 Results of crime ring investigations 54
Graph 21 Crime reports by the authorities, 1998–2003 55
Table 22 Reported crimes, 1998–2000 57
Table 23 All reported economic crime by category, 2001–2003 57
Table 24 Crime reports, 2001–2003 58
Graph 25a Total number of reports of suspected crime, 2001–2003 59
Graph 25b Total number of reports of suspected crime by category,
2001–2003 60
Graph 26 Cases received, 1998–2003 62
Graph 27 Cases received, 1998–2003 62
Table 28 Difference between received and completed cases
in 2000–2003 63
Graph 29 Breakdown of activie cases by degree of difficulty,
31 December 2003 63
Table 30 Number of decisions by EBM on indictment matters,
1999-2003 64
4

Table 31 Number of decisions by other prosecuting authorities,
1999-2003 64
Diagram 32 Legal process launched 65
Graph 33 EBM’s average throughput time from crime report until
verdict (number of days), 1998–2003 65
Graph 34 Average throughput time for police, other ÅM and total
(number of days), 2001–2003 66
Graph 35 Cases completed in 2003 by year reported 66
Graph 36 Investigations by tax crime units 68
Graph 37 People convicted, by principal offence 1998–2002 69
Graph 38 Trading prohibitions, 1998–2003 70
Graph 39 Violations of trading prohibitions 70
Graph 40 Costs for combating economic crime, 1999–2003 71
Graph 41 Number of appliations to county administrative courts
for attachment 72
Graph 42 Unpaid taxes and fees (SEK million) registered by KFM,
1999–2003 73
Graph 43 Unpaid taxes and fees (SEK million), special enforcement,
1999–2003 74
Graph 44 Supervision of bankruptcy, 1998–2003 75
Graph 45 Analysis model for economic crime 96
Graph 46
Declared income for certain types of small businesses
(SEK thousand) 101
5

1. Introduction
The ordinance on the co-operation of government authorities against
economic crime (1997:899) sets up a coordinating organization at the
national level – the Swedish Economic Crimes Council, chaired by
the Prosecutor-General – while each county has a cooperating agency
(SAMEB) headed up by the governor.
The SAMEBs are to put together a report on economic crime once every
three years. Starting in 2004, the report is to be submitted to the Swedish
National Economic Crimes Bureau (EBM) by 15 February.
On 11 November 2003, following preparatory work by the Swedish
Economic Crimes Council, EBM issued general recommendations and
detailed information concerning the report’s content and design. During
a conference at EBM, the Swedish Economic Crimes Council task force
and SAMEB representatives discussed and analyzed the new reporting
regulations as of 2003, as well as more general national and regional cooperation
issues.
EBM is to submit an economic crime report to the Government by 15
May once every three years The report, which the Swedish Economic
Crimes Council is responsible for preparing, is to describe how economic
crime has changed and present the measures that have been taken as part
of the interagency cooperation effort governed by the ordinance. Also to
be included are proposals for the direction that the effort to combat economic
crime should take over the next three years.
6

2. Current Status of Economic Crime
2.1 THE CONCEPT OF ECONOMIC CRIME
The concept of economic crime covers such a variety of phenomena that
any attempt to define it operationally and stipulatively would exclude
many of them. Many interested parties would find such a demarcation to
be inappropriate.
A solution is to regard the concept as conventionally determined. Thus,
it would theoretically include any phenomena recognized by those parties
at any particular point in time.
That leads to problems in classifying the various kinds of economic
crime.
The lack of clearly defined boundaries that applies to the general concept
is also relevant to such a breakdown.
As a result, the notion of typology is more suitable than that of classification.
A typology describes a number of phenomena that are not strictly
related to one another. Thus, they may contain some of the same elements,
leading to possible overlapping data. Such overlaps must be kept
track of when quantifying various kinds of economic crime.
The typology described in the 1992:2 EBM report proceeded from how
agencies perceive the types and scope of economic crime that determined
its structure. The present report takes the same approach.
2.2 VARIOUS KINDS OF ECONOMIC CRIME
1. Offences linked to crossborder trade
VAT fraud, such as carousel fraud in gold, mobile phones and computer
components
Smuggling in commercial imports
2. Financial offences and threats to the Swedish tax base
Undeclared work and other sector-related crime
Insider offences
Traditional tax evasion
7

Evasion of selective purchase tax
Tax havens and tax evasion related to foreign financial markets
Money laundering
3. Abuse of legal forms of business entity
Spurious shelf company dealings
Spurious founders of shelf companies
4. Insolvency-related offences
5. Organized crime
2.3 SOURCES OF INFORMATION
The status report (1999:2) that EBM submitted in September 1999 as
the basis for the Government’s 2000 interagency guidelines ventured an
overall description of the various types of economic crime in Sweden.
The report (2001:1) submitted in August 2001 argued that methods of
committing these offences had not changed significantly. Although most
agency officials involved in combating economic crime appeared willing
to sign off on such an assertion, it should be taken with a grain of salt.
Important to keep in mind is the way in which information about the types
and scope of economic crime is spread. In the first place, such offences
committed against the public sector are of a totally different character than
traditional or economic crime whose victims are businesses, organizations
or private individuals. When the public sector is the target, no individual
suffers direct injury or loss. Only after a public official has taken some
kind of monitoring measure – or an individual, business or organization
has filed a report – are such offences detected. A much greater proportion
of economic crimes committed against the public sector undoubtedly go
unreported than is the case with those aimed at other victims.
Nevertheless, various studies have shown that a relatively large percentage
of such offences suffered by others than the public sector are also unreported,
albeit not for the same reasons.
For instance, businesses refrain from submitting reports for fear of losing
their standing with customers, while financial institutions don’t want to
let on that their monitoring procedures are inadequate.
An assessment of overall economic crime trends during a particular period
of time must examine, in addition to unreported cases, the ways in which
8

detected offences are documented, as well as how such information is
subsequently processed and compiled.
Following are the characteristics of economic crime that are of greatest
value for understanding its evolution from the point of view of efforts to
combat it.
• What punishable acts are involved?
• How many such offences are committed?
• How many people engage in economic crime?
• What are their modes of operation?
• What is the scope of the offences in money terms?
• What are the sanctions?
No Swedish agency involved in combating economic crime systematically
documents all of these characteristics. The information that is documented
is neither processed nor compiled. That makes it difficult to gain
a more precise overview of even the detected offences.
The methods for getting a sense of the types and scope of economic
crime are the same now as in previous years. Such information is based
on monitoring measures taken by various agencies as described in the
SAMEB reports submitted each February, as well as the annual reports of
the national agencies. Either singly or jointly, the agencies also carry out
in-depth, short-term projects that examine particular economic offences
and generate special reports.
Interviews with individual officials of agencies that combat economic
crime provide information, albeit ad hoc and unsystematic, about ongoing
cases. Like the above projects, research can also shed light on particular
aspects of certain economic offences carried out during a specified
time period. Furthermore, coverage by the mass media offers some insight
into how economic crime is committed.
All in all, the prospects for providing a reliable account of the types, scope
and trends of economic crime are currently unpropitious. The resulting
deficit of knowledge hampers the effort to combat such offences at all
levels: governmental needs of documentation for management, prioritization
and legislation; measures taken by agencies; and reforms adopted by
the private sector.
9

2.4 CRIME LINKED TO CROSSBORDER TRADE
2.4.1 VAT Fraud
The adoption of the destination principle, the regulations of which
exempt goods from VAT in the seller’s country of domicile and make
them taxable in the purchaser’s country, has facilitated VAT fraud linked
to transactions within the EU. This exemption in the country of origin
provides simple channels for manipulating the system in order to avoid
taxation and/or obtain VAT refunds.
One method for taking advantage of the regulations is to use a company’s
VAT number during a short period of time and then relinquish it. Meanwhile,
goods have been purchased in another Member State and resold to
an independent domestic buyer. After that, the company (missing trader)
“goes missing” and no tax is paid. Maintaining that he acted in good
faith, the independent domestic buyer demands a refund on the input
VAT. Proof that the scheme was concocted in advance is difficult to establish.
In more complicated cases, several companies are involved in order
to foil detection and counterevidence. Sometimes the entire transaction
chain entails repeated “resale” of the same consignment, giving rise to the
term “carousel fraud.”
There is a danger that a deduction will be allowed for input VAT without
corresponding output VAT having been paid.
After treating carousel fraud as a high-risk area in recent years, government
agencies believe that its incidence has decreased. But given the
large amounts of money that may be involved, the danger of tax evasion
remains great.
A Closer Look at VAT and Selective Purchase Tax Fraud in the Food
Industry
In January 2003, the Swedish Economic Crimes Council launched a
nationwide, interagency monitoring project in the food industry. A
number of fraudulent methods have been documented so far.
The project will continue throughout 2005. VAT and selective purchase
tax fraud is widespread and involves large amounts of money.
2.4.2 Smuggling of Commercial Imports
A study was carried out to estimate the volume of uncollected customs
revenue in all of 1999 by means of a number of monitoring actions repre-
10

sentative of both commercial goods and other traffic from non-EU countries
from 15 April through 15 June and from 15 August through 15
November of that year.
The unreported volume of uncollected revenue was then calculated by
subtracting the uncollected revenue that Customs was able to detect and
rectify in 1999 from the total estimate. A total of 1,730 randomly selected
commercial import shipments were checked. In addition, 10,312 checks
of other traffic to Sweden were made. The commercial selection was proportional
to the number of shipments received in the various customs
regions and by the individual customs offices based on 1998 figures.
Although not all the other traffic was studied, the intention was to obtain
a representative sampling on which to base a nationwide estimate. Thus,
passengers were searched at Arlanda, Sturup and Landvetter, but not at
smaller airports like Örebro.
The selection of commercial shipments was extrapolated in three different
ways. The first method was to extrapolate an absolute figure based
on regional averages, generating total uncollected revenue of SEK 1,386
million for 1999. The second method, which extrapolated traffic in the
West Sweden and Skåne customs regions on the basis of Mälardal region
figures, came up with SEK 2,389 million. The third method, proceeding
from weighted averages in each region, arrived at SEK 1,378 million.
Uncollected revenue for other traffic totalled SEK 2,194 million.
The results of Customs’ monitoring operations in 1999 were SEK 449
million. Total debited revenue amounted to SEK 40,539 million. The
unreported volume of uncollected revenue was 7.7% based on the absolute
figure, 10.2% based on the Mälardal region, and 7.7% based on
weighted regional averages.
2.5 FINANCIAL CRIME AND THREATS TO THE SWEDISH TAX BASE
2.5.1 Insider Crime and Improper Influence on Share Prices
Following are accounts of a few legal cases that illustrate insider crime and
improper influence on share prices.
In 2002, the Svea Court of Appeal sentenced G to 8 months imprisonment
for insider crime, felony, and improper influence on share prices, as well
as PL to 4 months imprisonment for complicity in insider crime, felony.
PL’s brother ML was put on probation and fined for insider crime.
11

When working for a printer’s in 1991, PL learned that the Swedish business
that had ordered an informational brochure was planning to acquire
a stake in an American company. He told ML about it. ML gave the information
to a broker by the name of G, through whom he purchased stock
in the U.S. company. In addition, G had made 21 fictitious purchases of
the Swedish company’s stock in order to improperly raise its price.
In 2001, the Uppsala District Court fined L 80 days income for improperly
influencing share prices. L had submitted exorbitant purchase bids
on two stocks. He had made the purchases to improve his position in a
stock auction. The district court found that L’s actions had led to unreasonable
closing prices, thereby misleading the market. The transactions
had no commercial justification. L’s objective of improving his position in
an auction was improper.
The Stockholm City Court placed a representative of a business on probation
and fined him for insider crime. In 2000, he had taken part in
discussions with the principal shareholders of a listed real estate company
concerning a public offering of all its stock.
Through another subsidiary of the same Group, the representative had
agreed to join a bid consortium in the capacity of an investor. The city
court ruled that, before the public offering had been announced, the
representative had, on the basis of information that had not yet been
released, made several purchases of the real estate company’s stock so as
to substantially and intentionally influence its price. As a result, the stock
price was higher once the public offering had been announced.
2.5.2 Undeclared Work and Other Sector-related Crime
Most of uncollected tax revenue is deemed to stem from various kinds of
evasion related to undeclared work and unreported income for small or
medium-sized businesses. 1 To illustrate the issue, parts of a report compiled
by the Nationwide Project on Monitoring Undeclared Labour in
the Construction Industry (SKV 2001:9) are cited below. The excerpts
highlight the particular risks that crop up when a certain type of illegal
behaviour is incorporated into standard operating procedures. Other contracting
sectors give rise to similar problems.
A great deal of evasion also goes on in cash sectors, i.e., transactions
between businesses and private individuals. Frequently there is no docu-
1.
See Skattefel och skattefusk. RSV Report 1998:3 (Uncollected Revenues and Tax Fraud. RSV Report
1998:3) and Branschsanering. SOU 1997:111 (Sector Reform. SOU 1997:111).
12

mentary evidence for verifying actual revenue, particularly in the case of
small businesses that lack financial management or internal monitoring
systems. Among other contributing factors may be the stiff competition
that businesses face and the labour shortages that arise during economic
booms.
The following table shows the results of an SKV survey (Report 1998:1)
in terms of the percentage of businesses in various sectors that feel that
some of their competitors evade taxes.
Table 1
Percentage of businesses by sector that believe that they are subject to unfair
competition
Sector
Construction 37%
Restaurant 38%
Taxi 31%
Trucking 43%
Cleaning 54%
Hairdressing 64%
A report issued by SKV’s nationwide project on undeclared labour indicates
that certain segments of the construction industry have incorporated
tax evasion in a way that may be described as the organized contracting
out of such workers. Various constellations of independent contractors
– subcontractors, staffing companies and intermediaries at a number of
different level – are used in order to aggravate SKV’s attempts to uncover
and investigate tax evasion schemes.
The phenomenon is not new in itself. Previous examinations of contracting
sectors have revealed widespread tax evasion that called for legislative
changes. Current statutes on private employment agencies and the contracting
out of labour, as well as the adoption and practical application of
business tax certificates, have made it even harder for SKV to do something
about this type of evasion.
The project has found widespread payment of undeclared wages in the
construction industry. The studies conducted so far, as well as the crime
rings that have been identified, suggest that such wages amount to SEK
2.5-3 billion annually in the areas covered by the project. While refraining
from estimating the extent of undeclared work in the industry as a whole,
the report stresses that it is clearly unsettling. As the result of uncollected
13

payroll tax, personal income tax, and VAT, the state loses annual revenue
amounting to 85% of undeclared wages, or SEK 2-2.5 billion. The scope
of this problem has distorted competition in some cases.
According to the report, the work of the Nationwide Project demonstrates
that the organized contracting out of undeclared labour by the construction
industry has reached the point that radical legislative changes are
required to deal with it. In the autumn of 2001, the Ministry of Finance
commissioned SKV to study the prospects for adopting a system whereby
withholding taxes would have to be collected for subcontractors. SKV
report 2002:6 described various options for designing the system, such
as a voluntary vs. compulsory approach. The Government appointed a
Construction Commission in February of 2002. The subsequent material
expanded upon the legislative proposal, as well as offering recommendations
where the SKV report had presented alternative solutions.
The commission proposed a system of compulsory withholding taxes for
building and construction subcontractors and for firms that contract out
such workers. The system is to cover both Swedish and foreign contractors
and subcontractors. The amount withheld, which is to be 40% of compensation
for labour costs, is to be deposited in a special SKV account,
while the remaining invoice amount is paid to the contractor.
With respect to VAT, the commission proposed a compulsory “reverse tax
liability” for both Swedish and foreign buyers. Although Sweden would
have to apply for a special exemption pursuant to Article 27 of the EC’s
Sixth VAT Directive, the commission believes that the EU has already
established a precedent for granting such a request.
Adoption of the VAT reform is dependent on a decision of the Swedish
Parliament and the timing of EU approval.
The commission also proposed that a ROT (repair, renovation, extension)
deduction be enacted to encourage households to hire legitimate
businesses. The deduction went into effect in April 2004.
Putting together a legislative proposal that can work well for everyone
involved has proven very difficult. The latest reported development is the
appointment of a special joint action group – represented by various ministries,
the construction industry and SKV – to design the system.
Taxation on a Standardized Basis
One possible way of discouraging evasion in certain sectors is to adopt
some kind of taxation on a standardized basis for the smallest businesses.
14

SKV put together documentation to launch a comprehensive inquiry
concerning the possibility of effective standardized taxation procedures.
Although many fundamental objections were advanced to such a system,
SKV performed an additional analysis at the Government’s request and
proposed an elementary outline of the criteria that could be decisive for
such a standard. The report was circulated for comment. Opinion is
reportedly divided. While a number of the referral bodies are favourably
disposed, many are sceptical that a system of taxation on a standardized
basis could be developed. Nevertheless, they are not opposed to a continuation
of the inquiry. Trade associations are particularly supportive of
the idea.
The Government will reportedly decide in 2004 whether and in what
manner the notion of taxation on a standardized basis is to receive further
study. Regardless of which way it goes, any new tax system can hardly
be expected to affect 2005. A standardized taxation scheme would certainly
have a major impact on risk assessment during the year that it is
enacted.
Cash Registers
The Government appointed an investigator in February 2004 to study “a
system for monitoring sales in cash sectors and the activities of tax crime
units.” His assignment is dual in nature. His first task involves the question
of whether to adopt a requirement whereby businesses that sell goods
and services to the public for cash must have cash registers. His second
task has to do with making tax crime units more efficient.
Greater attention has been paid over the past few years to revenue recognition
by businesses in cash sectors. The lack of regulations in Sweden
requiring retailers to use cash registers has become a topic for political
discussion. The 1997 Sector Reform Report (SOU 1997:11) proposed
that cash registers be adopted by certain sectors. SKV proposed in 2002
that revenue monitoring be strengthened by the introduction of sealed,
type-approved cash registers and receipt requirements.
Regulations on cash registers in retail outlets went into effect in Denmark
a year or two ago. Norway has such rules for some retailers, particularly
services such as hairdressing. A report entitled Erfarenheter från
Frisörprojektet i Malmö (Lessons from the Hairdressing Project in Malmö)
proposed the enactment of a law on cash registers at retail stores. At the
request of the Ministry of Finance and based on Sweden’s alcohol legislation,
the Swedish National Institute of Public Health prepared directives
in 2002 on cash registers at restaurants. SKV has not gained a hearing
15

for its view that the directives should be adapted so as to facilitate tax
supervision as well.
In 2002-03, both trade associations and unions in cash sectors actively
urged the Government to speed up its consideration of a compulsory cash
register system. SKV has been consulted as part of that effort. Among the
sectors with which meetings and discussions about revenue recognition
problems have taken place with union and management representatives
are hairdressers, transport companies (particularly taxis and movers) and
restaurants. Such exchanges are scheduled to continue through 2004.
2.5.3 Traditional Tax Evasion
The Scope of Tax Evasion
Of vital importance when it comes to tax evasion is not only monetary
value, but the number of people involved, as well as its causes and consequences.
Many studies, both in Sweden and abroad, have examined the
supply of undeclared labour. A 1998 inquiry by the Swedish National
Audit Office (RRV) concluded that men are twice as likely as women
to do undeclared work, and that self-employed people and students are
the most common labourers in this market. A survey by SKV indicated
that people with high incomes were the most likely to engage undeclared
labour. Both studies found that undeclared work stems mostly from
financial motives.
In connection with an assignment by the Government to evaluate its tax
supervision activities, SKV estimated in 1998 the volume of its uncollected
revenues for the previous year. SKV warned that the statistics for
making such an assessment were unreliable and not up-to-date. But such
an estimate might still prove useful. An assessment could stimulate a fruitful
dialogue, as well as ongoing methodological discussions and analyses
of the magnitude, scope and causes of uncollected revenues. That could
lay the groundwork for a strategy aimed at minimizing their volume.
SKV estimated uncollected 1997 revenues at SEK 80-90 billion, almost
5% of the GDP or 9% of taxes collected.
It does not follow that such revenue can be extracted by means of additional
audits. If the unreported income were to be taxed, many of the services
would not be produced in the first place. SKV also argued that if the
tax authorities were given the resources to identify all cost and accounting
errors, intentional evasion would be negligible but that society’s resources
would not have been used in a cost-effective manner. The conclusion is
16

that a certain volume of uncollected revenues, including evasion, must be
accepted in a democracy with a tax system based on information provided
by citizens themselves. The amount of uncollected revenue and evasion
that can be tolerated is a purely political issue in which both financial and
non-financial factors must be considered.
In its estimate of uncollected revenues, SKV combined macroeconomic
calculations with the results of its own checks, mostly random.
The uncollected revenues that can be detected by audits or other in-depth
checks were estimated at SEK 40 billion. That part of the estimate was
essentially based on scrupulous earlier checks of a wholly random selection,
the results of which were extrapolated to the national level. Since
the biggest business Groups are fully reviewed within the framework of
planned, coordinated audits, the figures for them are 10-year averages.
Thus, the uncollected revenues that can be identified by checking, as well
as those that escape detection in the form of unreported income or other
benefits to private individuals, will be included in the statistics on which
macroeconomic calculations of the undeclared sector are based. The
adjusting entry reflects that dynamic, as well as periodization errors.
In conclusion, it should be kept in mind that the calculation does not cover
all taxes, all taxpayers or outright fraud directed at SKV involving VAT
and the like. Nor are cases included in which taxpayers declare income but
evade payment by making their assets inaccessible to collection.
As the general economy grows, new data emerges that can help fill in the
blanks. SKV’s updated 2000 calculation proceeded from the National
Accounts estimate that the undeclared sector represented over 4% of the
GDP. In addition, the GDP increase provided a somewhat more reliable
basis for estimating uncollected revenues on assets invested abroad that
are subject to taxation. The calculation implies that SKV’s current auditing
procedures have the ability to detect less than 50% of total uncollected
revenues.
The calculation for 2000 puts uncollected revenues at almost SEK 90
billion. According to the adjusted calculation, that represents more than
4% of the GDP and approximately 8% of total tax revenues. That is
somewhat lower than the 1997 calculation, which nevertheless did not
explicitly include investments abroad. A large percentage of estimated
uncollected revenues are attributable to the undeclared sector, which SKV
deemed in 1997 to be 5% of the GDP on the basis of previous assessments.
17

