Over 25,000 fraud cases on the shelf at Dutch tax office

For 2.5 years, the Dutch Tax Authority has been doing nothing with signals of fraud it receives because its new system to register and process these tips does not comply with privacy legislation. The Tax Authority now has over 25,000 reports from citizens and companies about possible tax fraud that remain untouched, NRC reports based on information from insiders.

A spokesperson for the Tax Authority confirmed to the newspaper that incoming fraud signals are not being handled. “Since the discontinuation of FSV [Fraud Alert Facility], signals that were previously registered in FSV have no longer been picked up pending a (positive) advise from the Data Protection Officer or the Authority for Personal Data.”

According to the spokesperson, the Tax Authority has other ways to detect fraud, including regular checks on tax returns and the deployment of special fraud teams. Investigation service FIOD uses a separate IT system that can still process incoming tips, the spokesperson said.

The Tax Authority stopped using its FSV in February 2020 after Trouw and RTL Nieuws revealed that the service had some 250,000 citizens on this blacklist of potential fraudsters, many based only on their ethnicity. In October last year, the Dutch Data Protection Authority (AP) concluded that the Tax Authority had “seriously violated many core principles of privacy legislation” with its FSV. The AP fined the Tax Authority 3.7 million euros for these violations.

The Tax Authority has been working on a replacement system - the Temporary Signalling Facility (TSV) - since to process incoming signals of fraud. But the temporary system still has some significant privacy problems. In July, the AP strongly advised the Tax Authority not to use the TSV, noting that the tax office still had “major steps” to take to make the processing of fraud signals “lawful, proper, and transparent.”