Etusivu \ Competition Issues \ Domestic Collaboration Networks \ Programme for combating the black economy and financial crime

Programme for combating the black economy and financial crime

On 28 April 2016, the government issued a resolution (in Finnish) on the strategy for combating the black economy and financial crime in 2016–2020. The resolution stated that implementing the strategy would require the financial crime management group to prepare a separate action plan for combating the black economy and financial crime. The action programme that was subsequently drawn up includes 20 projects, divided according to the key projects of the strategy.

Key project 1 is titled “Ensuring market performance and competition by improving companies’ and citizens’ possibilities to act correctly, by lightening the administrative burden and by enhancing the effective combating and prevention of corruption”. Section 1.3 of the key project is titled: “The regulatory burden caused by combating the black economy and financial crime, and monitoring the burden”. The regulatory burden refers to costs arising from the fulfilment of statutory obligations that would not arise without the statutory obligation. Usually, the focus is on the regulatory burden caused to businesses. The administrative burden is a narrower concept, as it only refers to the costs arising from statutory obligations to provide information.

The purpose of monitoring the regulatory burden is, firstly, the avoidance of preventive measures that cannot be recouped. As an example, the Incomes Register system is estimated to save approximately 800–850 person-years of payroll administration effort in the private sector, which, in euros, would mean some EUR 40–45 million a year. On the other hand, the acquisition costs of the income information system has been estimated to accrue expenses of almost EUR 50 million to the Tax Administration alone (HE 134/2017 vp). Secondly, the purpose of monitoring the regulative burden is to intervene in inequality in the competitive environment, as the regulatory burden tends to be relatively heavier on small businesses than on large companies. Consequently, the regulatory burden undermines competitive neutrality between companies.

Thirdly, monitoring the regulatory burden aims to chart arrangements that reduce the regulatory burden, such as making it easier to fulfil employer obligations and comply with legislation in general. Compared to the current situation, the regulatory burden could probably be reduced by, for example, improving information exchange between authorities.

The Finnish Competition and Consumer Authority has been in charge of the project. The other participants are the authorities responsible for combating the black economy and financial crime. In 2017, cooperation was carried out with the Ministry of Employment and the Economy in particular. In the calculation of the regulatory burden, we have sought to utilise the calculator created for the so-called one-for-one principle (in Finnish). Representatives of the FCCA have also been involved in developing the principle and the calculator. The one-for-one principle aims at cost-neutral legislation: for every cost of one euro caused by a new law, one euro in savings must be found in other legislation. In 2017, particular attention was paid to the construction sector, as the preventive measures against the black economy have so far particularly targeted this sector. 

Subscription traps have played a very prominent role in the fight against the black economy. They refer to a practice whereby a company obtains subscriptions by providing misleading information on the content of the subscription. For example, the first batch of a subscription is marketed only as a sample pack without further obligations, or entering a prize draw leads to a service subscription unconnected to the prize. The FCCA has highlighted the importance of intervening in subscription traps when compiling a snapshot of the black economy in collaboration between authorities. Discussions have been started with other authorities on methods to more effectively intervene in subscription traps. The aim is to increase consumer awareness of the phenomenon and thus reduce subscription traps.