A conservative estimate for 2002 would put the figure at 4.5%, or over
SEK 100 billion.
The National Accounts periodically undergo retroactive revisions. For
2000, uncollected revenues stemming from undeclared work are estimated
at SEK 56 billion. According to current National Accounts data,
the undeclared sector represented approximately 5% of the GDP in
1988-2000. The conservative 4.5% estimate for 2002 yields an undeclared
sector of SEK 105 billion and – based on the previous assumptions
– uncollected revenues of some SEK 70 billion stemming from undeclared
work. See Table 2.
Table 2
Schematic calculation of the total amount of tax error in 1997 and an updated
calculation for 2000, SEK billion
Tax error, SEK billion National Updated Share of
Tax Board calculation total taxerror
1997 2000 1999
Income tax, VAT and social
security contributions 60.4 56 64%
Tax on capital investments abroad ? 7.5 9%
Audit results – primarily non-deductible
costs and different forms of wrong accounts
and wrong tax calculation
Random audits of ordinary taxpayers and companies,
except the biggest groups of companies 20.8 25.3 ?
Coordinated audits of the biggest
groups of companies 20 16 ?
Selective purchase taxes on
alcohol, tobacco, oil, etc. 3.0 3.4 4%
Loss of VAT through electronic
trade on the Internet ,, 0.5 0.60%
Plain fraud against the tax administration,
e.g., claiming VAT repayments ,, ,,
Total tax error, SEK billion 83.8 88 100%
Total tax error as a percentage of GDP
(SEK 1 800 billion in 1997 and
SEK 2 083 billion in 2000) 4.7% 4.2%
Total tax error as a percentage of taxes
in the public sector (SEK 950 billion in 1997
and SEK 1 100 billion in 2000) 8.8% 8.0%
On behalf of the Tax Base Inquiry, SKV estimated uncollected revenues
linked to international transactions at SEK 20-30 billion, as broken down
in Table 3.
18

Table 3
Estimated tax error linked to international transactions
Special sales tax
SEK 2–4 B
VAT
SEK 5–10 B
Tax on capital (incl. Inheritance and gift tax)
at least SEK 8 B
Tax haven transactions by companies
SEK 2–5 B
Miscellaneous (internal pricing, e-commerce,
social security contributions, etc.) ?
Total
SEK 20–35 B
The SKV report indicated that the lower estimate of SEK 20 billion for
uncollected revenues linked to international transactions was consistent
with the previous assessment of total uncollected revenues of up to SEK
90 billion. Based on the higher estimate of SEK 35 billion, the total figure
would need to be adjusted upward as well.
All in all, uncollected 2000 revenues in Sweden appear to be in the neighbourhood
of SEK 100 billion.
Impact of Tax Evasion
Tax evasion has many different consequences, not all of them undesirable.
The most serious injurious effects are not deemed to be on revenues
collected, but on social morale and democratic institutions owing
to unintentional redistribution of the tax burden. Moreover, there is a
danger that inefficient businesses that evade taxes will crowd out their
more efficient rivals.
2.5.4 Evading Selective Purchase Tax
Selective purchase tax is levied on specific goods and services. Total collected
revenues for 2003 were approximately SEK 88.3 billion. Since
selective purchase tax is a means of influencing consumption and production
patterns in addition to providing a source of revenue, they are in a
state of constant change.
Mineral oil, alcohol and tobacco – the products subject to harmonized
selective purchase tax – are covered by the EU’s suspension system. Under
specified circumstances, the system permits the products to be manufactured,
stored, processed and shipped among Member States without
any tax liability accruing. Only when they are available for consump-
19

tion, normally at the retail level, does taxation come into play. Approved
warehousers and registered consignees have the exclusive right to handle
products under suspension.
Table 4
Assessed selective taxes, 2003, SEK billion 2
Type of tax
Energy 60.4
Environment 3.4
Alcohol and tobacco 19.2
Advertising 0.8
Lottery and gaming 1.2
Other 3.4
Total 88.3
Table 4 shows the taxes administered by the special tax office in Ludvika.
Risk Areas
The selective purchase tax is often many times greater than the value of
the good itself. That is particularly the case of Sweden, where taxes are
higher than in many other EU countries. As a result, there is a considerable
danger of various types of evasion.
Following is a discussion of the risks linked to alcohol, tobacco products
and mineral oil. These taxes, which represent large revenues, are in the
spotlight as the EU expands.
Alcohol and Tobacco
Following the establishment of a minimum tax on tobacco products by
the EU, all current Member States impose a fairly high rate. Thus only a
relatively small amount of tax evasion has been detected in trade among
the various EU countries so far. Most evasion related to tobacco products
stems from smuggling to and from non-EU countries, such as from and
through the Baltic states. Swedish Customs is presently in charge of such
matters.
2.
2003 annual report of SKV and the Enforcement Service.
20

The minimum tax rates on alcohol are extremely low by Swedish standards.
Since the tax on alcohol differs considerably from country to country,
consumer prices vary widely as well. The irregularities that have been
reported in the alcohol trade also occur in other areas. High tax rates and
opportunities for a quick profit attract their share of spurious players.
Besides smuggling from non-EU countries are various kinds of untaxed
imports to Sweden from other Member States.
The tax evasion ploys in which registered players participate is largely
related to crossborder EU trade. Production costs, which are generally
minor compared to the selective purchase tax, appear to be fairly uniform
between Sweden and the other EU countries. That purchases are made
abroad, incurring additional transport costs, is often due to such trade
being more difficult to monitor.
Worth noting is that these irregularities do not involve imports only, but
also various sales schemes from Sweden.
Mineral Oil
The substantial rise in the selective purchase tax on heating oil in recent
years has affected both the legal and illegal border trade, particularly
between Finland and Sweden. Given that some approved users can
acquire oil for certain tax-exempt purposes while paying zero or reduced
tax, there are risk areas within Sweden also. The oil can subsequently be
resold or used for purposes that are not tax-exempt. The same holds true
of oil acquired for use in commercial navigation.
Regulations surrounding the simultaneous production of electric power
and district heating represent a special risk area. Complex and difficult to
interpret, the regulations are constantly changing. Although only a few
players are affected, the monetary consequences are considerable and the
wording of the regulations has a major impact on the conditions to which
such production is subject.
Trends
The number of registrants for the tax on alcohol is up sharply in recent
years. In addition, the sector is suffering profitability problems. As a
result, a considerable number of players are likely to face financial and tax
difficulties in the future.
Tax rates on heating oil and other fossil fuels are poised to rise further as
a result of the green tax shift in Sweden.
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In 2003, the Tax Reduction Committee (SNED) proposed a number of
changes to the energy tax system. Under current regulations, the manufacturing
sector pays reduced energy taxes. One SNED proposal is to
place all business activity on an equal footing with the manufacturing
sector. The result would be a dramatic increase in the number of companies
subject to reduced energy taxes. Which of SNED’s proposals will be
adopted is still a matter of speculation.
Flex Mex2, an ongoing inquiry into a system for trading pollution rights,
has released two interim reports. The tax impact of the trading, scheduled
to begin on 1 January 2005, remains unknown at this point.
An inquiry, to be completed by 31 December 2004, is under way to evaluate
the tax on waste introduced on 1 January 2000, as well as the possibility
of enacting an incineration tax. An interim report on the incineration
tax is due out by 30 June 2004.
Work on an EU-wide Excise Movement and Control System (EMCS)
began in 2002. The proposed system, which is to be fully up and running
in 2008, would replace current paper-based declarations with the
electronic exchange of information among businesses through the tax and
customs administrations of the various Member States. Sweden has been
an active participant in the development of EMCS.
2.5.5 Tax Havens and Tax Evasion Linked to Foreign Financial Markets
Among the terms for this phenomenon are safe havens, offshore centres,
tax havens and non-cooperative countries.
A tax haven is a jurisdiction with zero or low tax. Among its other characteristics
are
• No accounting liability or reporting for legal entities
• Strict banking secrecy
• Unwillingness by countries to provide legal assistance
Uncollected income and wealth tax revenues linked to international transactions
can be broken down into the following general categories.
• Private individuals, for instance
– Tax on non-reported assets abroad (including planned losses)
– Tax on consulting fees, board remuneration, royalties and other
benefits (such as credit cards) from abroad
22

• Businesses, such as:
– Tax planning through Controlled Foreign Companies (CFCs)
– Swedish shareholders exercise a controlling influence in a business
established in a tax haven
– Consulting assignments through companies abroad
– Foreign endowment insurance policies with employers or from
private limited companies
The above methods may become more extensive due to major monitoring
difficulties. Today’s information technology makes it easier to take
advantage of tax havens.
For instance, an estimated 400 British companies have links to Sweden.
Since the late 1950s, businesses and other players that sell tax dodging
schemes have offered various constellations of companies in tax havens.
As the tax authorities have become more aware of transactions involving
such companies, an increasingly common approach is to form them in
countries that are not regarded as tax havens as facades for such schemes.
There are now certain addresses in central London at which several thousand
companies are registered. They do not conduct any activities from
such addresses and are in fact discouraged from doing so.
2.5.6 Money Laundering
The money laundering issue has commanded a great deal of attention in
recent years, both nationally and internationally. The agencies and organizations
that have traditionally combated money laundering may now be
taking measures against the financing of terrorism as well.
The globalization process, the availability of offshore services, the complexity
of and automation of the financial system – as well as its products
and services – and the entry of new players have all made it more difficult
to fight money laundering.
Based on changes to the Money Laundering Directive, Sweden is reviewing
the relevant legislation.
Only a few people have been convicted of money receiving since it was
made a separate crime. Although most convictions have been for predicate
offences, some recent judgments have involved typical money receiving.
Following is one particular case.
On 30 August, a Stockholm bank fell victim to gross fraud when an
unknown person used a fake ID to make transfers totalling SEK 10 mil-
23

lion from the account of a wealthy individual to an attorney’s business
account at another bank.
The following day the money was transferred again to a Swiss bank
account held by a Swede. The account holder tried to withdraw the entire
amount in cash, but the bank would give him only USD 100,000.
On 4 September, the holder retransferred the remaining sum of more
than SEK 8.9 million to the attorney’s account in Sweden. Three days
later, the attorney transferred the same amount to the client account of
another lawyer.
The second attorney purchased two SEK 4 million cashier’s checks, each
made out to a different company, on September 10. On the same day, the
checks were used to buy foreign currency at exchange offices in Stockholm
and Malmö. Thus, most of the money from the plundered bank
account had been converted and removed.
The second attorney tried to withdraw the rest by purchasing a third
cashier’s check for SEK 845,000. But when the bank refused, he wrote a
regular check for the same amount. At the request of the Swede with the
Swiss account, the check was made out to a foreign company.
The city court ruled that this type of fraud requires a plan involving several
people, each of whom does his part. The offender(s) could not have
expected to remove the money without difficulty unless other participants
in the chain of transactions had not been at least somewhat aware
that it had been obtained in a criminal manner.
The Swede with the Swiss account was sentenced to 2½ years imprisonment
for money receiving, while the first attorney was convicted of money
receiving, misdemeanour, and put on probation. A person involved in
exchanging the money was sentenced to 2 years imprisonment for complicity
in money receiving. The second attorney was not convicted of
money receiving, but of providing negligent advice – he received a probated
sentence. In addition, the court found the guilty parties jointly and
severally liable for damages of approximately SEK 8.9 million to the bank
against which the fraud had been committed.
The court of appeal held with the city court that fraud of the type and
scope in question would require a thorough plan and several accomplices
in order to succeed.
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According to the court of appeal, the idea was for the illegally withdrawn
money to be transferred immediately to the first attorney’s account and
further to the Swiss bank, from which it would be distributed among the
various accomplices. The reason that most of the money went back to the
attorney in Sweden must have been that the Swiss bank suspected money
laundering and declined to aid and abet it.
Despite the court of appeal’s identification of a plan, it examined the
involvement of each accomplice separately. Thus, the court found that
the evidence was not strong enough to convict the man who had helped
exchange the money.
But the attorneys received stiffer sentences than in the lower court. The
first attorney was sentenced to 1 year imprisonment for money receiving,
felony, primarily because he had persuaded the second attorney to accept
the money at a time when he realized that there was something “fishy”
about it. The second attorney was convicted of money receiving, misdemeanour,
and placed on probation, given that he had reasonable cause to
believe that a crime was being committed when the bank refused to issue
the third cashier’s check for SEK 845,000. The bank was the party that
initially reported the transactions as suspected money laundering.
Finally, the court of appeal elevated the money receiving conviction of
the man with the Swiss bank account to a felony but left his sentence at
2½ years.
2.6 ABUSE OF LEGAL FORMS OF BUSINESS ENTITY
2.6.1 Spurious Shell Company Dealings
Sweden’s 1992 tax reform did away with the regulations governing transactions
of companies with considerable reserves, as well as internal stock
transfers. The reasoning was that the proposed new rules for taxing partners
in close companies would make it impossible to wrest the kinds of
improper tax advantages that the regulations had been intended to prevent.
But it turned out that the tax reform’s general rules were insufficient to
avert the plundering of businesses that stems from shell company transactions
and leads to a large number of bankruptcies. As a result, SKV
proposed rule changes.
25

New regulations to hinder spurious shell company dealings, which were
adopted on 4 April 2002, placed a greater responsibility on sellers of such
companies at the time of transfer. For instance, a seller who was a private
individual had to submit a tax return for the shell company under certain
circumstances.
In 2002-03, several of SKV’s regions examined shell company transactions
both before and after the 4 April reform. The review showed that
spurious shell company dealings had decreased but that certain legislative
loopholes remained.
2.6.2 Spurious Founders of Shelf Companies
The ability to purchase a registered joint stock company for a few thousand
kronor from certain founders of shelf companies gives criminals
access to a useful tool. Over the past three years, an estimated 3,000 joint
stock companies have been formed and used for illegal purposes. After
serving for a short while to facilitate mostly VAT and credit fraud, such
a company is left to fend for itself. Founders of spurious shelf companies
are a catalyst for economic crime. Moreover, they do not compete on a
level playing field with legitimate players, such as corporate counsel, law
offices, banks and accounting firms. Both the state and the private sector
suffer considerable financial losses from such fraud. Ultimately, faith in
the joint stock company as a business entity is in danger of being undermined.
The Swedish Economic Crimes Council launched an inquiry in 2000 on
problems related to spurious founders of shelf companies. 3 The objective
of the project was to ensure that every joint stock company was formed
with the correct amount of share capital, which remained intact when the
shelf company was transferred and began to operate.
A task force of representatives from EBM, SKV, the Swedish Companies
Registration Office and the Enforcement Service (KFM) conducted the
inquiry. Their report proposed a number of measures to combat abuse.
The task force identified a series of unfair practices that permit the sale
and use of a large number of joint stock companies to commit economic
crime. Given that the regulations protecting share capital are circumvented,
the price of a shelf company is only a few thousand kronor. That
is accomplished by violating rules about illicit distribution of profits, the
3.
Lagerbolag och Ekonomisk Brottslighet. EBM Rapport 2003:3 (Shelf Companies and Economic
Crime. EBM Report 2003:3).
26

loan prohibition, the Accounting Act and the provisions of the Companies
Act on liquidation and shortage of capital. The persistence of the
abuse is largely due to the failure of cooperating agencies to address the
problems aggressively enough, such as by adopting measures based on
existing provisions of the law. The task force pondered the question of
who would be in a position to ensure that current civil, criminal and tax
regulations are enforced in the effort to thwart the founders of spurious
shelf companies. No agency has overall supervisory responsibility for such
enforcement.
One of the first links of the chain in the interagency struggle against
economic crime, the Swedish Companies Registration Office is in charge
of registering shelf companies and verifying by means of accountant and
bank certificates that the initial share capital is properly deposited. The
agency currently lacks the authority to investigate whether every registered
shelf company actually has at least SEK 100,000 in share capital.
3SKV comes into contact with spurious founders of shelf companies not
only directly when auditing their activities, but indirectly when the sold
companies and their representatives fail to meet their tax and fee obligations.
SKV also becomes acquainted with shelf companies when they register
for VAT, preliminary company tax and as employers. KFM, which
deals with shelf companies when they are the targets of collection, can
apply for bankruptcy proceedings. It is also the supervisory authority in
bankruptcy.
Receivers in bankruptcy who become familiar with shelf companies can
call attention to illicit distribution of profits, illegal loans and the like that
may warrant prosecution.
The police, public prosecutor and EBM normally deal with shelf companies
and spurious founders when the tax authorities and receivers in
bankruptcy report them for having engaged in illegal activities.
The task force proposed a number of measures to combat abuse, and the
Swedish Economic Crimes Council extended its mandate to work on and
gather resources for implementing them. The measures are broken down
into two basic categories. The first category involves providing information
about the content of the report to employees of the cooperating
agencies, founders of shelf companies, accountant’s organizations and
accountants for chains of shelf companies. Hopefully that will have a
preventive effect and alter the behaviour of those involved. The second
category entails using existing legislation to prosecute people who participate
in spurious shelf company dealings.
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2.7 INSOLVENCY-RELATED CRIME
Decisions on Compulsory Liquidation
In accordance with the Companies Act, the Swedish Companies Registration
Office can make certain decisions on the compulsory liquidation
of joint stock companies. The most common grounds for such a decision
are that the company fails to submit an annual report and auditor’s
report to the Swedish Companies Registration Office within 11 months
of the close of a fiscal year, lacks a certified public accountant or does not
appoint a proper board. The decision is often a red flag that economic
crime has been committed within the company.
Not having the assets to pay for liquidation proceedings, some companies
quickly declare bankruptcy. The Swedish Companies Registration Office
does not have reliable statistics on the percentage of companies declaring
bankruptcy that were already in liquidation. Rough estimates point to a
figure of 20%.
Table 5
Decisions on liquidation (number)
Year Lacked accounting documents No accountant Unauthorised board
1998 558 417 166
1999 759 383 112
2000 293 436 89
2001 729 629 151
2002 723 465 257
2003 726 448 193
2.8 ORGANIZED CRIME
The Task Force on Organized Crime (AMOB), which was appointed by
RPS in 1976 to propose investigative procedures in the area, came up
with the following oft-used definition.
Organized crime is illegality that generally meets the following conditions:
1. It is conducted as an operation
2. That operation is criminal in itself
3. It is ongoing in nature
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4. It has a definite focus, though it can be broken down into different
spheres of activity
5. It can be planned and managed in advance with relative assurance
6. It is linked to fixed premises, locations or areas
7. It involves a number of people
8. Those people, who make up a decisionmaking and functional hierarchy,
are each replaceable
9. Decisions, information and communication – as well as the flow of
money, goods and services – follow pre-established patterns
Compare that with perhaps the most oft-used definition of economic
crime among researchers, as formulated by German criminologist Klaus
Tiedemann.
“Economic crime is illegal behaviour, the effect of which disturbs or
threatens economic life or the economic system such that not only the
interests of private individuals are affected.”
The primary criteria that distinguish organized from economic crime are
that it be criminal in itself and involve a number of people.
Lars Korsell 1 compared the AMOB report on organized crime in 1977
with the findings of a report that the Swedish National Council for Crime
Prevention (BRÅ) and Lund University compiled on the same subject in
2002.
Korsell concluded that organized crime had changed greatly during that
quarter century. Today it operates in the market, sells many goods and
services just like in the regular private sector, and has no need of clubs that
serve alcohol without licenses. A reasonable assumption is that organized
crime will expand along with general crossborder trade and the growing
ability of information technology to hold various networks together.
Such activities are now carried out in just such networks, as opposed to
the hierarchical, Godfather-run structures portrayed in the cinema. The
appeal of the industrialized world is likely to boost human trafficking, an
unknown concept 25 years ago. There are indications that corruption,
which has hit bottom internationally, may grow – a threat that agencies
should take seriously.
4.
EBM Threat Analysis 2002.
29

