Organized crime constantly finds new ways to exploit the welfare system, and residential care homes are just one example of sectors where we have seen serious irregularities come to light during 2024. At the same time, even though we already have the technology in place, authorities lack the right tools and sometimes even the mandate needed to effectively identify and shut out unscrupulous actors.

The Swedish Companies Registration Office has recently presented measures and additional proposals to the government to strengthen the work against economic crime through, among other things, improved controls and collaboration. That, together with the government’s decision to establish a financial intelligence center – where authorities and private actors are to deepen their cooperation in order to effectively combat the criminal economy – is a step in the right direction to address the problem, but it is not enough.

Roaring recently carried out a review of 1,090 residential care homes that have been active over the past five years. The results speak for themselves:

• More than 50% of the companies and their representatives have appeared in legal contexts, including convictions.
• Almost as many new residential care homes are started each year as go bankrupt.
• In a deeper analysis of 50 residential care homes with legal occurrences, 641 convictions against representatives were discovered (an average of approximately 12 convictions per company) and 138 convictions against the companies (an average of approximately 3 convictions per company).
• The types of crimes involved range from economic crime to violent and drug-related offences.

The latest example from Gothenburg, where one fifth of the staff at a residential care home had been convicted of serious crimes such as money laundering and drug trafficking, also clearly shows deficiencies in control. If the public sector had had the tools needed to properly analyze companies and representatives, we might perhaps have seen different news reporting on the residential care homes. The data would have revealed which actors needed to be examined more closely. Instead of protecting vulnerable young people, we have placed them in situations where criminal actors have been able to operate undisturbed.

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Gaps in legislation hinder action

The case in which the Swedish Prison and Probation Service tried to exclude a care company with links to organized crime, but recently lost in a ruling by the Administrative Court, shows how inadequate current legislation is. When the public sector lacks the right to impose requirements beyond what was specified in the procurement, despite suspicion of criminal links, these actors are given the green light to continue infiltrating our welfare system. Minister for Social Services Camilla Waltersson Grönvall has expressed openness to reviewing the legislation, but we need more than legal reforms. We need modern, data-driven tools that can provide a comprehensive picture of both companies and their representatives. Especially while we wait for legislation to catch up.

Technology can help identify criminal links, but unclear legislation, lack of resources, and competence gaps hinder its use. Many are also unaware of the advanced analyses that are possible, and despite the prioritization of the problem of criminal actors, there is a lack of focus on solutions. Bureaucracy and long decision-making processes postpone new systems into the future. For the technology to be fully utilized, awareness and clearer guidelines are required – but also investment in tools, the courage to challenge legislation, and training. Private actors can play an important role in guiding the public sector to understand and use data proactively.

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Technology and collaboration are key

During a debate in the Riksdag on residential care homes and criminal actors, the government emphasized measures that have strengthened supervision and the closure of unscrupulous operations. Even though our politicians are reviewing the problem, we need to do more here and now. Better cooperation between authorities and private actors, and a public sector that secures the requirements in procurements. But also tools that can effectively flag risky suppliers. This does not remove the problem of enablers, but at least we can reach more criminal actors than we do today.

We are facing an alarming reality in which criminals actively use companies to launder money and drain our shared resources. These are funds that could have gone toward strengthening our welfare and securing the future for coming generations. It also affects the business community to the highest degree. We must all work proactively to prevent this. We already know what needs to be done, and data-driven solutions can help us along the way.

The technology exists, and the will should exist too, so why are we not doing more?

Pontus Holmberg, CPO, Roaring, which provides company and personal data to support organizations in reducing business risks and counteracting economic crime

Read the article in GP

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