Yes, the code exists, and yes, police have been been using this code to hide the criminality of certain groups. Note that the code was for incidents related to the recent wave of asylum seekers (most of whom were Muslim), not for crimes committed by Muslims or immigrants as such.
Here's from one of Sweden's major regime-friendly media outlets:
Polisen vägrar berätta hur stora resurser som går åt till att hantera flyktingvågen och den alltmer spända situationen på många asylboenden. Utredningar om våld, hot och andra brott kodas med siffran ”291” och hemlighålls för massmedia.
”Ingenting ska ut”, står det i ett internt direktiv som DN läst.
My translation:
The police refuse to say how great the resources are that are spent on handling the wave of refugees and the increasingly tense situation at many refugee shelters. Investigations of violence, threats, and other crimes are coded with the number ”291” and kept secret from the mass media.
”Nothing must come out”, says an internal directive read by DN.
http://www.dn.se/nyheter/sverige/polisen-hemlighaller-fakta-om-sitt-flyktingarbete/
There was some criticism in the comments about the motive behind this coverup not being clear. These two articles should clarify things for those not familiar with Swedish political reality.
Here is from an article about the coverup by the Police of gang sexual assaults at a music festival:
Flera av de poliser som DN pratat med menar att myndigheten medvetet undviker att rapportera om fenomenen som knyts till gärningsmän med utländsk bakgrund.
[...]
– Det här är en öm punkt, vi vågar ibland inte säga som det är för att vi tror att det spelar Sverigedemokraterna i händerna. Vi får ta på oss det här inom polisen, säger polischefen Peter Ågren.
My translation:
Several of the police officers DN has spoken to say that the Police consciously avoids reporting on phenomena associated with perpetrators with a foreign background.
[...]
– This is a sensitive area, we sometimes don't dare to tell the truth because we think it will benefit Sverigedemokraterna*. We'll have to take responsibility for this in the Police, says Police Chief Peter Ågren.
- The only party in Parliament that opposed the liberal immigration policy at the time.
http://www.dn.se/nyheter/sverige/overgreppen-pa-festivalen-i-stockholm-rapporterades-aldrig-vidare/
In an article about the Police no longer giving out physical descriptions of perpetrators/suspects in another major regime-friendly newspaper, the Police PR officer says this:
Vi vill undvika att peka ut etniska grupper som kriminella.
My translation:
We wish to avoid identifying ethnic groups as criminal.
https://www.svd.se/internt-polisbrev-stoppar-signalement