The report of the SAMEB in Västra Götland County made the following
observations, which largely tally with Korsell’s analysis, about organized
crime.
“Sweden does not harbour extensive organized crime at the moment. On
the other hand, it has changed and grown more transnational in nature.
Criminals have become more organized in order to maximize the scope
and proceeds of their illegal activities. They orchestrate various projects
and sometimes sell their plans further.
Table 6
Overview of changes in organized crime
AMOB 1977 BRÅ/Lund University 2002
Prostitution (500 brothels)
Clubs that serve alcohol without
licences (200)
Illegal casinos (approx. 100)
Handling stolen goods
Stolen vehicles
Underground credit market
Protection racket
Environmental crime
Buying and selling precious metals,
art and antiques
Drugs
Prostitution (reduction)
Illegal casinos
Larceny
Buying and selling stolen vehicles
Protection racket
Blackmail
Aggravated robbery
Violence and murder
Threats and violence against
public officials and witnesses
Corruption
Environmental crime
Drug smuggling
Alcohol smuggling
Smuggling of tobacco products
Smuggling of doping agents
Mineral oil
Arms trafficking
Human trafficking
Illegal immigration
Fraud and other economic crime
Money laundering
30

“A number of groups are engaged in activities that meet the EU’s criteria
for organized crime.
“Although organized crime in Sweden basically resembles similar undertakings
in Central and Eastern Europe, such groups cannot be placed on
an equal footing with the French and Italian Mafias and the like.
“They are involved not only in traditional illegality like drug trafficking
and the violent transfer of assets (larceny, unlawful collection through
blackmail, etc.), but economic crime as well. The effort to size up, investigate
and prosecute these groups is in the development stage.
“Since crime heeds no distinctions between the various authorities, interagency
cooperation is all that more important.” 5
5.
2004 SAMEB Report, Västra Götaland County
31

3. Cooperation
3.1 THE SWEDISH ECONOMIC CRIMES COUNCIL
The ordinance on the co-operation of government authorities against
economic crime (1997:899) sets up a coordinating organization at the
national level – the Swedish Economic Crimes Council. In addition to
EBM, the Swedish Economic Crimes Council is composed of the Office
of the Prosecutor-General (RÅ), the Swedish National Police Board (RPS),
the Swedish Tax Agency (SKV), Swedish Customs, the Swedish National
Council for Crime Prevention (BRÅ), Finansinspektionen (the Swedish
Financial Supervisory Authority), and the Swedish Companies Registration
Office. EBM runs the Swedish Economic Crimes Council office.
A task force, which includes representatives of each agency, does the
Swedish Economic Crimes Council’s preparatory work. While the Council
normally meets twice a year, the task force gets together 5-10 times.
The task force plays a key role in forging contacts and providing a forum
for interagency information sharing, with the emphasis on new phenomena
in the area of economic crime.
A detailed discussion of the Swedish Economic Crimes Council’s role and
tasks took place in 2001. A 10 May 2002 memo to the Government from
the Council proposed changes to Ordinance 1997:899. In accordance
with the proposal, the Government ordered later in the year (2002:873)
that the Council deal primarily with strategic issues. Areas requiring concrete
interagency cooperation methods were to be identified and focused
on.
Two concerns that the Council and its task force were particularly attentive
to in 2003 were the interagency action launched in November 2002
and the threat analysis described more fully in Section 15 of this report.
The November action, scheduled to continue throughout 2005, monitored
certain segments of the trade in food products. The Council and its
task force have continually coordinated and reported on the action.
In November 2001, the Council initiated a more fundamental, systematic
probe and review of the threat analysis that EBM is conducting in
cooperation with other agencies that combat economic crime. Both the
33

Council and its task force have continued to take an active part in the
effort to define and focus the studies.
One threat area that has received in-depth analysis involves agents who
aid economic crime, such as spurious advisers, decoys, goalkeepers and
tax havens. Among the by-products of that undertaking were studies on
spurious founders of shelf companies as described in Report 2003:2.
Preliminary discussions and analyses were conducted in 2003 regarding
new interagency actions following the foodstuffs project.
3.2 EU FRAUD
On 1 July 2000, EBM took over the task of the EU Fraud Delegation to
ensure adequate protection of the Union’s assets in Sweden. An EU Fraud
Council, charged with promoting proper, efficient use of those assets, was
linked to the agency. The Council includes representatives of RÅ, EBM,
RPS, Customs, SKV, the Swedish Board of Agriculture (SJV), the Swedish
National Board of Fisheries, the Swedish National Labour Market Board
(AMS), and the administrative boards of Skåne and Jämtland counties.
EBM submits an annual report to the Government on protection of the
EU’s financial interests in Sweden.
3.3 THREAT ANALYSIS
A team of experts from the cooperating agencies was formed in the
autumn of 2002 to put together a threat analysis. The project included
studies of the causes, nature and scope of economic crime, as well as a
detailed inquiry into its harmful effects. On behalf of the Swedish Economic
Crimes Council, certain priority areas were subsequently subject
to an in-depth review.
In order to compile and examine threat analysis material on a more consistent
basis, as well as to conduct the required in-depth studies, a special
team of representatives from the cooperating agencies’ analytical units or
their equivalent was formed.
The first meeting, which took place around year-end 2003, discussed the
team’s working methods, including the first joint examination of existing
material on economic crime and the threat analysis developed by each
agency concerning its particular sphere of activity.
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3.4 COLLABORATION AMONG THE NATIONAL
COOPERATING AGENCIES
In counties where EBM is not in charge of prosecution, its instructions
render it jointly responsible with the Office of the Prosecutor-General for
coordinating activities related to economic crime.
EBM is continually working with public prosecutors and police to
improve coordination procedures in these counties. In addition to purely
operational collaboration – such as providing personnel during raids –
“contact prosecutors,” visits, special theme days and informational events
are part of the effort.
Cooperation between EBM and the police authorities, which is proceeding
well, has focused on mutual support in operational matters. For
instance, the police at EBM have contributed their skills in securing and
analyzing IT seizures from police raids.
The partnership has also included investigations of economic crime linked
to other types of offences such as drugs trafficking or violent acts. Police
investigative units often aid EBM in its fact-finding work.
The cooperating agencies have participated in various projects and joint
action groups. In particular, the Organized Crime in Sweden (OBiS) group
has led to closer contacts in the area of intelligence and will enable more
efficient interagency collaboration during 2004. Access by the police at
EBM to the criminal intelligence register in 2003 and the ability to enter
information into the register in 2004 represent additional steps in the
effort for EBM to more actively participate in interagency cooperation.
In collaboration with EBM, RPS and the police unit invited the economic
crime squads of the county police authorities to a coordinating
meeting in November 2003.
A Joint Action Group for Combating Money Laundering is chaired by
the Financial Intelligence Unit (fipo) and includes Finansinspektionen,
EBM, the International Division of the Office of the Public Prosecutor in
Malmö, SKV and Swedish Customs. Besides generally enhancing cooperation
and raising awareness among the various agencies, the goal is to
coordinate money laundering matters in a more efficient manner.
The national project launched by the Swedish Economic Crimes Council
concerning certain segments of the trade in food products further energized
cooperation with economic crime prosecutors and squads outside
EBM’s geographic jurisdiction.
35

Special joint consultation groups for tax crime units deal with attempts
to expand and improve collaboration among prosecutors, police and tax
crime investigators. A national committee of representatives from EBM,
RÅ, RPS and SKV takes on overall issues, whereas regional and local
groups deal with operational questions.
The cooperating agencies were assigned to study during 2003 how well
the collaboration with tax crime units was working, describe and analyze
any obstacles, and detail the improvements that were being planned. The
heads of the four agencies reported that the collaborative effort had gotten
steadily better and that the prospects for further progress were good. But
they did not offer any joint recommendations for measures to deal with
the barriers identified by the questionnaire with regard to the powers and
location of tax crime units.
From an operational point of view, cooperation among EBM, SKV, KFM
(particularly in its tax enforcement role and as the supervisory authority in
bankruptcy) and receivers in bankruptcy are of major importance, given
that they are in charge of most of the economic crime that is reported.
Collaboration under the auspices of the Rubicon (Routines, criminal
investigations in bankruptcy) Project has been further developed. The
nationwide seminar series launched in 2001 concluded in 2002.
The agencies concerned have a network made up of representatives from
exchanges and the Swedish Securities Dealers Association (SSDA). One
purpose of the network – which includes EBM, Finansinspektionen, the
Stockholm Stock Exchange, SSDA, FiPo and the Nordic Growth Market
– is to create rapid contact channels and share experience about developments
in the securities market.
The agencies concerned cooperate with the Swedish Institute of Authorised
Public Accountants (FAR) and the Swedish Association of Auditors
(SRS) concerning the obligations of accountants under the Companies
Act when crime is suspected. A joint consultation group –which regularly
examines ways of improving collaboration among accountants, prosecutors
and the police – charged a task force with developing guidelines on
practical implementation of the duty to report such offences. A June 2003
memorandum of the task force’s deliberations – which has been sent to
prosecutors, police and accountants throughout the country – is key to
the ongoing attempt to establish closer contact with accountants.
Unions and employer organizations are vital partners in preventing economic
crime.
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3.5 REGIONAL COOPERATING AGENCIES
Each regional cooperating agency (SAMEB) is chaired by the county governor
and includes the regional director of the public prosecution authority,
the county police commissioner, the head of SKV, the head of KFM
and representatives of the county administrative board and Swedish Customs.
EBM runs the SAMEB offices in Stockholm, Västra Götaland and Skåne
counties. Unless the agencies concerned agree otherwise, the police
authorities have that responsibility in other counties
To the extent approved by the governor, the work of a regional SAMEB
may include representatives of other government agencies, municipalities,
the business sector and various organizations. Some SAMEBs have representatives
from the Social Insurance Office and county labour board.
Two or more SAMEBs can merge into a joint group if they deem it appropriate.
Unless the agencies concerned agree otherwise, the governor of
the largest county chairs the combined group. The counties of Östergötland
and Jönköping, Västernorrland and Jämtland, and Västerbotten and
Norrbotten have already taken this step.
Following are some examples of various types of cooperation that are carried
out on the operational level, or with a focus on certain sectors or
phenomena.
• Operational collaboration among representatives of SKV, KFM, Customs
and EBM. Other agencies also participate to varying degrees.
The purpose of the groups is to maintain close contact and above all
to discuss and plan the implementation of measures to combat economic
crime and related phenomena
• A council for the construction industry composed of representatives
from the Swedish Association of Building Contractors, unions, SKV,
KFM, tax crime units and the police. The employers have asked that
the Social Insurance Office be included as well
• Commercial traffic groups in a number of counties
• A joint action group for insurance matters, with representatives of
the Social Insurance Office, insurance companies, police authorities
and Enforcement Service
37

4. Intelligence and Monitoring Operations
4.1 INTELLIGENCE
An overarching goal of the effort to combat economic crime is a substantial
reduction in its occurrence.
Decisive in that respect is the ability to quickly detect and stop crime
that is in progress by means of intelligence, investigative and monitoring
activities.
The National Criminal Investigation Department (RKP)
RKP has put together and disseminated information for the purpose of
preventing and foiling economic crime.
National and international cooperation has been expanded through working
with money transfer companies and similar efforts. Since funds can
increasingly be moved anonymously, one goal of the project is to counteract
money laundering.
The Financial Intelligence Unit (fipo)
FiPo is part of RKP’s criminal intelligence operation. FiPo’s task is to
gather, process and analyze information in order to flag early indications
of money laundering and new forms of economic crime such as credit
card fraud, as well as to support investigative efforts. The objective is to
stave off and uncover underlying illegalities in the abovementioned areas
and, when there is reasonable cause for suspecting crime, turn the matter
over to the police and public prosecutor to launch a pretrial investigation.
FiPo is the exclusive recipient of information from businesses, banks,
credit market firms, securities firms, foreign exchange offices, insurance
brokers, life insurance companies, money transfer companies and casinos
that have the duty to report. Pursuant to the UN’s International Convention
for the Suppression of the Financing of Terrorism, those institutions
must also review and report on all transactions involving assets
that appear to stem from the funding of particularly serious offences.
Governed by the Swedish Act on Measures Against Money Laundering,
the effort is primarily a function of the information that businesses report
38

when they suspect that illegalities are being committed. Casinos are subject
to a special Government decision on the duty to report.
FiPo can also request information of professional dealers in antiques, art,
gems, precious metals, scrap and means of transport, as well as gaming
and lottery operations.
Reported Money Laundering
FiPo received 9,832 reports of money laundering in 2003, a 1,752
increase from the year before. A significant proportion, some 45%, of
the greater number was from the Stockholm area. Given that Stockholm
is the country’s financial hub, it not surprisingly accounts for almost half
of all reports. FiPo worked further on 2,257 of the reports that arrived in
2003.
Graph 7 Reports of money laundering, 1998–2003
12000
10000
9 832
8000
8 080
6000
4000
2000
0
846
1 512
2 560 4 155
1998 1999 2000 2001 2002 2003
The largest number of money laundering reports are from foreign
exchange offices, one reason being that some of them provide notification
of almost all transactions over SEK 110,000.
Since exchange offices have only fleeting contact with their customers,
they have an unusually difficult time spotting suspicious transactions. On
a number of occasions, FiPo and Finansinspektionen have discussed the
problem with representatives of certain exchange offices.
39

The total money involved in transactions reported by exchange offices in
2003 was SEK 1,674 million.
Table 8
Money laundering reports in 2000-2003 by informer
Informer 2000 2001 2002 2003
Foreign exchange offices 1 785 3 227 7 338 8 820
Payment transfer companies 0 51 92 221
Banks 577 777 611 765
Inquiries abroad 68 45 6 1
Swedish police 107 32 10 4
Misc. (including casinos) 23 23 23 21
The number of money laundering reports rose during the year from 611
to 765 by banks and from 92 to 221 by money transfer companies.
The number of pretrial investigations launched declined from 67 in 2002
to 47 in 2003.
Graph 9 Number of pretrial investigations, 1998–2003
80
70
60
50
40
30
31
47
49
47
67
47
20
10
0
1998 1999 2000 2001 2002 2003
40

Table 10
Types of crimes in pretrial investigations, 2001–2003
2001 2002 2003
Tax crime 32 44 22
Money receiving 2 7
Fraud 4 11 6
Bookeeping crime 4 2 4
Crimes against creditors 2 1 4
Financing of serious crime 3 2
Drugs 3 3 1
Larceny 1
Blackmail 1
Violation of trading prohibitions 1 1
Other 1
Total 47 68 47
EBM’s Criminal Intelligence Operations
EBM’s special units conducted certain criminal intelligence operations in
2003. Projects in which EBM cooperated with other agencies that fight
organized crime used the working method most. The right to handle personal
data in accordance with the Police Data Act has made it easier for
EBM to conduct criminal intelligence operations as of 2004. Thus, the
agency will strengthen and expand that effort during the year.
As part of the struggle against organized crime, EBM focused on closer
cooperation with RPS and the police authorities in 2003. The initiative
to broaden and strengthen contact with the police authorities continued.
Various cooperative efforts, operational as well as strategic, were undertaken
with both RKP and the police authorities.
The special units of each EBM department collaborate closely with the
criminal intelligence squads of the police authorities. The police supervisors
at the departments meet regularly with the appropriate police authority
and other cooperating agencies.
One product of the operational partnership was a pretrial investigation in
Stockholm that led to convictions carrying several years imprisonment.
The police at the Southern Division participated in Project Bornholm, a
joint initiative with several other agencies.
41

Intelligence Operations of Tax Crime Units
Tax crime units now conduct intelligence operations aimed at gathering,
processing and analyzing information to establish whether criminal
activities have been or may be carried out. The objective is to compile
data for decisions on pretrial investigations or other measures to prevent,
foil or detect illegalities. The operations focus on organized, felonious or
otherwise serious tax crime.
Tax crime units do not currently enjoy direct access to the tax rolls, which
would be a cornerstone in pursuing effective intelligence activities. Intelligence
and fiscal operations share information in accordance with the
Secrets Act.
Less than 10% of human resources, or approximately 15 labour years, are
assigned to intelligence. Special-focus nationwide task forces do some of
the work. There is presently one for intelligence registers, one for special
investigations and one for IT support. The idea is for each task force to
spearhead progress in its particular area for the eventual benefit of all tax
crime units.
Some of the intelligence activities are conducted in close cooperation
with other agencies that combat economic crime. That is particularly
the case during special investigations that zero in on organized crime,
or on groups of people in whom the agencies share a common interest.
Though limited, the results of such investigations have been encouraging
thus far.
4.2 TAX SUPERVISION
With the exception of a slight increase for joint stock companies, the
number of active entries in the register of the Swedish Companies Registration
Office declined in 2002-03 for all forms of business entity. But
there was no significant change in absolute terms. The total number of
active companies decreased by 8,413 from 2002 to 2003.
SKV noted more registrations for all forms of business entity in 2001-03.
The increases are not sizable and have been steady since 1999. The statistics
on registered companies do not indicate any significant changes in the
basic SKV register, either in percentage or absolute terms. Given private
sector trends in both Sweden and around the world during the period, the
increase appears to be modest.
42

Graph 11 Number of new registrations with SKV, 1999–2003
80 000
70 000
60 000
69 834
62 549
74 368
65 824
68 729
58 859
68 869
57 926
69 753
60 571
50 000
40 000
30 000
20 000
42 317
41 485
27 517
49 053
41 304
33 064
38 334
36 882
31 847
36 204
32 665
30 672
37 726
32 651
32 027
10 000
0
Total VAT
1999 2000 2001 2002 2003
Monthly
VAT return
VAT in yearly income
tax return
Registrations
as employers
Preliminary
company tax
Graph 12 Annual workforce for SKV's supervision, 1998–2003
2 500
2 000
1 500
1 851
1 644
1 707
2 070 2 050
1 902
1 329
1 000
1 115
975 975 970 959
500
0
1998 1999 2000 2001 2002 2003
Desk reviews
Audits
While resources for desk reviews varied somewhat during the period,
those available for auditing purposes steadily shrank.
43

