Preventing Financial Crime: ‘Entrepreneurial’ Regulation in Action?

This paper investigates the Swedish tax authority’s (Skatteverkets) compliance initiative called Preventing Financial Crime. In Sweden tax evasion related to organised moon-lighting is defined as a major risk to the revenue collection and to the legitimacy of Skatteverket. The traditional approach to abating such tax evasion has been reformed and a new mix-method approach adopted. This approach combines a proactive strategy—Preventing Financial Crime—with a reactive inspection strategy. During one a month of intensive fieldwork in Sweden, I studied the daily work in Preventing Financial Crime. Based on this, the paper shows that the Swedish tax officials seek to motivate large construction contractors and municipalities to take preventive measures in relation to their sub-contractors to avoid and abate tax evasion. The paper shows the challenges in engaging and involving these external stakeholders in the preventive work as there is no legal base to support the preventive measures. All the preventive work must be organised on a voluntary basis. This requires exceptional persuasive abilities on the side of the tax officials as they need to get their agenda on top of the external partners’ agenda. The analysis has implications for how tax authorities (and other state authorities) reform their coercive regulation. If they decide to pursue a voluntary based approach where the actions of external partners play a central role, then the analysis helps to show some of the implied challenges and potentials.