23.7 million euros in fines – fraud with social benefits: advertisements doubled

The majority (23.7 million euros ($20.1 million)) resulted from labor market controls, while 3.6 million euros came from illegal gambling, the Finance Ministry said on Tuesday.

51,356 employees were checked
A total of 51,356 employees were checked last year. Of these, 4,998 employees were not correctly registered with social security and 3,452 people worked illegally without a work permit. Violations of the Wage and Social Dumping Act were also found in 4,147 people. “It is important to expose the performance of the financial police,” Finance Minister Magnus Brunner (ÖVP) said on Tuesday.

Fight against organized economic crime
For the financial police, the mere monitoring activity is increasingly overshadowed by the fight against organized economic crime, Wilfried Lehner, head of the financial police, said on Tuesday. The perpetrators are becoming more and more professional and major cases are becoming increasingly challenging, according to Hacker. Last year, the financial police investigated several major cases involving damages of more than 100 million euros.

Fraud with benefits
Social security fraud is also a major problem. Fraud is usually used in which people work undeclared or partly undeclared and also receive social benefits such as unemployment benefits, minimum income or housing allowance. Employers register their employees as part-time workers, but pay significantly more wages in cash and tax-free. The disbursement of the funds is recorded in the accounting department using fictitious invoices from fictitious companies.

The money is actually transferred, but immediately afterwards withdrawn in cash and flows back to the entrepreneur as a so-called “kick-back payment”, who can then make the undeclared wage payment. According to the ministry, the volume of such money transfers amounts to more than 800 million euros per year. As part of this fraud model, 152 fake companies were discovered by the financial police last year and taken out of circulation.

Extreme case in the cleaning industry
A particularly extreme case occurred in the cleaning sector. The employees worked part-time and also received unemployment benefits or emergency care. However, the hours actually worked were higher and were paid. The ministry calculates that employees earned a net income of around 3,000 euros plus various exemptions and housing allowance. In such cases, not only the entrepreneurs are prosecuted for social fraud, but also the employees for social benefit fraud.

“Benefit fraud combined with social security fraud is simply an extremely lucrative business model,” Lehner said. It is a “win-win situation” for the entrepreneur and the employee and therefore difficult to determine. The best leverage is through the fake companies, which the financial police are increasingly taking out of circulation. The result was that new ones were added faster and faster.

Many advertisements also talk about mandatory checkouts
There were also many advertisements about the cash register requirement. Last year, the financial police received more than 350 reports on this subject and information that a company had no receipt distribution, no cash register or no administration at all.

However, the number of checks on illegal gambling decreased. Last year, the financial police carried out 282 checks and seized 435 gaming devices. In 2020 there were 689 inspections. “Illegal gambling activities have almost completely disappeared from the cityscape due to the high control pressure of the financial police,” said a statement from the ministry. However, occasionally poker casinos or gambling dens can still be found in private apartments or basement bars.