Graph 13 Number of audits, 2000–2003
8000
6000
5 360
5 740
6 070
6 370
4000
2000
0
760
230
629
220
539
700
340 330
2000 2001 2002 2003
Yearly
Selective purchase
Scheduled audits
supervision audits
Graph 14 Number of tax rulings on the basis of audits and desk reviews,
2000–2003
500 000
437 349
400 000
372 618
300 000
200 000
328 606
253 378
100 000
0
61 558
45 218
56 970
44 943
57 579
46 663 54 201
45 513
2000 2001 2002 2003
Social security contributions Income tax VAT
The number of audits consistently increased during the period. With the
exception of a slight rise in 2002, all types of tax rulings decreased in
number.
44

Graph 15 Amounts in SEK million in tax rulings due to audits and desk reviews,
1999–2003
18 000
16 000
14 000
12 000
13 605
15 520
15 220
16 123
10 000
8 000
6 000
4 000
2 000
0
638
2 186
373
1 925
444
1 327 751
4 000
2 100 1000 1 800
1999 2000 2001 2002 2003
Social security contributions Income tax VAT
Graph 16 Number of tax surcharges, 2000–2003
80 000
60 000
63 377 61 263 60 378
56 338
59 223 58 423
55 349
40 000
41 539
39 890
45 461
41 656 42 445
20 000
0
2000 2001 2002 2003
Social security contributions Income tax VAT
The amounts involved in income tax rulings changed drastically. After
having risen steadily from 1999 to 2002, the total fell by 400% from
45

2002 to 2003. The sums involved in VAT rulings were down by more
than 50% from 2002 to 2003. But the total for payroll taxes rose following
1999.
Total tax surcharges decreased in 2002-03, but were higher than in 2001
– with the exception of income taxes, for which there was a steady decline
throughout the period.
4.3 SUPERVISION BY FINANSINSPEKTIONEN
Finansinspektionen’s duty is to promote orderly financial markets by
improving the supervision of securities trading and exchanges. In that
connection, the agency is to consider the impact of supervision on the
credibility and efficiency of financial markets.
Developments that arouse suspicion of irregularities in the trading of
financial instruments are to be analyzed and to constitute the basis for
identifying cases deserving of investigation. An investigation should
always be conducted when insider crime or improper influence on share
prices is suspected.
Insider Crime and Improper Influence on Share Prices
The tables below present figures on investigations and reports of suspected
insider crime and improper influence on share prices. The number
of new cases rose in 2003.
The year’s trends are as follows.
• More cases involving suspicion of insider crime were turned over to
prosecutors, one reason being shored-up investigative resources. The
number of cases that were opened remained at the same level as previous
years.
• There were fewer new cases involving suspicion of improper influence
on share prices. Since such behaviour was generally detected
by the price supervision units of the exchanges and subsequently
reported to Finansinspektionen, it is difficult to draw any conclusions
from the decline.
• The agency prioritizes cases in which specific people are under suspicion
from the very beginning, as well as those related to takeover
bids, profit warnings or large, important orders. Tax considerations
are clearly the motivation in many cases of improper influence on
share prices.
46

The following observations have been made.
• Investigations of illegal insider trading indicate that the suspects are
still those with primary access to information.
• The incentive for insider crime is information that has not been
made public. The investigations demonstrate that, all too often,
businesses continue to handle such information in an unprofessional
manner.
Finansinspektionen cooperated with EBM during the year by means of
ongoing contact on individual cases. The supervisory authority’s investigators
also assisted prosecutors during their pretrial investigations.
Involving the prosecutor at as early a stage as possible made for improved
collaboration.
Detailed regulations are being issued in connection with the new EU
Directive on Market Abuse. Through its work on the Committee of European
Securities Regulators (CESR), Finansinspektionen helped write proposals
for the regulations.
To improve supervision of securities trading, Finansinspektionen keeps a
register of people with insider status at listed companies, as well as their
transactions and holdings. Parts of this insider register are available at
Finansinspektionen’s website: http://www.fi.se
Table 17
Number of insider investigations
1998 1999 2000 2001 2002 2003
Opening balance 28 27 75 59 39 40
Begun 38 80 45 59 47 62
Completed 39 32 61 79 46 52
Closing balance 27 75 59 39 40 50
(of which reports to EBM) 3 7 8 3 8 15
Table 18
Number of investigations of improper influence on share prices
1998 1999 2000 2001 2002 2003
Opening balance 1 4 6 17 11 14
Begun 6 11 18 12 16 10
Closing balance 3 9 7 18 13 15
Closing balance 4 6 17 11 14 9
(of which reports to EBM) 0 4 6 2 5 6
47

Money Laundering, etc.
A newly established joint action group represents increased cooperation
among Finansinspektionen, FiPo and other agencies. Training programs
for foreign exchange companies have been conducted in partnership with
FiPo. Measures by some of the major banks to combat money laundering
and terrorist financing have undergone special examination.
Finansinspektionen has also launched a study of computer-aided intelligent
analysis tools that can be used to detect money laundering, and
has started discussing the issue with representatives of banks and other
interested parties. These inquiries will continue in 2004.
Finansinspektionen has maintained contact with agencies in and outside
of Sweden, as well as representatives of the industry, concerning measures
to curb terrorist financing. In addition, it has continually notified companies
under its supervision about new and amended EU regulations in the
area. The agency has also taken part in a contact group headed up by the
Swedish Security Service (SÄPO).
4.4 CUSTOMS CONTROL
Both the number and value of alcohol seizures changed over the past year.
The value of such confiscations averaged 2½ times as much in 2001-02
as in 2003. The trend for tobacco was just the opposite, the average value
of seizures more than doubling in 2003. The number of alcohol seizures
varied over the past three years and was far from steady. On the other
hand, confiscations of tobacco products numbered approximately the
same throughout the period.
Table 19a
Alcohol seizures 6 1999–2003
Alcohol 1999 2000 2001 2002 2003
Seizures 8 475 7 932 4 307 5 008 3 855
Value 7 137 010 000 278 176 000 142 372 000 174 077 000 50 295 000
Average value 16 166 35 070 33 056 34 760 13 047
Hard liquor 40% (litre) 283 700 199 815 190 373 106 794 84 357
Hard liquor 96% (litre) 110 000 380 000 147 000 242 244 46 055
Wine (litre) 77 031 18 231 40 643 14 177 19 186
Beer (litre) 271 895 187 052 115 951 182 611 175 347
6.
Swedish Customs statistics.
7.
The calculations are based on an alcohol content of 3.5% for beer and 8.5-15% for wine.
48

Table 19b
Seizures of tobacco products, 1999–2003
Tobacco 1999 2000 2001 2002 2003
Seizures 5 934 5 325 3 491 2 987 2 798
Value 8 44 380 000 62 526 000 66 738 000 39 302 000 108 291 000
Average value 7 479 11 742 19 117 13 158 38 703
Quantity
Cigarettes (millions) 32 45 48 27 74
Pipe and rolling
tobacco (kg) 389 712 817 319 157
Cigarillos and
the like No info No info No info 403 850
Higher import quotas may have affected the number and value of the
seizures
4.5 NATIONWIDE INTERAGENCY PROJECTS
4.5.1 Carousel 2000
In April 1999, SKV appointed a task force to work with EBM on analyzing
and investigating carousel fraud, as well as evaluating and proposing
improvements to SKV’s supervisory activities in the area. At the
same time, EBM formed a project team with the sole task of investigating
mobile phone and computer component issues. The project released a
report of its work and findings on 8 February 2001.
Investigations of carousel fraud under the project’s auspices were successful.
The interagency cooperation model proved to be productive. The
results that were achieved would have been impossible without such collaboration.
The agencies involved were EBM, FiPo, KFM, SKV and Customs.
The VAT evasion in question totalled an estimated SEK 1.5 billion. Decisions
were made to attach approximately SEK 140 million, while SEK
52 million in deduction claims for input VAT was denied. Given that
changes may occur during additional investigations and judicial reviews,
such figures are not set in stone.
8.
Statistics were kept for cigarettes only.
49

Since the project started on 1 April 1999, the cooperating agencies have
devoted some 40 labour years to 15 extensive investigations.
Considering that carousel fraud with mobile phones appears to have come
to a virtual halt in Sweden, the investigations may have had a preventive
effect. Carousel fraud has not yet proliferated outside the metropolitan
areas as much as had been feared. But other kinds of products seem to
have taken up some of the slack.
4.5.2 Food Products Project
The Food Products Project is an interagency effort initiated by the Swedish
Economic Crimes Council, which delegated implementation issues to
its task force.
The objective of the project is to study commerce within the Swedish
food industry, as well as between Swedish companies and businesses in or
outside of the EU.
The inquiry is focusing on discovering, describing, prosecuting and
disrupting the more serious, systematic types of VAT and selective purchase
tax fraud. Light will also be shed on fraud with recycling fees when
detected. Possible preventive measures to be worked out in the future are
also being studied.
To assess the scope of unreported EU purchases, SKV in Malmö solicited
information from two active wholesale grocers in another Member State.
According to the VAT Information Exchange System (VIES), the wholesalers
sold approximately SEK 645 million in merchandise to Swedish
businesses from 1 January 2000 through 30 June 2003. At least SEK 536
million, or 83%, of these purchases or subsequent sales went unreported
in Sweden. This information has now been passed on to other regions of
the country.
The project covers all types of merchandise sold by food stores. The investigations
have not yet dealt very extensively with perishable items. The
goods most often studied are soft drinks, 3.5% beer, detergents and rinsing
agents. Cash dealings are common.
Tax evasion on trading in food products within the EU has many different
faces. Some food distributors report only a percentage of their purchases,
decoys do not report at all and purchase on behalf of someone
else, and business owners in other industries make unreported purchases
for private use.
50

The project is in full swing around the country. SKV is involved in extensive
activities on a broad front. Various working methods are under development.
The effort will intensify in 2004. A review of problem areas is
under way.
There is no patent solution for getting the better of this kind of evasion.
Successful investigations require active interagency cooperation and good
contacts abroad.
SKV has made the following observations thus far.
• Evasion appears to be most widespread in metropolitan areas
• The investigations usually involve small neighbourhood stores
• Illegal sales are known to occur
• There is evasion with the system for returnable containers
• Labelling regulations are being violated
• Evasion has distorted competition
EBM has launched many pretrial investigations. Other public prosecution
and police authorities around the country are also taking part in the
project. Only a few convictions have been handed down so far.
FiPo participates by investigating suspicious money flows. The Board of
Agriculture investigates and reports violations of the Act on Certain Beverage
Containers. Customs examined food imports in the region and is
now carrying out audits throughout the country. KFM contributes by
enforcing attachments.
4.6 REGIONAL MONITORING EFFORTS
Operation Restaurant Inspection continued in most counties throughout
2002 and 2003. The effort varies from county to county in terms of
scope, the agencies involved, and the focus during any particular year.
One part of the operation is a joint project of the County Administrative
Board, the Police Authority, SKV, the Migration Board, municipal
licensing boards and EBM. The goal of the project is to stamp out spurious
business owners. In addition to the above agencies, KFM, Customs,
the Social Insurance Office, the Environmental Administration and the
Emergency Services take part in restaurant inspections coordinated by the
County Administrative Board.
Another joint project of SKV, EBM and the County Administrative Board
aims at more thorough tax supervision. Approximately half of the some
50 audits that have been launched subsequently led to crime reports.
51

Manipulated cash registers are the chief tax evasion tool.
The cooperative procedures that were worked out in 2002 to combat
welfare cheating by restaurant employees require the alcohol officer to
provide the County Employment Board and Social Insurance Office with
the civic registration numbers of everyone who is on the job at the time of
an inspection. The agencies subsequently check that information against
the active welfare rolls and pursue further investigations when warranted.
During inspection of the restaurant, its owner or representative is notified
about what will be done with the employee information that has been
obtained. These procedures appear to have been very effective in preventing
welfare cheating.
SKV, EBM, Customs and FiPo are carrying out a project focused on identifying
revenue that small and medium-sized businesses fail to report. The
effort, which has steadily expanded since its inception in 1999, does not
concentrate on any particular sector.
A number of counties engaged in coordinated efforts directed at the
transport industry during 2002-03. One county began reviewing and
monitoring its carriers in 2001. The checks are carried out in collaboration
among the county administrative board, police authority, SKV and
KFM. The emphasis has been on operating licensees with large debts. The
agencies cooperate continually with regard to new license applications
and expansions of vehicle fleets. SKV has responded to inquiries from
the county administrative boards, and obstacles to granting licenses have
been identified in a series of cases. As a result of this effort, a number of
operating licenses have been revoked and several carriers have received
warnings.
Representatives of the county administrative board (convenor), SKV,
KFM and the traffic division of the police authority make up a joint
action group for the supervision of commercial traffic. The group meets
three times a year, whereby SKV submits a list to the county administrative
boards of licensees and transport managers with unpaid taxes. Each
representative provides information about the licensees in question, after
which appropriate measures are identified to collect the debts.
The most common measures are:
• Revocation of the license unless the debt is paid (county administrative
board)
• Collection or preparation of an instalment plan (KFM)
• Audit, revocation of business tax certificate (SKV)
• Visit to the company (police authority)
52

The meetings also follow up on measures taken earlier with respect to
other licensees. They also discuss tips from competitors and the general
public.
SKV, EBM and various traffic units of the police authority frequently
carry out joint monitoring efforts aimed at taxi companies. Special measures
have been taken against taxi operators that fail to disclose income.
Following pressure by the police and others, some municipalities have
banned private automobiles from parts of the centre of town on certain
days of the week. In addition, restaurant owners help spread information
about such taxi companies. Restaurants and places of entertainment put
up posters and hand out flyers to their guests about these operators. Cabs
will have decals urging customers to ride with legitimate companies. The
police authority and university have put together an infomercial about
taxi operators that fail to report their income.
An intercounty, interagency project concerns vehicle imports. All the
cooperating agencies have been affected. Prosecutors have taken on some
40 cases as a result. Similar projects are under way in a number of counties
to which vehicles are imported from other EU countries and in which
VAT, and even income tax, evasion occurs.
Two counties worked together on the guard industry. The purpose of the
effort was to assess the occurrence of unreported income and undeclared
labour, as well as to monitor the sector in other respects. Since guards are
in one sense the long arm of the law, the review was regarded as pressing.
The checks focused on doorman agencies and restaurants. The police
authority arranges the training of, and even approves, doormen. Guard
agencies must obtain authorization from the county administrative board.
SKV gathers information about the industry from the police authority
and county administrative board concerning authorized guard agencies,
police requirements for the number of doormen per restaurant, who has
been approved to work as a doorman in the county, etc. Checks of restaurants
focus on the wages that doormen receive – as well as unreported
admission and wardrobe fees (which account for most of the undeclared
revenue).
The reports of the SAMEBs discuss a number of regional projects aimed
at the construction industry. In 2003, for instance, SKV conducted a
series of crime ring investigations in close partnership with EBM (see
Table 20). Coordinated activities have been directed at staffing companies
that contract out undeclared labour, primarily in the construction and
other contracting sectors. Many representatives of such companies are
53

professional criminals to one degree or another. Four of the investigations
uncovered unreported revenue and/or wages.
Table 20
Results of crime ring investigations
Crime ring investigation
Antal
No. of businesses 55
No. of principals 15
Undeclared wages, SEK million 56
Tax amoung, SEK million 37
No. of crime reports 10
In one case, SKV and the police managed to identify 100 people who
failed to declare their income. Some 30 of them had received unemployment
compensation for the same period.
One county has tried a rather original approach to monitoring. On a
number of specific days in 2002, the police, Customs, SKV and KFM
pooled their resources and got municipalities involved as well. Follow-ups
of the effort have found all the agencies favourably disposed to the working
method. The results of a citizen questionnaire were also encouraging.
Among the actions have been a series of unannounced inspections, cash
register checks at restaurants, official visits by KFM and vehicle inspections
by Customs.
As part of interagency cooperation, some counties single out certain suspects
for special surveillance.
An effort has been made to get the better of businesses involved with false
invoices. Such cases usually start with several reports of attempted fraud.
Quickly identifying the company that is responsible for such invoices and
performing the necessary checks with SKV and KFM is of the essence. A
decision was made in October 2003 to put together a group consisting of
a prosecutor and two economic crime investigators to structure such cases
and launch a coordinated effort. The group will comply with the directives
that are expected to follow a joint decision by RÅ and RPS.
54

5. Reports of Suspected Crime
Tax authorities, receivers in bankruptcy and KFM reported a total of
27,947 offences in 1998-2003. Forty-eight percent was by the tax authorities,
and the other 52% was by receivers in bankruptcy and KFM.
KFM and receivers in bankruptcy accounted for the majority of reports in
1999-2000 and the minority afterwards. But the difference has not been
particularly great. The total number of reports rose by 2,148 from 2001
to 2003. Following a decline from 1999 to 2001, that represents a steep
increase.
Graph 21 Crime reports by the authorities, 1998–2003
3 500
3 000
2 500
2 000
1 500
3 073
1 743
2 567
1 812
2 081
2 031
1 998
1 632
2 992
2 929
2 849
1 000
500
0
1998 1999 2000 2001 2002 2003
Tax Agency
Receivers in bankruptcy/KFM
Report Statistics
Official crime statistics use somewhat different criteria than do EBM’s
reports. The official figures include economic crime only when there is reasonable
cause for suspicion. As a result, the statistics reflect only offences
that turn up in the suspect and criminal register. In other words, a large
percentage of the offences investigated by EBM do not appear in the
55

official figures. In the autumn of 2003 and spring of 2004, BRÅ worked
with EBM to review and compile information on how it receives reports
of economic crime. Measures taken as a result of the review resolved the
discrepancies generated for the abovementioned reasons. EBM decided to
take 2001-03 data on reported economic crime from Leonardo, the office
of the public prosecutor’s statistical database of information from its
BRÅDIS register. Since no secure, quality-controlled figures on each type
of offence were available for 1998-2000, such a breakdown was made for
2001-03 only. All information for crimes reported in 1998-2000 is taken
from previous EBM status reports. Thus, the two sets of data are not
wholly comparable.
The statistics cover reports of suspected violations of the sections of the
law that comprise economic crime and EBM’s target area. A description
that ranges from reports of suspected crime to prosecution requires an
explanation of certain fundamental differences among the various steps
along the way. The number of suspected crimes reported includes each
individual offence. A case may involve more than one person, offence and
type of crime. Throughput time is measured such that a case is not closed
until a decision has been reached about each reported suspicion. Trading
prohibitions (along with prosecution and penalties) are reported one by
one. Prosecutions are counted on the basis of the individuals involved and
the principal offence. Thus, a person who has been prosecuted is linked
only to his or her principal offence regardless of the fact that a conviction
may involve several.
The dates on which a crime is reported, subject to a pretrial investigation,
processed and prosecuted are all different. There is currently no reliable
method for comparing those different stages. Such time adjustments are
not yet feasible.
Generally speaking, the statistics do not say a great deal about actual economic
crime trends. They are more revealing about the resources that are
being devoted to the various types of offences and the priorities of the
agencies concerned. 9
A total of 7,637 offences were reported in 2000, a 10% decline from the
year before.
.
9. See Korsell’s reasoning in Brottsutveckling 1998–2000, BRÅ 2001, pp. 195–216.
56

Table 22
Reported crimes, 1998–2000 10
1998 1999 Difference, 98/99 2000 Difference, 99/00
Crimes against
Creditors (BrB 11) 6 674 5 442 –18% 4 494 –17%
Tax Penal
Act (SkbL) 3 476 3 022 –13% 3 143 4%
Total 10 150 8 464 –17% 7 637 –10%
The figure was down by 17% from 1998 to 1999. The statistics for the
period suffer from certain qualitative flaws. For a more detailed account
of 1998-2000 trends, please refer to previous EBM status reports. 11
A total of 11,961 offences were reported in 2002, a 17% increase from
the year before. The figure was up by 8% from 2002 to 2003.
Table 23
All reported economic crime by category, 2001–2003
2001 2002 Difference, 01/02 2003 Difference, 02/03
Crimes against
Creditors (BrB 11) 5 575 6 366 14% 6 674 5%
Tax Penal
Act (SkbL) 4 459 5 331 20% 5 817 9%
Other 211 264 25% 383 45%
Total 10 245 11 961 17% 12 874 8%
The number of reports rose for all three categories in 2001-03. The most
noticeable difference is in the other offences category, which jumped
by 25% in 2002 and 45% in 2003. The category is small in absolute
terms, covering 200-400 reports of suspected crime each year. Thus, a few
more reports one way or the other has a major impact on the percentage
figure.
The rate of increase from 2002 to 2003 was less for all categories. The
total rise slowed from 17% to 8%.
The breakdown of total reported crime into the various categories did
not change significantly from 2001 to 2003. Crimes against creditors and
10. EBM. Report 2001:1, p. 61.
11. EBM. Report 2001:1, p. 61.
57

ookkeeping offences continued to account for just over 50%, and tax
offences for approximately 45%, of all reported economic crime. Altogether,
the two categories represented 98% of the total.
Table 24
Crime reports, 2001–2003
2001 2002 2003
Dishonesty to creditors 577 630 650
Negligence with creditors 79 90 76
Fraudulent preference of creditors 73 102 98
Bookkeeping crime 4 846 5 544 5 850
Tax crime (Sections 2–4 of the Tax Penal Act) 3 268 4 028 4 295
Negligent tax statements 80 77 122
Tax accounting crime 197 174 237
Impeding tax supervision 901 1 031 1 153
Tax deduction crime 13 21 10
Violation of a trading prohibition 33 61 46
Violation of the Companies Act 156 163 295
Violation of the Insider Penal Act 15 38 39
Violation of the Financial Instruments Trading Act 7 2 3
Reports of suspected tax offences (Sections 2-4 of the Tax Penal Act)
(up by 760) and bookkeeping offences (up by 698) increased the most
in absolute terms from 2001 to 2002. Suspected insider trading (up by
23 reports, or 153%) and violations of trading prohibitions (up by 28
reports, or 85%) increased the most in percentage terms during the same
period.
From 2002 to 2003, violations of the Companies Act (up by 132 reports,
or 81%) and negligent tax statements (up by 45 reports, or 58%) increased
the most in percentage terms.
Total reports of suspected crime rose from 2001 to 2003, though at a
decreasing rate. See Graph 25a. The number rose by 1,716, or 17%, from
2001 to 2002, and by 913, or 8%, from 2002 to 2003.
Reports of crimes against creditors (see graph 25b) increased by 93, or
13%, from 2001 to 2002. From 2002 to 2003, reports of the offence were
up by a negligible 2. Reports of crimes against creditors totalled 729 in
2001, 822 in 2002 and 824 in 2003.
58

Graph 25a Total number of reports of suspected crime, 2001–2003
16000
14000
12000
10000
10 245
11 961
12 874
8000
6000
4000
2000
0
2001 2002 2003
Reported bookkeeping crime (see graph 25b) rose steadily throughout
the period. As is the case with crime reports in their entirety, the rate of
increase slowed. The number of suspected bookkeeping offences reported
increased by 698, or 14%, from 2001 to 2002 and by 306, or 6%, from
2002 to 2003.
Reported tax crime (see graph 25b) rose throughout the period. The rate
of increase slowed in this category as well. Reports were up by 20% from
2001 to 2002 and 9% from 2002 to 2003. There was wide variation
within the category. Code 5020 and 5021 offences accounted for 87% of
the increase from 2001 to 2002 and other tax crime for 13%. Impeding
tax supervision was the biggest single ingredient (25%) of the increase
from 2002 to 2003. Code 5020 offences represented 55% of the increase
for the same period.
The other offences category (see graph 25b) is so heterogeneous that a
more detailed study is not called for. Reports in this category increased by
25% from 2001 to 2002 and by 45% from 2002 to 2003.
59

Graph 25b Total number of reports of suspected crime by category,
2001–2003
7000
6000
5000
4 846
5 544
5331
5 850
5 817
4000
4 459
3000
2000
1000
0
2001 2002 2003
900
800
700
729
822
824
600
500
400
300
383
200
100
211
264
0
Crimes against
Creditors
2001 2002 2003
Tax crimes Bookkeeping
crimes
Other economic
crimes
60

6. Crime Investigation
6.1 General
EBM, certain other divisions of the office of the public prosecutor, economic
crime squads of the police authority outside EBM’s geographic
jurisdiction and tax crime units are all involved in the economic crime
investigative effort.
EBM handles cases from Stockholm, Västra Götaland, Skåne, Halland,
Blekinge and Gotland counties that involve
• Part 11 of the Penal Code
• the act on safeguarding pension commitments, etc.
• the Tax Penal Act
• the Companies Act
• the Insider Penal Act
and those that
• require special knowledge of finances, the private sector, tax law and
the like
• involve Part 9, Sections 1-3 of the Penal Code if the offence involves
EU’s financial instruments, and Part 9, Section 3a of the Penal Code
• are suitable chiefly because professional crime is involved and the
scope is nationwide, there are international links, or the offences are
principal or far-reaching in nature
6.2 Case Handling by the Public Prosecution Authorities
The figures below cover all cases handled by EBM, as well as those taken
on by other prosecution authorities when coded as economic crime. 12
While both received and completed cases rose for EBM, they levelled off
for the other agencies. The discrepancy between received and completed
cases is a clear indication that EBM had a heavier workload in 2001 and
handled it such that more cases were wrapped up than reported in 2003.
For all the agencies combined, a significantly larger number of cases were
completed than received in 2001. That disparity between EBM and the
12.
The data is taken from the 2003 annual reports of the various agencies, along with previous EBM
reports.
61

Graph 26 Cases received, 1998–2003
4 000
3 500
3 000
2 500
3 008
2 428
2 544
2 440
3 019
3 475
3 737
2 000
1 500
1 000
1 222
1 247
1 276
1 583
1 518
500
0
1998 1999 2000 2001 2002 2003
EBM
Other ÅM
Graph 27 Cases completed, 1998–2003
4 000
3 500
3 355
3 758
3 000
2 500
2 000
2 446
2 435
2 335
2 744
2 791
1 500
1 000
1 559
1 350
1 385
1 488
1 550
500
0
1998 1999 2000 2001 2002 2003
EBM
Other ÅM
other agencies narrowed during the next two years, so that the discrepancy
between received and completed cases was approximately the same
for all of them in 2003.
62

Table 28
Difference between received and completed cases in 2000–2003
Agency in charge 2000 2001 2002 2003
EBM –304 228 120 –21
Other ÅM –103 –109 95 –32
Graph 29 Breakdown of active cases by degree of difficulty, 31 December 2003
70 %
60 %
65 %
50 %
40 %
44 %
51 %
30 %
20 %
28 %
10 %
0 %
7 %
5 %
Relatively undemanding Demanding Highly demanding
EBM
Other ÅM
The breakdown of active cases by degree of difficulty is based on Leonardo’s
figures as of 31 December 2003. The breakdown changed during
the past three years. In 2001, only 5% of the cases handled by EBM
and 4% of those by the other prosecution authorities were categorized as
highly demanding. That rose to 7% for EBM and just over 5% for the
other agencies in 2003. The percentage of relatively undemanding cases
declined during the period. The proportion of demanding cases rose from
2001 to 2003.
The total number of EBM decisions increased, particularly those to indict.
Decisions to indict by the other agencies decreased considerably.
63

Table 30
Number of decisions by EBM on indictment matters, 1999-2003
EBM 1999 2000 2001 2002 2003 Change, 02/03
Prosecutions 1 529 1 604 1 168 1 327 1 729 23%
Penalty order 166 480 307 337 381 12%
Right of refusal to
prosecute 49 60 21 25 32 22%
Pretrial
investigation
closed 2 575 2 896 2 484 3 106 3 292 6%
No charges
brought 619 1 132 264 393 579 32%
No pretrial
investigation
launched 1 663 1 566 2 171 2 551 2 794 9%
Other decisions 1 147 1 171 1 482 1 194 1 398 15%
Table 31
Number of decisions by other prosecuting authorities, 1999–2003
EBM 1999 2000 2001 2002 2003 Change, 02/03
Prosecutions 1 738 1 469 1 122 1 442 1 199 –17%
Penalty order 119 157 183 253 266 5%
Right of refusal to
prosecute 62 36 41 38 30 –21%
Pretrial
investigation
closed 1 554 1 535 1 788 1 830 1 612 –12%
No charges
brought 625 342 199 264 236 –11%
No pretrial
investigation
launched 535 543 521 640 725 13%
Other decisions 773 496 721 578 469 –19%
The total number of decisions was up during the period for EBM but not
for the other agencies. The percentage relationship between decisions to
indict, penalty orders and right of refusal to prosecute increased for EBM
and decreased for the others.
6.3 THROUGHPUT TIME AND PROSECUTION
The disparity between throughput times for EBM and other prosecution
authorities is due to their disproportionate participation in investigations.
64

Diagram 32 Legal process launched
Crime committed
Pretrial investigation
Prosecution
Penalty
Crime detected/reported
Pretrial investigation concluded
Verdict/appeal
EBM’s throughput time runs from the crime report until a decision on
indictment. The agency requires that period because it comprises both
police and prosecutor activities. The other authorities measure throughput
time from completion of the pretrial investigation and not from the
crime report, i.e., the police investigation is not included.
Both the average and median throughput time has decreased. Since there
are so few cases, the completion of one can lead to a significant variation
in throughput time from year to year. That is particularly true of highly
demanding cases.
Measures taken to increase the number of cases prosecuted and improve
the quality of pretrial investigations help minimize throughput times.
The attention paid to older cases will lead to shorter throughput times
Graph 33 EBM's average throughput time from crime report until verdict
(number of days), 1998–2003 13
600
528 533 523
500
400
458
496
300
345
200
100
0
1998 1999 2000 2001 2002 2003
13.
Leonardo, 31 December 2003.
65

Graph 34 Average throughput time for police, other ÅM and total
(number of days), 2001–2003
600
500
478 467 475
400
401
377
394
300
200
100
0
77
90 81
2001 2002 2003
Report to
police until
completed pretrial
investigation
Other ÅM
completed pretrial
investigation until
prosecution
Total
throughput
time
Graph 35 Cases completed in 2003 by year reported
1 800
1 600
1 712
1 400
1 200
1 000
800
1 060
600
400
523
521 481
200
0
258 225
114
2003 2002 2001 2000
EBM
Other ÅM
for EBM in the future. The agency has been working aggressively to wrap
up old cases that are still active. As a result, throughput times will increase
in the short term and then decrease again.
66

Graph 34 compares throughput times reported by the police and RÅ for
economic crime.
Throughput times for the police and other prosecuting authorities are at
the same level as for EBM.
Graph 35 shows completed cases by year reported. Most of them were
reported in 2002 or 2003. The data is presented on the basis of suspected
crime, not number of cases. The average EBM case consists of one coded
suspicion, whereas the average case of the other prosecuting authorities
consists of five – for a cumulative average of two.
EBM prosecuted 24% of its cases in 2002 and 24.5% in 2003, whereas
the other authorities prosecuted 36.5% of their economic crime cases in
2002 and 30.8% in 2003.
6.4 POLICE INVESTIGATIONS IN THE REST OF THE COUNTRY
The number of active cases older than one year has been about the same
as those turned over to prosecutors. The percentage of cases received that
are still active has been on the rise, particularly since 1998. One reason is
that SKV has taken over economic crime cases from the police. Most of
them are relatively straightforward and do not require a great deal of time
to investigate. Thus, the cases for which the police are still responsible
have become more complicated.
For the first time since 1998, the number of cases received and those
turned over to prosecutors is increasing. Percentage wise, those turned
over to prosecutors have risen somewhat faster than those received. Thus,
even though the number turned over to prosecutors has grown somewhat,
it has remained relatively stable since 1998. But there are major variations
from one police authority to the other.
The low ratio of economic crime reports to total cases received is partly
due to the fact that six police authorities, including the three largest, are
no longer involved in combating such offences.
For the police authorities that still fight economic crime, the percentage
ranges from 0.1% in Västerbotten County to 0.4% in Östergötland,
Jämtland and Norrbotten counties. The proportion of investigation hours
devoted to economic crime varies from 2.4% in Västerbotten County to
7.5% in Norrbotten County. Economic crime and the category of other
offences are the two areas in which resources available for investigation
have markedly decreased.
67

6.5 TAX CRIME UNITS
Expansion of tax crime units is proceeding according to plan. There were
a total of 179 investigators at the end of 2003, as opposed to 157 a year
earlier.
The number of pretrial investigations completed rose by approximately
40% in 2003 to almost 1,400. Since tax crime units are still in the expansion
stage, enhanced performance is to be expected. Nevertheless, the
improvement has been better than anticipated.
Some 80% of the cases completed in 2003 originated as crime reports
from the tax authorities. Receivers in bankruptcy reported the second
largest number of offences.
Graph 36 Investigations by tax crime units
1 400
1 200
1 378
1 000
949
800
773
600
521
400
200
0
258
70
100
131
157
179
1999 2000 2001 2002 2003
Pretrial investigations completed
Numbers of investigators
68

7. People Convicted and the Penalties
The official statistics on people convicted cover the principal offence only.
As a result, they don’t reflect all offences. The data, which is taken from
BRÅ’s official figures, includes only offences stipulated in the Tax Penal
Act and Part 11 of the Penal Code.
Graph 37 People convicted, by principal offence 1998–2002
1 200
1 123
1 000
955
992
990
800
790
600
400
200
362
272
411
376
403
0
1998 1999 2000 2001 2002
Crime against Creditors (BrB 11)
Tax crime (SkbL)
The number of people subject to trading prohibitions has risen sharply
since 1996. The figure jumped by 114% from 262 at the end of 1998 to
561 at the end of 2003.
69

Graph 38 Trading prohibitions, 1998–2003
600
561
500
400
322
399
422
468
300
200
100
0
262
95
103
140
92
155
188
1998 1999 2000 2001 2002 2003
New
Active
Graph 39 Violations of trading prohibitions
70
60
50
59
40
46
30
33
20
10
0
2001 2002 2003
70

8. Resources
Tax crime units have grown in recent years. Thus, although there has been
a levelling off of costs for all agencies except those units, the total is up.
Graph 40 Costs for combating economic crime, 1999–2003
400000
350000
300000
250000
259 211
283 500
304 307
317 767
317 869
200000
150000
100000
50000
0
147 600
39 000
32 795
138 200
56 000
38 681
125 300
76 000
38 308
166 653
135 631
97 000
92 000
38 000 29 000
1999 2000 2001 2002 2003
Total costs 478 606 516 381 543 915 588 398 614 522
EBM Other ÅM RPS SBE
71

9. Attachment, Collection, etc.
The effort to track down and recover the proceeds of crime is a top
interagency priority. Vital to preventing economic crime is the ability to
ferret out its proceeds and subject them to enforcement measures such
as attachment, sequestration or seizure. That requires close interagency
cooperation, as well as organized, tactically oriented activities.
The purpose of attachment is to ensure the payment of taxes, customs
duties and fees. The county administrative court makes attachment decisions.
It may do so only if there is a palpable risk that the taxpayer will
try to dodge claims of significant magnitude. When the law is enforced,
there is often a well-founded suspicion of tax crime. Due to the elimination
of the right of priority for tax claims, SKV will act to ensure they can
be more quickly submitted to KFM.
In combating economic crime, KFM is to pay special attention to cooperative
efforts. The agency’s collections policy and guidelines for creditor
operations highlight that need.
KFM has employees assigned to special enforcement in each region.
Graph 41 Number of applications to county administrative courts for attachment
300
282
250
200
150
156
193
218 208
100
50
0
1999 2000 2001 2002 2003
72

The collections policy stresses the key role of effective enforcement in
minimizing the harmful effects of economic crime. It also emphasizes
that KFM actively participate in various joint action groups to head off
such offences. The agency is to accord priority to debtors who evade their
obligations or have suspected ties to economic crime.
Activities involving collection or pursuant to the Trading Prohibition Act
incorporated rules for the presumption of secrecy on 1 October 2001. As
a result of the change, the difficulties that have sometimes arisen when
sharing information with other agencies can be ameliorated, while the
secrecy of individuals who are subject to KFM measures is better protected.
Amendments to the Secrets Act on 1 March 2003 made it even
easier to share information. According to the new regulations, SKV and
the agencies that combat economic crime can render the work of receivers
in bankruptcy more effective by providing them with information from
audits and pretrial investigations.
Special enforcement normally focus on debtors who are suspected of
engaging in economic crime. A total of SEK 417 million was collected
in 2003.
KFM collected SEK 78 million abroad in 2003.
Graph 42 Unpaid taxes and fees (SEK million) registered by KFM, 1999–2003
70000
60000
50000
67 040
61 677
60 709
58 832
56 636
40000
30000
20000
10000
0
5 709
6 467
6 259
6 622
6 686
1999 2000 2001 2002 2003
Debt
Paid
73

Graph 43 Unpaid taxes and fees (SEK million), special enforcement, 1999–2003
15000
12000
9000
13 294
14 270
10 338
11 047
11 557
6000
3000
0
319
579
322
242
380
1999 2000 2001 2002 2003
Debt
Paid
9.1 BANKRUPTCY SUPERVISION
KFM is also the supervisory authority in bankruptcy. Such supervision is
exercised over receivers in bankruptcy as appointed by the courts.
Pursuant to the Bankruptcy Act, the purpose of supervision is to ensure
that receivership is conducted in accordance with the law, appropriately
and so as to obtain the best possible financial outcome for creditors.
In order to meet the Government’s requirements for bankruptcy supervision,
SKV issued recommendations in 1999. Among them are that the
supervisory authority in bankruptcy be questioned before a receiver is
appointed. In addition, the receiver is to provide timely information on
each bankruptcy, while supervision is to be active, systematic and focused
on the essentials.
The task of the supervisory authority includes making sure that receivers
report both suspected crime and situations in which there is cause to issue
trading prohibitions, as well as helping to improve the quality of such
reports.
Bankruptcies steadily decreased in number during the late 1990s. A
slight increase in the first years of this decade seems to have levelled off
in 2003.
74

Graph 44 Supervision of bankruptcy, 1998–2003
18 000
16 000
14 000
12 000
16 488
13 436
12 353
12 575 13 037 13 012
10 000
8 000
6 000
9 254
7 279
7 196
7 879
8 374
8 686
4 000
2 000
0
1998 1999 2000 2001 2002 2003
Cases received
Active cases
9.2 TRACKING DOWN AND RECOVERING THE PROCEEDS
OF ECONOMIC CRIME
An interagency project launched by the Swedish Economic Crimes
Council involves tracking down and recovering the proceeds of economic
crime. One objective is for EBM, FiPo, SKV, KFM, Customs and others
to develop joint models on how various agencies can obtain information
about assets. That also entails working methods for expanding and
improving current procedures for securing property.
Police, prosecutors and others are to learn more about attachment and
sequestration, as well as how seizure and bankruptcy regulations work.
Awareness of how to secure assets found during a search of the premises
and the like should be a standard feature of every crime investigation. In
addition, consciousness about currently available options for information
sharing among crime investigation agencies, SKV, KFM and receivers in
bankruptcy is to be raised.
With that in mind, EBM is planning seminars aimed at the agencies concerned.
Based on the Rubicon model, the practical experience shared at
the seminars will be followed up on and analyzed in greater detail. At that
stage, the project will further examine improvements to the regulations
that are needed to more effectively collect assets from people and businesses
linked to economic crime.
75

Since a coordinated effort to recover such proceeds requires an attitude
change in addition to increased knowledge, it is important that the seminars
get going as soon as possible.
9.3 RUBICON (ROUTINES, CRIMINAL INVESTIGATIONS
IN BANKRUPTCY)
A task force that included participants from RÅ, KFM, what is now EBM
and a number of other agencies, as well as receivers in bankruptcy and
accountants, issued the Rubicon memorandum in 1994 concerning its
efforts. Included were a series of proposed measures to make crime investigations
in connection with bankruptcies more efficient. The memorandum
also suggested ways in which receivers, accountants and the agencies
concerned could work together more closely. A seminar series in 1997
was the next step in the Rubicon project. A follow-up launched by EBM
in 2000 on the status of cooperation under the Rubicon umbrella led to
a fresh nationwide series of seminars, held mostly in 2002. The seminars
reviewed the new Accounting Act, provided information on how to
handle accounting data, took up the issue of trading prohibitions, identified
existing problems and discussed ways of promoting the Rubicon
concept.
Among the results of the seminar series are as follows. An EBM memorandum
offered an overall background and model for future methods
of cooperation under the Rubicon concept. As of 2004, EBM has fixed
routines for providing information to receivers in bankruptcy.
A determination was made that the original Rubicon memorandum’s
guidelines for reporting procedures and methods of cooperation are generally
still appropriate. In 2004, EBM will put together and electronically
publish a document that is easily accessible for everyone concerned. It will
subsequently be updated on a regular basis.
76

10. Crime Prevention Efforts
10.1 GENERAL
As far back as 1994, a strategic Government paper (1994/95:217) called
for increased emphasis on preventive measures in combating economic
crime. The Government’s annual goals and guidelines have further stressed
prevention, identifying it as a key success factor in the struggle. The latest
such guidelines (14 December 2000) stated the following.
“A guiding principle should be to step in and break up criminal activities
at as early a stage as possible, as well as to promote prevention efforts in
other respects. For instance, agencies might prioritize and improve upon
their own supervisory and monitoring operations, along with various
types of interagency monitoring measures involving joint visits to all the
businesses in a particular sector or sphere of activity. Informational and
training efforts are important, particularly for new and small businesses.
“The guidelines also discussed the possibility of making these operations
more efficient by singling out certain suspects, collaborating with the private
sector, sharing information, analyzing legislative measures, etc.”
BRÅ submitted two reports in 2003 about methods of preventing economic
crime. Report 2003:1, Preventing Economic Crime, presented and
analyzed needs, methods and research in the field. Report 2003:10, An
Anthology, contained 15 freestanding essays concerning preventive methods.
10.2 EBM’s STRATEGY
In 2002, EBM appointed a task force to develop strategies and guidelines
for making its crime prevention efforts more efficient. Report 2003:1 of
May 2003 proposed a strategy in the area. Planning activities for EBM’s
2004 activities subsequently took up the proposals. In brief, the proposals
envisage EBM becoming a more proactive force in the evolution of crime
prevention initiatives, particularly by launching and coordinating operations
together with other agencies and organizations concerned.
EBM is to be the catalyst for change in the area of economic crime prevention.
77

According to the proposals, the agency’s efforts should embrace the following
main tasks.
• Gathering information and providing analyses to raise awareness
about the basis and prerequisites of economic crime
• Working up suggestions for legislative changes that will avert or
hamper the commission of criminal acts, or enable the detection or
reduction of their harmful effects
• Making the general public, politicians and private sector more
knowledgeable about the scope and harmful effects of economic
crime
• Initiating or taking part in the development of methods and systems
for early detection of ongoing criminal activities
• Improving upon and disseminating knowledge about specific types of
economic crime so that individuals and businesses can guard against
its harmful effects or help uncover and fight it
• Launching and/or supporting cooperation among different players
and interested parties
Starting in 2002, EBM’s organization more clearly reflected its responsibilities
and resources for crime prevention efforts. The agency’s development
unit is in charge of strategic matters, methods development and
coordination of prevention activities. The head of each department’s
special unit has express operational responsibility, while resources in the
individual units are earmarked for prevention.
The increased importance of, and focus on, prevention requires a systematic,
long-term development effort that tries new or untested methods as
part of pilot or experimental studies. Prevention does not normally have
access to the technical and IT-based systems that have emerged to support
traditional enforcement efforts. As a result, working up documentation
for planning, as well as developing routines for follow-up, demands
special initiatives, thereby putting prevention at a disadvantage vis-à-vis
traditional enforcement. Thus, crime prevention measures must be continually
followed up on subsequent to implementation.
Intelligence and investigative activities are key to uncovering economic
crime. EBM’s special units play a vital role in their operational responsibility
for investigative efforts, while serving as a central link in contacts
with the intelligence, investigative and monitoring units of other agencies.
EBM’s divisions have established close operational cooperation with
the crime units of the various county police authorities when it comes to
investigation.
78

Preventive Economic Contacts (PECs) represent the most common working
method for preventing economic crime. PECs are visits, coordinated
by various agencies, to businesses for the purpose of providing information
about registration, accounting, taxation, etc. Such visits have been
increasingly called into question in recent years and steadily diminished
in number. Meanwhile, alternative crime prevention methods – often
based on interagency cooperation with various interest organizations
– have emerged.
Under certain circumstances, PECs allow for productive contact with the
general public. While culling information, agencies can make observations
and learn about the problems and conditions faced by the private
sector. Thus, there may be grounds for devoting resources to some kind of
PEC effort merely to understand the workaday world better, even if that
is not its primary purpose.
10.3 SKV’s CRIME PREVENTION EFFORT
SKV’s general task is to prevent and rectify tax errors and evasion. Investigative
and supervisory activities are central to preventing tax crime. The
overarching purpose is to have a preventive effect. SKV’s tax crime units
are its primary vehicles for preventing and combating illegal activities.
The units’ knowledge and experience of risks and behaviour will be put to
use. Their preventive efforts chiefly involve gathering, systematizing and
analyzing information. SKV will draw on the knowledge accumulated by
the units in order to minimize uncollected revenues.
SKV put together a report in 2003 entitled Contributions of Tax Crime
Units to the Crime Prevention Efforts of the Tax Authorities. In 2004, a
task force will develop a method for taking advantage of the experience
that the units have had during pretrial investigations. Prevention efforts
will accumulate unique knowledge about the causes of and opportunities
for crime. The experiences will be systematized and serve as the basis for
SKV’s supervisory and informational activities. The information will also
provide the underpinnings of the agency’s legislative proposals.
Tax-related offences represent a large, important area in the effort to prevent
economic crime. One case in point is the fight against the everyday
offences of undeclared work and unreported income. Of great urgency is
to identify ways for tax authorities, tax crime units and EBM to cooperate
and share responsibility so as to maximize their combined skills and
resources. The tax authorities are continually in touch with individuals
79

and employers concerning registration and tax return matters. The tax
authorities should normally be in charge of carrying out any measures
aimed at preventing tax offences by individuals or businesses. EBM’s
skills and resources should concentrate on analysis and development of
legislative proposals and systematic solutions, informational initiatives
directed toward groups of businesses or taxpayers, contacts with interest
organizations, etc.
10.4 CONTACT AND INFORMATION
Contact and cooperation with other agencies and organizations expanded
steadily in 2003. The initiative often came from trade organizations in sectors
that have problems with undeclared work and undisclosed income.
Contacts were forged at both the national and regional level.
Following are a few concrete types of cooperation.
• Crime prevention activities with individual agencies or municipalities
• Informational initiatives about economic crime and prevention
efforts by agencies at meetings with groups from particular sectors,
such as the Transport Workers’ Union, the Swedish Movers Federation
(SMF), the Swedish Flower Wholesalers’ Association, regional
representatives of the construction industry, or local representatives
in the case of large projects
• Closer cooperation on the issue of undeclared work in the restaurant
sector with agencies concerned and representatives of the Swedish
Hotel and Restaurant Employers’ Association, the Hotel and Restaurant
Workers’ Union, and organizations of musicians and staffing
companies
• General cooperation and concrete activities with local chapters of the
Swedish Trade Union Confederation
Information is a key tool in crime prevention efforts, a fact that EBM
takes into consideration in all of its activities. The mass media represent
an import target in that respect, as well as various interest groups such as
trade organizations, employer’s associations and schools.
The media are vital to informing the general public about economic
crime and the effort to combat it. The agencies concerned have ambitious
goals with respect to being available to the media and serving as sources of
information when reporters have questions about economic crime.
80

Economic crime, and therefore EBM’s sphere of activity, was in the media
spotlight during 2003. The publicity survey that the agency conducted
among the major morning newspapers in the first half of 2003 reflected
that interest. The analysis revealed that the press covered economic crime
twice as much in 2003 as the year before.
Other efforts to raise awareness about crime prevention activities included
participation at seminars, information offerings for schoolchildren and
students, and meetings with agencies, organizations and other interested
parties in the field. One of the informational brochures that EBM put
together was aimed at newly started small businesses and dealt with false
accounting
An economic crime symposium arranged in November by EBM and
Jönköping International Business School attracted some 20 leading European
researchers in addition to the cooperating agencies.
In the autumn of 2003, EBM conducted a survey on the attitudes of
Swedes toward economic crime. More than half of the interviewees said
that such offences are fairly widespread in Sweden. Over one-third said
that it was very widespread. The figures are somewhat higher than a similar
2001 survey.
Almost half of those questioned said that they had contact with at least
one person who did not declare their income over the past year or with
someone who hired such workers. That was particularly true of men,
young people with college educations and high-income earners. A total
of 82.9% of the respondents felt that society and politicians were not
doing enough to combat economic crime. The youngest age group (18-
24) deviated from the consensus.
Important to keep in mind is that SKV noted in its periodic attitude
surveys that young people grew more accepting of undeclared work from
1998 to 2001. In addition, a series of similar studies commissioned by
EBM have shown that young people today are more tolerant of undeclared
work and economic crime than previous generations.
SKV subsequently carried out an informational drive aimed at 16-20 year
olds. In order to gauge the impact of the campaign, a preliminary survey
was conducted in the spring of 2002. Following a year of activities, a new
study in the spring of 2003 indicated that fewer young people thought
that undeclared work was legitimate and more repudiated the idea. Now
that the informational effort has proceeded for another year, the results
of a third survey are in the process of compilation. Preliminary findings
81

suggest that attitudes are continuing to move in the right direction. Thus,
SKV has established that such campaigns can change the way that people
look at these issues.
10.5 NATIONAL CRIME PREVENTION PROJECT
A report from the Hairdressing Project in Malmö was submitted to the
Government in November 2002. Bankrolled by the Ministry of Finance,
the project was aimed at hairdressing saloons, their employees and the
general public. The emphasis was on preventive measures, including
information for the public and voluntary certification to strengthen legitimate
businesses.
In 2003, the Swedish Taxpayers’ Association initiated a series of discussions,
conferences and seminars on the undeclared sector. Set in Stockholm,
the first seminar dealt with the Hairdressing Project, which was
central to subsequent discussions as well.
Various trade associations in the hairdressing sector are considering the
possibility of expanding voluntary certification and making it nationwide.
A follow-up on the impact of the pilot project is examining reported
revenue and assessed income for the Malmö hairdressing sector after the
2003 tax assessments. A report is due out in early 2004.
Collaborating with the local authorities in Gotland, EBM launched a
project in 2001 focused on crime prevention in the municipality’s restaurant
sector. A similar project concentrated on peddling in Gotland.
Among the activities of the projects was to pay one or more visits to all
restaurants licensed to serve alcohol. The tax authority has also carried
out other monitoring activities in the restaurant sector.
Visits to markets and public squares have checked VAT registration, business
tax certificates, adherence to information requirements pursuant to
the act on peddling, and the use of undeclared labour.
10.6 REGIONAL CRIME PREVENTION ACTIVITIES
At one time, PECs were the most common crime prevention measures.
Due to a certain amount of confusion, such activities have steadily diminished
as of 2002. Many SAMEBs are asking for clearer legal regulations
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on PECs, arguing that a combination of informational and inspection
visits to businesses – particularly in sectors where evasion is known to
occur – is an effective crime prevention measure. They suggest changes
to legislation and the allocation of resources that would allow for coordinated
visits by the police and Tax Administration.
As in previous years, various counties conducted projects such as “The
White Coast.” The cooperating agencies have been SKV, EBM, KFM,
municipalities, the Social Insurance Office and the County Labour Board.
Both the agencies concerned and sector representatives view the projects
– which have dealt with the construction industry, restaurants, peddling
and more– as extremely important.
The pilot project in the hairdressing sector has spawned regional and local
initiatives to monitor and inform hairdressers for the purpose of discouraging
undeclared work. Both members and non-members of the Swedish
National Hairdressers’ Federation have exhibited great interest. In one
region, the project has offered certification to hairdressers, provided that
they have the following.
• Cash registers with receipts and control slips
• Price lists in plain view
• Proper registration with SKV
• Liability insurance
• Registration with the Environmental Board
• Credit card terminals (not mandatory)
Approximately half of the county’s 600 registered hairdressers have
attended the informational meetings. More than 60 businesses have been
certified so far. The information will be provided at hairdresser’s training
as well.
Among other crime prevention measures are:
• special economic crime days attended by agencies concerned, interest
organizations, etc.
• seminars with representatives of EBM, SKV and KFM, as well as
people from various organizations helping immigrants who own or
want to start businesses. The goal was to identify channels for providing
the target group with information about regulations and agencies
• More than 40 representatives of the cooperating agencies, as well as
receivers in bankruptcy, took part. A follow-up seminar is scheduled
for the spring of 2004
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84
• a regional informational project in 2002 conducted by EBM, SKV,
KFM, the County Administrative Board, Customs and the Police
Authority. A 2003 press released entitled “A United Front Against
Economic Crime” attracted some media coverage. All the agencies
got together on a two-page spread in an October edition of the newspaper
Länstidningen. In addition to regular circulation, the articles
were sent to the region’s schools. The target audience was the general
public. The objective was to discuss the consequences of doing undeclared
work and to highlight interagency cooperation
• providing interagency information to upper secondary schools on
a trial basis in the spring of 2001. The objective was to discuss the
potential personal consequences of unpaid debts (bad credit ratings),
revelations of undeclared work, evasion, economic crime, etc. Both
students and teachers were so enthusiastic about the pilot project
that the effort was extended to other schools in the county.

11. Study of Adherence to Trading
Prohibitions 14
A trading prohibition can be issued for 3-10 years. KFM, which monitors
adherence, can request assistance of the police authority. The Swedish
Companies Registration Office keeps the public register of trading prohibitions
that have been issued. Violations are punishable by an extension
of the prohibition for up to five years and a maximum of two years
imprisonment. If the offence is trivial, a fine or sentence of no more than
six months is given and the prohibition is normally extended.
EBM, the Swedish Companies Registration Office, SKV and KFM put
together a joint report, including suggestions for improved compliance.
The report proposed legislative changes and other measures to help make
the trading prohibition process more effective.
The project included a study of KFM supervision of the prohibitions
issued in the second half of 2002, as well as an examination of those that
started earlier and were still in effect at the end of that year. In addition, it
reviewed the circumstances surrounding and the measures taken following
reports of suspected violations.
The number of people subject to trading prohibitions has risen sharply
since 1996. The figure jumped by 217% from 173 at the end of 1995 to
561 at the end of 2003. The increase is due to the fact that more prosecutors
are requesting trading prohibitions than earlier.
The main purpose of such prohibitions is to prevent offending business
owners from continuing to cause major harm. Effective supervision is
vital to that effort.
14.
This section is a summary of a report, to be submitted in 2004, on how well adherence to and
supervision of trading prohibitions are being monitored.
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12. International Contact and Cooperation
In 2003, EBM continued to broaden its international contact network in
the area of economic crime. In addition to being in constant touch with
agencies in the Nordic area that combat such offences, EBM participated
in the annual Nordic Economic Crime Conference arranged by SØK, its
Danish counterpart. Interest has also come from outside the Nordic area
as to how Sweden combats economic crime and EBM’s unique constellation
of agencies.
EBM assisted the Swedish Ministry of Justice in negotiating the UN’s
Convention Against Corruption and participated in the world body’s
Commission on Crime with regard to corruption issues. The agency has
also taken part in the European Council’s Group of States against Corruption
(GRECO) and the OECD Working Group on Corruption in
International Business Transactions.
EBM attended a preliminary meeting at the United Nations Asia and Far
East Institute for the Prevention of Crime and the Treatment of Offenders
(UNAFEI) in Japan. The meeting planned a new seminar on economic
crime at the 2005 UN Congress on Crime Prevention and the Treatment
of Offenders, to be held in Thailand.
Agencies that combat economic crime are involved in a legal assistance
project financed by Phare, a EU program that promotes cooperation
between applicant countries and the agencies of Member States, as well as
helping aspirants meet the requirements for joining the Union. Moreover,
the agencies have attended a number of seminars arranged by the Council
of the Baltic Sea States (CBSS).
They also participate in:
• the Financial Action Task Force (FATF), an action group to combat
money laundering and terrorism, the office of which is in OECD.
Sweden holds the Presidency of the organization from July 2003
through June 2004. An official specially appointed by Finansinspektionen
assists the president. Under the aegis of FATF, Finansinspektionen
has evaluated how well Sweden follows the organization’s
recommendations on money laundering and terrorist financing
• the Committee of European Securities Commissions (CESR), an
advisory body to the European Commission charged with ensur-
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ing consistent implementation of the legal measures that have been
enacted. CESR is to consult with the parties concerned before issuing
its opinions. The committee is a permanent participant in joint,
transnational investigations and surveillance projects, coordinating
approval and the mechanics of surveillance. As an advisor, CESR
proposes technical directives that are part of the Financial Services
Action Plan (FASP). Among them are the International Accounting
Standards (IAS) Directive, the Market Abuse Directive, the Prospectus
Directive, the Investment Services Directive (ISD) and the Transparency
Directive
• a group of experts in the Operative Committee (OPC) of CBSS that
deals with money laundering and terrorist financing. Sweden, Finland,
Denmark, Norway, Iceland, Germany, Russia, Poland and the
Baltic States compose OPC
FiPo takes part in the Egmont Group, currently consisting of 84 countries
and international organizations. Egmont’s Secure Web, to which FiPo is
linked, permits participants to share information about legislation, training
and new modes of operation.
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13. Skills and Methods Development
13.1 EKOBANKEN
EBM’s vision is to serve as the catalyst for society’s struggle against economic
crime. A key success factor is to utilize the knowledge and experience
that continually emerges from the fight against such offences and
make it available to everyone in the organization.
EBM pursued an intense development effort in 2003. Information is now
being fed into a pilot version of Project Ekobanken, a database of knowledge
and experience to support operational activities. Another prominent
feature of the development effort is to ensure the quality of those activities.
As of November 2003, a quality monitoring and assurance model
evolved to the point that it is evaluated and documented for all category
3 cases.
Ekobanken was developed throughout 2003 for the purpose of designing
routines and systems in that effort. The pilot version will initially be available
to a limited group of users, essentially one unit of each division. The
second step will open the system up to everyone at EBM, with the eventual
goal of including all parties involved in the fight against economic
crime. Started up in February 2004, the pilot version is to support operational
investigation and prosecution efforts. As a source of knowledge
and experience, as well as a stimulus for employee-to-employee contact,
Ekobanken will improve the quality of operational activities and set the
stage for shorter throughput times.
13.2 TRAINING
EBM has put together a comprehensive training program of more than
15 different courses. The program is designed for both EBM employees
and those engaged in combating economic crime at cooperating agencies.
Prosecutors, economic crime accountants, police, tax crime investigators,
and administrators have been the primary attendees. The curriculum is
designed to provide each profession with cutting-edge expertise in its area
and the ability to work more effectively with the others in interdisciplinary
investigative teams. Particularly when it comes to complicated
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investigations, awareness of what each profession can contribute lays the
groundwork for satisfactory results. Thus, a number of interdisciplinary
courses have been developed at various levels.
Prosecutors, police and economic crime accountants who investigate violations
of the Insider Penal Act participate in licensing courses for brokers.
An interactive course in Accounts Analysis, a prerequisite for Accounting,
was added during the year.
Administrative employees took a course in economic crime designed for
their particular needs. A special course for police at and outside EBM
who investigate economic crime was given for the first time. The goal is
to enhance their skills in the specific areas that affect their work.
Almost 400 EBM employees and those from cooperating agencies
– including 94 external prosecutors, police and tax crime investigators
– took one or more of the courses in 2003.
As in previous years, EBM’s prosecutors took part in RÅ’s special training
sessions.
A development and training effort was started during the year for the
agency’s economic crime accountants to make it easier for them to analyze
extensive accounting records on the basis of IT support.
Given the rapid technological progress of recent years, particularly in
the private sector – which demands a great deal on the part of EBM in
terms of securing computerized data – the agency continued to focus on
advanced training of IT specialists in its operational activities.
EBM employees share their expertise, primarily in the area of economic
crime, by teaching courses set up by RÅ, the Swedish National Courts
Administration, the Swedish National Police College, the Swedish Institute
of Authorised Public Accountants (FAR), the Swedish Association of
Auditors (SRS) and others.
13.3 METHODS DEVELOPMENT
A long time often passes between the commission of a crime and the point
at which a receiver in bankruptcy or tax authority reports it. A striking
number of businesses that are reported have failed to prepare and submit
annual reports to the Swedish Companies Registration Office.
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Since the autumn of 2002, EBM has conducted a project to uncover economic
crime as soon as possible using the Swedish Companies Registration
Office’s information about such delinquent businesses.
Since newly started companies are traditionally in the risk zone in terms
of serving as tools of economic crime, the project places them at centre
stage. Given that the Companies Act requires accountants to report suspected
illegal activities, the effort also examines their actions with regard
to the businesses involved.
The project was limited to 82 reports of suspected false accounting.
• In 15 cases, annual reports were subsequently submitted and no pretrial
investigations were launched
• In 15 cases, pretrial investigations of other suspected offences were
already under way
• Of the remaining 52 reports, 23 people were deemed to be engaged
in serious economic crime
• Seven judgments have been handed down so far, all convictions
• A total of 49 companies have declared bankruptcy
The project will be fully evaluated in 2004. It is already clear that the
working methods and cooperation have proven successful, allowing crime
to be discovered and prosecuted at a very early stage. That is extremely
important from the point of view of prevention, even increasing the likelihood
of tripping up crime while it is still in progress.
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14. Research on Economic Crime 15
Swedish research on economic crime has long been neglected. In 1998-
2002, BRÅ provided SEK 26 million in grants to promote such research.
The source of the initiative was the Government’s 1995 strategy for combating
economic crime, a cornerstone of which was the need for greater
knowledge in the area.
In White-Collar Crime Research. Old Views and Future Potentials – Lectures
and Papers from a Scandinavian Seminar, published by BRÅ in 2001,
Sven-Åke Lindgren, Associate Professor and Head of the Department of
Sociology at Göteborg University, talks about how white collar crime has
interested researchers ever since the 19th century.
Martin Bergquist’s licentiate dissertation Ekonomisk brottslighet – Något
att räkna med (Economic Crime – Something to Consider) (2002) for the
Department of Criminology at Stockholm University thoroughly examines
the concept as it appears in international literature.
Fiffelstrategier vid ekonomisk brottslighet (Strategies in the Commission of
Economic Crime) (2003) by Tage Alalehto at Umeå University’s Department
of Sociology reviews international research and provides an overview
of the various types of offences involved. He focuses entirely on the
methods employed by offenders.
An essay by Alalehto and Jan Sjödin in Förebyggande metoder mot ekobrott
(Methods of Preventing Economic Crime), published by BRÅ in 2003
at the initiative of the Swedish Economic Crimes Council’s cooperating
agencies, describes a Swedish case in which a spurious contractor cheated
both the county administrative board and the municipality out of millions
of kronor. The investments that were to attract employment and
wealth to the community never arrived.
Kartin S. Thornton, Associate Director of the Tuck School of Business
at Dartmouth College, examined 263 Swedish companies that declared
bankruptcy in 1988-91. In 2002, she posed the question as to how shareholders
can be sure that the company’s executives are not using the money
for private gain. They can divest the company’s assets at a loss to busi-
15.
This section is an abridged version of a brochure published by BRÅ in 2004.
91

nesses under their control, grant lucrative salaries to themselves, sell stock
to themselves or family members at cheap prices and exorbitantly remunerate
themselves.
The latter ploy is a well publicized phenomenon in today’s business world.
According to Thorburn, the composition of boards, reward systems and
the number of votes entitled by a share are of vital concern in combating
economic crime.
Forskning om ekonomisk brottslighet. En översikt (Nordic Research on Economic
Crime: An Overview) (Korsell et al, 1999) and Från storsvindel till
småfi ffel. Teman i internationell ekobrottsforskning (From Fraud to Cheating:
Themes in International Economic Crime Research) (Lindgren and
Theandersson, 2000) were both published at BRÅ’s behest.
Among the issues discussed by the second publication are the causes of
economic crime and the kinds of people who commit it.
Norway and Finland have also launched special research efforts. Paul
Larsson’s overview points to early Norwegian economic crime research,
i.e., Vilhelm Aubert’s classic study of business owners who violated pricing
and rationing legislation.
One of BRÅ’s tasks has been to encourage the sharing of information
among researchers in the field. Korsell’s Nordic overview was the product
of a seminar attended by economic crime researchers. The articles and
lectures from an additional seminar, arranged in collaboration with Göteborg
University and also attended by researchers from around the world,
were compiled in Lindgren’s international overview.
One key research finding has been that we must become just as skilful in
gauging economic crime as traditional types of offences. Bergquist’s dissertation
zeroes in on that challenge.
Hazel Croall’s 2004 report for BRÅ entitled Lurad och förgiftad – att
avslöja utsatthet för ekobrott (Fooled and Poisoned – Uncovering Vulnerability
to Economic Crime) also discusses needs and opportunities for
measurement. Seminars and compilations have been integral to BRÅ’s
task of raising awareness about international research and encouraging
economic crime experts to share their findings.
A 2001 dissertation by Erik Wesser at Lund University’s Department of
Sociology entitled “Har du varit ute och shoppat, Jacob?”. En studie av
Finansinspektionens utredning av insiderbrott under 1990-talet (“Have You
Been Out Shopping, Jacob?”: A Study of Finansinspektionens’s Super-
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vision of Insider Crime in the 1990s) examines all 344 of the agency’s
investigations from 1991 through 1999. Twenty-seven investigations
were turned over to prosecutors, eight led to prosecutions and six to convictions.
BRÅ supports a research project at Lund University on corruption in the
private sector. An essay by Katarina Jacobsson and David Wästerfors in
Methods of Preventing Economic Crime argues that what constitutes bribery
in a legal sense may be appear innocuous in everyday terms. Phenomena
like bribery, subornation and corruption are described as “commissions,
consulting assignments, gifts, trips and receptions.”
Antoinette Hetzler at Lund University’s Department of Sociology also
stresses the importance of such grey areas in explaining economic crime.
Her 2003 examination of financial markets concludes that abuse walks a
fine line between what is legal and illegal.
A 2002 study by Samuel Cavallin, research fellow at the Jönköping International
Business School, also deals with how the financial market is
regulated. The regulation concerning improperly influencing share prices
focuses on legal measures, the illicit purpose of which is to make money
off the system. Cavallin maintains that the term illicit purpose represents
an attempt to criminalize behaviour in the grey area. His argument is that
the provision has no legal substance, given that what constitutes an illicit
purpose in the capital market is not generally known.
A BRÅ report entitled Organiserad brottslighet – lösa maskor eller fasta
nätverk (Organized Crime – Loose Mesh or Fixed Networks) (Korsell
et al, 2002) features a large number of researchers who provide a joint
overview of the situation in Sweden. They conclude that organized crime
consists of networks in which the offenders work together. That is particularly
true when it comes to smuggling of drugs, alcohol, tobacco products
and doping agents, as well as larceny, trafficking in women and arms
trafficking. Organized crime also involves such economic offences as tax
violations, shell company dealings, undeclared labour and fraud.
In partnership with the Swedish Insurance Federation, the Swedish
National Insurance Board, and the Faculty of Law at Lund University,
BRÅ has launched a research project on the connection between public
and private insurance fraud. A report by Helén Örnemark Hansen, Fredrik
Andersson and Anette Ohlsson, scheduled for release next year, will
describe methods of discouraging fraud. Central to the project is the
notion that closer cooperation between private insurance companies and
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social insurance offices could prevent many crimes, given that offenders
play off one system against the other.
From Fraud to Cheating: Themes in International Economic Crime Research
reviews what is currently known about those who commit such offences.
On the basis of interviews with business owners, Fiffl arens personlighet,
En studie om personlighetsdragets betydelse vid ekonomisk brottslighet (The
Personality of the Swindler: A Study in the Significance of Personality
Traits in Economic Crime) (2002) by Swedish researcher Tage Alalehto
identifies three personality types.
Research has also examined offenders from a gender perspective. The
2000 review of international research by Lindgren and Theandersson suggested
that women are vastly underrepresented among those who commit
economic crimes, just as they are among traditional offenders. One key
factor is that many fewer women own businesses than do men. In addition,
more men hold corporate posts that provide the occasion to engage
in certain kinds of economic crime. On the other hand, women are often
in a position to commit embezzlement or fraud.
A 2003 doctoral dissertation entitled I fi nansvärldens bakre regioner. En
studie om fi nansiella offshoremarknader och ekonomisk brottslighet (In the
Backwoods of the Financial World: A Study of Offshore Markets and
Economic Crime) by Oskar Engdahl at Göteborg University’s Department
of Sociology makes another contribution to the evolution of Sweden’s
recent economic crime policies. In 2000, Enghdahl published a BRÅ
report entitled Finansiella offshoremarknader och skatteparadis (Offshore
Financial Markets and Tax Havens).
Lotta Pettersson and Vanja Lundgren of the Departments of Criminology
at Stockholm University and the University of Oslo respectively studied
economic crime in the transport sector. Their 2002 BRÅ report entitled
Just in time. Ekobrottslighet inom svensk och norsk långtradartransport (Just
in Time: Economic Crime in Swedish and Norwegian Trucking) describes
the structural problems that lead to such offences.
Another transnational research project concerns offences discovered and
reported by Swedish Customs. Anna K. Hansson, doctoral candidate at
the Jönköping International Business School, examines fraud in connection
with crossborder trade. Certain companies that import products
from non-EU countries make false customs declarations in order to minimize
or totally evade taxes, fees and duties.
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An essay by Katarina Jacobsson and David Wästerfors of Lund University’s
Department of Sociology in Methods of Preventing Economic Crime
argues that one way of fighting corruption is to call a spade a spade when
it comes to bribery.
Att förebygga fel och fusk. Metoder för reglering och fusk (Preventing Error
and Cheating: Methods for Regulation and Cheating) (Korsell och Nilsson,
2003) looks at ways that the Government and Parliament can better
structure legislation to prevent economic crime and point various agencies
in that direction as well. A key element of the Government’s effort
is to demand factual information concerning the various guises that economic
crime assumes.
Förebygga ekobrott. Behov och metoder (Preventing Economic Crime: Needs
and Methods) (BRÅ, 2003) is directed toward agencies that combat economic
crime, including the police, prosecutors, EBM and tax crime units.
The report, which is in response to directions from the Government to
work up economic crime prevention methods for the agencies concerned,
contains a series of approaches structured according to the situational
model normally used to counteract traditional offences.
As part of the Government’s assignment, an extensive survey was conducted
among receivers in bankruptcy, tax accountants, enforcement
offices, tax crime investigators, police, prosecutors, etc. A report (Canow,
2003) and an essay on preventive measures (Canow, 2003a) review the
survey findings.
An upcoming BRÅ report by Bengt Larsson, senior lecturer at Göteborg
University’s Sociology Department, entitled Revisorers anmälningsskyldighet
(The Duty of Accountants to Report) presents the results of his
evaluation in the area.
On behalf of BRÅ, Sören Wibe, now at the Swedish College of Forestry in
Umeå, published in 1990 the findings of an extensive survey on attitudes
toward economic crime. His follow-up study in 2003 was an attempt to
determine whether anything had changed. The results suggest that the
public is more receptive to the idea of stricter tax supervision as a means
of combating economic crime. In addition, more people now approve of
efforts to fight such offences in the business world.
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15 Problem Areas and Future Threats
15.1 THEORETICAL BACKGROUND FOR THE ANALYSIS
EBM’s initial status report (1999:2), which served as a basis for the Government’s
2000 interagency guidelines on combating economic crime,
was the first overall review and analysis of the issue ever put together in
Sweden. At the time, it was deemed appropriate to establish a general
causal model on which to structure the analysis. The purpose of the overall
analysis was to lay the groundwork for more effective crime prevention
activities and measures. From that point of view, the most suitable
focus appeared to be on the causes of economic crime, thereby improving
the prospects of successfully tackling it. Nevertheless, the effects of such
offences were also systematically examined.
The analysis proceeded from a model based on the Routine Activities
Theory (RAT) developed by L. E. Cohen and M. Felson in 1979. The
model seeks to explain the commission of an offence using three groups
of causal variables: a motivated offender, the opportunity to commit a
crime (opportunity structure), and the lack of effective monitoring.
EBM analysis adapted RAT to analyze economic crime. Figure 45 presents
the model in graphic form.
Diagram 45 Analysis model for economic crime
Norms and values
Technical,
economic
and
political
development
Crime opportunity
structure
Attitudes
Motive formation
Economic crime
Supervision
Effects
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In response to an April 2002 assignment from the Swedish Economic
Crimes Council, EBM used the model as the basis for putting together a
threat analysis on economic crime, which it submitted in May 2003.
The model proceeds from various types of offences. The analysis refined
the concept of motivated offender to a more neutral examination of
human motives, i.e., people’s goals and their perception of the best way
to attain them. Thus, the analysis examined how different crime opportunity
and monitoring variables affect the development of people’s motives
such that they commit economic offences.
In addition to opportunity and monitoring, EBM added another group
of causal variables to its model: social values, norms and attitudes that
affect whether or not a person commits a crime.
The report maintained that crime opportunity variables are describable
on the basis of different classifying principles. One fundamental classification
regarded as useful proceeded from the kinds of people who fall
victim to economic offences. The victim can be said to have offered the
opportunity for the commission of crime. That in turn can happen in
many different ways. Thus, a breakdown of the opportunity variables
may include classifying principles in addition to the focus on the victims
themselves.
Monitoring refers primarily to various actions by government agencies,
but may also include those by unions and trade associations. Although
the emphasis is on the ten agencies that cooperate in the fight against
economic crime, the Social Insurance Office, the Consumer Ombudsman,
the Swedish Consumer Agency and others can have a role to play
as well.
Socioeconomic, political, and technological developments all affect the
evolution of human motives with respect to economic crime. The impact
may be either direct, or indirect by way of the model’s other groups of
variables. One such development was the transition to the euro.
The direct, immediate harm caused by an economic offence can be measured
in the amount of money taken from the victim. Among the indirect
or far-reaching effects are:
• the unreasonably large percentage of investigative resources that
some economic offences tie up
• sabotage of income distribution policies
• financial losses suffered by lenders, suppliers and the like
• greater exodus of capital, reduced GDP
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• higher unemployment
• distorted competition
• threat to democracy and the rule of law
• damage to faith in the political system
15.2 PUTTING TOGETHER A THREAT SCENARIO
In August 2002, the Swedish Economic Crimes Council task force
resolved to appoint a group of experts with representatives from its various
agencies for the purpose of identifying the economic offences deemed
to constitute the greatest threats.
The group, which came to consist of 20 representatives from most of the
agencies that make up the Swedish Economic Crimes Council, split up
into three teams to pinpoint the areas that currently occasion the most
harm and that could become even more threatening within five years. The
teams ultimately agreed to underscore the following categories.
• Undeclared work
• VAT fraud
• Selective purchase tax
• Dishonesty to creditors
• Abuse of legal forms of business entity
• Stock market offences
• Breach of trust and associated fraud
• Organized crime
• Agents who aid economic crime
A task force meeting on 23 September 2002 decided to proceed in accordance
with these broad categories, while asking EBM’s development unit
to identify specific modes of operation and to present them at a seminar
slated for 24-25 October to discuss the threat scenario. The development
unit also submitted a proposal to the seminar identifying explicit elements
of the threat scenario within the above categories. After discussing
the proposal and adding certain specifics, the seminar worked up the
following suggested threat scenario for presentation to the Swedish Economic
Crimes Council meeting of 6-7 November.
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Threat Scenario
Agents who aid economic crime
• Spurious founders of shelf companies and abuse of legal forms of
business entity
• Spurious advisers and tax havens
Undeclared work
• Employers in cash sectors who do not declare their labour
• Undeclared work
• Spurious staffing companies
VAT fraud
• Particular focus on crossborder trade
Crime in the fi nancial market
• Insider offences
• Miscellaneous (such as false bank guarantees)
Company-related fraud
• Credit fraud, etc.
Crime and dishonesty related to bankruptcy
Organized crime
In-depth Analysis
The Swedish Economic Crimes Council meeting of 6-7 November 2002
charged its task force with proceeding on the following categories.
Agents who aid economic crime
• Spurious founders of shelf companies and abuse of legal forms of
business entity
• Spurious advisers and tax havens
Undeclared work
• Employers in cash sectors who do not declare their labour
• Undeclared work
• Spurious staffing companies
VAT fraud
• Particular focus on crossborder trade
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15.3 UNDECLARED WORK IN CASH SECTORS
Behaviour that Constitutes a Threat
Although resource considerations have limited this phase of the threat
analysis to cash sectors, undeclared work is just as widespread in the
invoicing sectors, particularly the construction industry in its broadest
sense. The next phase will take up these other sectors as well. This type
of crime involves the failure to disclose and declare cash income, thereby
affecting not only income tax assessment, but VAT and social security
payments as well. In the most serious form of undeclared work, companies
use it to reduce costs and thereby strengthen their competitiveness
vis-à-vis legitimate businesses. The particular ways of concealing such
income are highly specific to each sector.
Spurious staffing companies are a burgeoning phenomenon. Since they
hold business tax certificates, employers who use their services can deny
ever having hired undeclared labour.
A number of studies have been conducted on this criminality’s modes
of operation in specific sectors: restaurants, cleaning, taxis, hairdressing,
transport (movers), food, peddling, etc. Moreover, government agencies,
unions and trade associations possess so much information that minimal
resources should suffice to put together a fairly comprehensive account of
the various modes of operation. Certain industries, such as car repairs, are
a combination cash/invoicing sector.
Scope
SKV estimated uncollected 2000 tax revenues on undeclared labour – as
well as unreported business income (income tax, VAT and payroll tax)
– at SEK 56 billion. The percentage represented by cash sectors was not
broken out.
For illustrative purposes, the graph below shows assessed income for individual
businesses in a number of typical cash sectors. By way of comparison,
annual salaries in many of these sectors average SEK 180,000-200,000.
The scope of undeclared work poses a particularly serious threat to Sweden’s
social welfare system. The spurious staffing companies that have
emerged since contracting out workers became legal are a major risk
factor in that connection. EBM has planned a study of the problem but
not yet carried through due to want of resources.
The assertion that many small businesses in cash sectors pay tax on the
basis of whim rather than ability.
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Graph 46 Declared income for certain types of small businesses (SEK thousand)
%
40
35
30
25
20
15
10
5
0
–50–0 0–50 50–100 100–150 150–200 200–250 250–
Bakeries Kiosks Shoemakers Hotdog stands Hairdressers
Opportunity Structure
Some of the opportunity for crime in cash sectors derives from the ease
of starting and registering companies with the tax authorities for VAT,
business tax certificates and employer status. Founders of spurious shelf
companies are complicit by furnishing people with joint stock companies
for SEK 4,000-5,000 without having to deposit the SEK 100,000 share
capital minimum.
Owing partially to changes in the job market during the 1990s, cash sectors
have undergone a rapid transformation over the past ten years.
The number of small businesses, particularly in the retail and service segments,
has grown very quickly. Another element of crime opportunity
is the high taxes and fees that make it profitable to perform undeclared
labour.
Monitoring and Supervision
Since cash dealings do not leave a bookkeeping, invoice or receipt trail,
they are intrinsically difficult to monitor. The tax authorities do not
presently have suitable tools to supervise cash sectors. While a very large
number of these businesses need to be checked, audits consume too many
resources to be used more extensively.
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EBM’s pilot project on measures for preventing economic crime in the
hairdressing, restaurant and peddling sectors suggests that information,
prodding and inspections are insufficient. Unless offences uncovered
during such inspections lead to prosecution and conviction, businesses
remain unfazed.
Values and Attitudes
Attitude surveys by both SKV and EBM indicate that young people today
lack the fundamental values and taxpayer morale of previous generations.
That may pose a serious threat to the future of the Swedish tax system.
Impact
There is no question but that the state loses several billion kronor in
uncollected taxes and fees every year. Although no overall empirical study
has been carried out, undeclared work appears to be on the rise. Agencies,
unions and trade associations have all testified to a steady increase.
15.4 VAT FRAUD
Behaviour that Constitutes a Threat
There are four basic ways of committing VAT fraud.
• A transaction is not declared and no VAT payment is made. Nor is
income tax paid for any profit associated with the transaction. Nor is
any selective purchase tax collected.
• VAT is declared but not paid, a frequent occurrence when bankruptcies
are being planned.
• Based on false grounds, excess input VAT is declared in order to
extort tax revenue from the state.
• Goods are smuggled into Sweden from non-EU countries in order
to sell them without having to pay income tax on the proceeds. As a
result, no VAT is paid either.
These general categories can be broken down into some 20 modes of
operation that have been well documented in both crime research and
the day-to-day work of agencies. As soon as agencies start to monitor one
type of fraud more closely, other methods crop up.
No reliable estimate is available as to the scope of VAT fraud, but billions
of kronor are clearly involved every year. Thus, the appropriation
of resources for an empirical study of how widespread the phenomenon
actually is would be an extremely useful step to take.
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Opportunity Structure
The opportunity to commit VAT fraud consists in the existence of a tax,
the payment of which can be avoided or even manipulated so as to actually
extort tax revenue from the state. The fact that Sweden has the highest
VAT rates in the EU makes it that much more attractive to commit
fraud there.
Monitoring and Supervision
The tax authorities and Customs, and to a lesser degree other agencies,
employ a number of monitoring and supervisory strategies to combat
VAT fraud. But there are no simple systematic solutions that can fully
eliminate the problem. Sweden’s membership in EU, which follows the
destination principle, opened the door to new types of fraud that are difficult
to monitor. For instance, VAT carousel fraud and VAT fraud linked
to cash dealings in food products from other EU countries are the subject
of a nationwide interagency monitoring project. Any empirical study on
the scope of VAT fraud as described above should also include a badly
needed overview of such monitoring efforts.
Values and Attitudes
People engaged in various types of VAT evasion presumably have a favourable
view of what they do. Consumers are complicit in many respects,
given that they are more than willing to purchase goods or services that
are “exempt from VAT” at unusually low prices.
Impact
The state loses major revenues. Competition becomes distorted when
some businesses can offer lower prices than their rivals by virtue of not
paying VAT. That has a ripple effect in that companies may turn to crime
in order to survive.
Trends Over the Next Three Years
Assuming that agencies continue to have the same monitoring resources
and strategies at their disposal, the occurrence of VAT fraud is highly
unlikely to decrease. The more probable scenario is that it will increase as
Swedes become further integrated into an EU that has just taken in ten
new members.
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15.5 AGENTS WHO AID ECONOMIC CRIME
15.5.1 Spurious Founders of Shelf Companies
Behaviour that Constitutes a Threat
Each year, individuals and businesses in Sweden form a large number of
shelf companies that they sell for SEK 4,000-5,000 each without ensuring
that the minimum share capital of SEK 100,000 is ever deposited. In
most cases, the purchasers plan to use the companies to illegally obtain
excess input VAT and commit various types of fraud.
EBM report 2003:3 entitled Lagerbolag och Ekonomisk Brottslighet (Shelf
Companies and Economic Crime) by the agency’s Spurious Founders of
Shelf Companies project team reviews and describes the ploy in great
detail.
Scope
Agencies are acquainted with the founders of spurious shelf companies
who are engaged in extensive activities. Between 15 and 20 individuals
manage businesses that buy and sell shelf companies in a spurious
manner.
The abovementioned project team has pieced together a number of chains
of shelf companies forged by such people. After a short while, most of the
companies declare bankruptcy and the purchasers are left with very high
debts, both public and private.
Approximately 17,000 joint stock companies, some 3,000 by spurious
founders of shelf companies, were started annually over the past three
years.
Opportunity Structure
Given the current demand for joint stock companies without having to
deposit the SEK 100,000 share capital minimum, founders of shelf companies
can make money by selling them. Most purchasers would presumably
not qualify for even a short-term loan to meet the requirement at the
time of transfer. In a sense, they are actually running private firms while
formally managing joint stock companies with respect to creditors, suppliers
and others.
Monitoring and Supervision
No agency has overall monitoring responsibility when it comes to the formation
of shelf companies. Accountants are the only ones who ever check
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whether regulations are being adhered to. In addition, certain means are
available for getting at founders of spurious shelf companies by prosecuting
them for violating the loan prohibition. In case no. 11007-02, the
Svea Court of Appeal convicted a founder of shelf companies for violating
the loan prohibition when the seller transferred the company’s claim on
share capital to the purchaser. The ruling was appealed to the Supreme
Court.
Values and Attitudes
Though fairly self-evident, it is worth pointing out that the values and
attitudes of most buyers and sellers in this market accept and justify such
criminal behaviour. A few purchasers may turn out to be ignorant of the
applicable regulations and believe that they are acting in full accordance
with the law.
Impact
A joint stock company becomes a tool of crime. Sometimes these spurious
founders also help purchasers commit various kinds of tax crimes and
other economic offences. Their activities constitute a kind of school in
economic crime. The state loses major tax and fee revenues as a result.
Suppliers and creditors suffer heavy losses. Meanwhile, having noticed
that agencies are monitoring their activities, some founders of spurious
shelf companies have started to market partnerships and limited partnerships
instead of joint stock companies.
Trends Over the Next Three Years
Unless countermeasures are taken, spurious activities will no doubt proceed
at their current level and most likely increase. More and more people
will learn how to commit economic crime. The state will continue to
lose major tax and fee revenues. Suppliers and creditors will suffer heavy
losses. Hundreds of millions of kronor are involved every year. The indirect,
long-term impact of systematic schooling in the commission of tax
crimes and other economic offences is difficult to predict.
15.5.2 Spurious Advisers and Tax Havens
Behaviour that Constitutes a Threat
Dealings through tax havens have many different purposes and contexts.
The common denominator is the attempt to conceal, by forming various
companies and trusts, the actual purpose of a transaction or the identities
of the parties and shareholders involved. The checks that have been car-
105

ied out indicate that most transactions are either for self-gain (i.e., the
payer and payee are one and the same) or for the benefit of someone other
than the payer, such as a consultant, athlete or artist. SKV has charted
and described a number of such methods as part of various monitoring
projects.
Opportunity Structure
Tax havens have been around for a long time. Prior to the deregulations of
the 1990s, they were very expensive and unwieldy. Since that time, they
have become much cheaper and simpler to use, while many sources of
advice and offers are now available on the subject. The projects discussed
above indicate that the utilization of tax havens is on the rise, particularly
among small, profitable businesses. In recent years, most transactions have
been conducted through facade companies in less conspicuous countries
like Britain and the Netherlands.
Monitoring and Supervision
An effective supervisory method developed by SKV takes advantage of
data that the Swedish Central Bank receives about payments to and from
abroad, as well as information sharing with Britain and other countries.
But it is difficult to reliably estimate the ratio of unreported to reported
cases. Efforts through the tax courts have proven successful. The proceedings
are often based on reviews and chains of circumstantial evidence.
Since more aggressive litigation was introduced in recent years, the courts
have largely gone along with the arguments of SKV. SKV’s most recent
supervisory initiative has proceeded from the gathering of information on
the holders of foreign credit cards used in Sweden.
Scope
Tax havens are nothing new, and their number has grown steadily. The
biggest increase has occurred following deregulations in the foreign
exchange and financial markets during the 1990s. Tax havens house an
estimated 1.2% of the world’s population and 25% of its financial assets.
A significant percentage of those assets appear to represent income from
non-tax offences.
Sweden estimates annual uncollected tax revenues linked to international
transactions at SEK 20-35 billion, of which SEK 2-5 billion stems from
company formation through tax havens and SEK 8 billion primarily from
investments by private individuals in low-tax countries with insufficient
supervision.
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Values and Attitudes
A rough breakdown can be made between businesses and households.
Nothing but stricter supervision and the risk of detection is likely to influence
a businessperson who has started companies in a tax haven in order
to divert money and thereby elude the tax authorities. Private individuals
who invest abroad may have a different attitude. Legislative and tax
policy changes in the next few years could very well have a major impact
on such investment behaviour. For instance, if new regulations impose a
wealth tax on OTC stock, investments may rise further. If the rules for
the wealth and estate tax are amended as is currently being considered, the
money may begin flowing back into Sweden. But estimates are difficult to
make in these areas. Much of the investment abroad is no doubt part of a
plan that exploits loopholes in regulations, supervision and information
sharing among the countries involved. Changes in Sweden could possibly
have an impact on that dynamic. But tax relief will clearly not affect
foreign investments that are protected by an impenetrable wall of secrecy
regulations for the purpose of evading Swedish tax.
Impact
The state loses tax revenues. International tax evasion differs from other
types in that the taxable basis is often lost forever. No revenue is channelled
back into the Swedish economy to create additional income.
Trends Over the Next Three Years
For a number of years, the OECD and EU have devoted a great deal of
effort to following and assessing the injurious effects of taxation differences
among various countries. Labelling it unfair or harmful tax competition,
the EU has concentrated on attempts by Member States to use favourable
regulations to attract businesses, capital and individuals at the expense of
other countries. The OECD calls it harmful tax practices, focusing on tax
havens instead. Following extensive investigation and negotiation, most
of the 40-odd tax havens that were pinpointed have pledged to amend
their regulations. One area of reform is to make it easier to share information
and learn the identity of a company’s true shareholders. But there is
great scepticism at the moment as to if and when such changes will actually
happen. No significant improvements are likely over the next three
years.
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Appendix 1
CHANGES PROPOSED BY SAMEB REPORTS
• Proposals have been developed for a long time and in different connections
for the purpose of reducing tax evasion in cash dealings.
One recurring demand is for type-approved cash registers.
• SKV should be given express permission to make unannounced
inspections of business premises and find out
– who is responsible for operations there
– who works there
– the prospects for the business to meet its obligations to render
account vis-à-vis SKV
• All business premises must have up-to-date papers containing shareholder
and registration information.
• The inspection coordinator should have the authority to immediately
close any business at which nobody claims responsibility. The county
administrative court must review the coordinator’s action within five
days. If nobody claims responsibility for the business within four
weeks, its inventories, equipment, etc. will be forfeited to the state.
• There has been discussion of requiring customers to take cash
receipts and keep them for a certain period of time. Another
approach recently suggested at the national level is to adopt one or
more types of taxation on a standardized basis.
• Supervision will never totally eliminate tax evasion. Thus, the
SAMEBs propose a greater focus on preventive efforts and more
straightforward regulations. Some kind of taxation on a standardized
basis may be one way of simplifying matters. The taxi, hairdresser
and restaurant sectors would be suitable for such an approach. Taxation
on a standardized basis would make businesses aware of their tax
costs, thus reducing and facilitating supervision. Furthermore, everyone
will be playing by the same competitive rules.
• Many observers regard undeclared labour as the thorniest economic
crime issue facing us. Businesses whose only raison d’être is to issue
false invoices that other companies can use in their books to conceal
payment of undeclared wages have become very common. Society
has a vital interest in quickly identifying and implementing measures
to impede and hopefully prevent such activities.
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• Withholding taxes and social security contributions should be attributable
to the individual wage earner during the income year.
• Do not grant extended fiscal years. That makes it much too easy to
gain breathing space to commit crimes and to put goalkeepers in
place before closing the books.
• Do not permit VAT reporting on tax returns.
• Overhaul the Secrets Act to allow for information sharing between
the social insurance office and the county labour board, etc.
• Incorporate Preventive Economic Contacts (PECs) into legislation.
• PECs have been part of the crime prevention effort for a number of
years. But largely due to confusion about its legal status, such activity
has diminished recently. From a nationwide perspective, it is of
the greatest importance that the regulations be clarified and that
good crime prevention ideas and initiatives be spread throughout the
country.
• New legislation is needed to curb the steadily growing market for
undeclared labour and false invoices, perhaps the most serious economic
crime problem today. The legislation should make it possible
to demand identification of people at the workplace who are
employed in the most vulnerable contracting sectors, such as construction,
assembly and services.
• A highly desirable requirement would be that holders of restaurant
licenses keep records of those who work for them and thus facilitate
monitoring of undeclared labour in the sector.
• Legislation should be changed so as to place a greater responsibility
on businesses that use staffing companies. The responsibility would
include an obligation for the licensee to carefully check up on the
staffing company at the behest of the tax authority.
• In order to prevent welfare cheating, an employer should be required
to notify the Migration Board when hiring an asylum seeker who is
exempt from the obligation to hold a work permit.
• A number of changes to secrecy regulations are in order. A letter to
the Ministry of Justice refers to “absurdities” in this area that make
interagency cooperation to combat economic crime more difficult.
County Administrative Boards
• The Social Insurance Office is not authorized to release inspection
reports or rulings concerning welfare recipients to a county administrative
board or supervisory authority to help them decide whether a
business owner can keep his or her license to serve alcohol.
• SKV is currently neither obligated nor authorized to inform the
supervisory authority that it is auditing a restaurant owner.
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SKV
• SKV should have limited authority to release classified information
to cooperating agencies on its own initiative.
• Absolute classification at SKV and poorer secrecy protection at the
agencies make it harder to release information pursuant to the general
clause.
• Which investigative method SKV employs is decisive to whether
classified information may be released to a receiver in bankruptcy.
Social Insurance Office
• The social insurance office should have limited authority to release
classified information to cooperating agencies on its own initiative.
For instance, the social insurance office cannot presently contact
the tax authority when it suspects tax fraud. Nor does it have legal
authorization to release information to the Migration Board.
• The secrecy regulations to which the Social Insurance Office is subject
should be overhauled to enable agencies to obtain information
about individuals suspected of welfare cheating.
• The SAMEB of Västmanland County stresses the necessity of allowing
agencies to cooperate for crime prevention purposes without
encountering obstruction from secrecy regulations. Secrecy legislation
should be amended so that the agencies concerned can participate
in the effort.
• As the SAMEB of Västmanland County has previously stated,
secrecy regulations should not keep agencies such as the Social Insurance
Office and County Labour Board from being involved in crime
prevention initiatives. Those agencies have played a very useful part
in the activities of the SAMEB of Västmanland County.
• SKV presented its evaluation of the tax crime unit reform in report
2001:7. The overall assessment is that the reform has worked well
and that the units are ready for the next phase in which they will be
given expanded authority. Among the report’s recommendations is
that tax crime investigators be empowered to hold interrogations that
may subsequently form the basis of a prosecutor’s request.
• Legislation governing secrecy with respect to the tax rolls also needs
overhauling. Despite the fact that tax crime investigators are tax officials,
they do not presently have direct access to the rolls but must
submit a request. They regard the subsequent one-day delay as an
obstacle to doing their jobs efficiently.
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Glossary of Agencies, Committees and Organizations
Committee of European Securities Commissions (CESR)
Committee of European Securities Regulators (CESR)
Council of the Baltic Sea States (CBSS)
Enforcement Service (KFM)
European Council’s Group of States against Corruption (GRECO)
Excise Movement and Control System (EMCS)
Far East Institute for the Prevention of Crime and the Treatment of
Offenders (UNAFEI)
Financial Action Task Force (FATF)
Financial Intelligence Unit (FiPo)
Financial Services Action Plan (FASP)
Hotel and Restaurant Workers’ Union
National Criminal Investigation Department (RKP)
OECD Working Group on Corruption in International Business Transactions
Office of the Prosecutor-General (RÅ)
Operative Committee (OPC)
Organized Crime in Sweden (OBiS)
Regional cooperating agencies for combating economic crime (SAMEBs)
Rubicon (Routines, criminal investigations in bankruptcy)
Security Service (SÄPO)
Swedish Association of Auditors (SRS)
Swedish Board of Agriculture (SJV)
Swedish Companies Registration Office
Swedish Customs
Swedish Economic Crimes Council
Swedish Financial Supervisory Authority (Finansinspektionen)
Swedish Flower Wholesalers’ Association
Swedish Hotel and Restaurant Employers’ Association
Swedish Institute of Authorised Public Accountants (FAR)
Swedish Movers Federation (SMF)
Swedish National Audit Office (RRV)
Swedish National Board of Fisheries
Swedish National Council for Crime Prevention (BRÅ)
Swedish National Economic Crimes Bureau (EBM)
Swedish National Labour Market Board (AMS)
Swedish National Police Board (RPS)
Swedish Securities Dealers Association (SSDA)
Swedish Tax Agency (SKV)
Swedish Trade Union Confederation
Task Force on Organized Crime (AMOB)
Tax Reduction Committee (SNED)
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Transport Workers’ Union
VAT Information Exchange System (VIES)
Glossary of Abbreviations
ÅM (Procecuting Authorities)
AMOB (Task Force on Organized Crime)
AMS (Swedish National Labour Market Board)
BRÅ (Swedish National Council for Crime Prevention)
BrB (Penal Code)
CBSS (Council of the Baltic Sea States)
CESR (Committee of European Securities Commissions)
CESR (Committee of European Securities Regulators)
CFCs (Controlled Foreign Companies)
EBM (Swedish National Economic Crimes Bureau)
EMCS (Excise Movement and Control System)
FAR (Swedish Institute of Authorised Public Accountants)
FASP (Financial Services Action Plan)
FATF (Financial Action Task Force)
FiPo (Financial Intelligence Unit)
GRECO (European Council’s Group of States against Corruption)
IAS (International Accounting Standards)
ISD (Investment Services Directive)
KFM (Enforcement Service)
OBiS (Organized Crime in Sweden)
OPC (Operative Committee)
PECs (Preventive Economic Contacts)
RÅ (Office of the Prosecutor-General)
RAT (Routine Activities Theory)
RKP (National Criminal Investigation Department)
RPS (Swedish National Police Board)
RRV (Swedish National Audit Office)
SAMEBs (Regional cooperating agencies for combating economic crime)
SÄPO (Security Service)
SkbL (Tax Penal Act)
SJV (Swedish Board of Agriculture)
SKV (Swedish Tax Agency)
SMF (Swedish Movers Federation)
SNED (Tax Reduction Committee)
SRS (Swedish Association of Auditors)
SSDA (Swedish Securities Dealers Association)
UNAFEI (Far East Institute for the Prevention of Crime and the Treatment
of Offenders)
VIES (VAT Information Exchange System)
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Economic Crime – Scope and Unreported Cases
Undeclared work and unreported income
Other tax and fee evasion
Crimes against creditors
Other economic crime
Estimated unreported cases and unknown grey areas
The estimated scope of economic crime is SEK 100–150 billion
annually.
Tax and fee evasion accounts for 75–85 % of that amount, i.e.,
SEK 75–130 billion annually.

Reported economic crimes have increased over the past three years. Since so many cases go
unreported, it is difficult to draw any reliable conclusions about crime trends. Most probably
no significant increase or decrease has occurred.
During the next three years, agencies must continue to expand their collaboration and
jointly develop new methods for combating economic crime in a more effective manner.
The aim must be to put together a fundamental prevention effort aimed at reducing crime
over the long run. That will be accomplished by performing strategic reviews and in-depth
analyses designed to make the operations of the agencies more efficient. The ultimate
objective is to enhance crime reduction initiatives both quantitatively and qualitatively
while focusing investigation and prosecution activities on the most serious types of crimes.
P.O. Box 820, SE-101 36 Stockholm, Sweden, Street Adress: Hantverkargatan 15, Phone: +46 8-762 00 00, Fax: +46 8-613 40 19