White-collar Crimes

About the Author

Asma Shuaib, law graduate from Jamia Millia University, New Delhi. Now working on a police reform project with Common Cause, a civil society organization in Delhi.

List of Contents

Introduction
White-collar Crimes in India
Difference between White-collar and Blue Collar Crimes
Reasons for Increase in White-collar Crimes in India
Types of White-collar Crimes
Effects of White-collar Crimes
Recent White-collar Crime Cases in India
Preventive Measures
Conclusions
References

Introduction

The most influential criminologist of the 20th century and a sociologist, Edwin Hardin Sutherland, for the first time in 1939, defined white-collar crimes as “crimes committed by people who enjoy the high social status, great repute, and respectability in their occupation”. The five attributes of the given definition are:

It is a crime.
That is committed by an important person in the company.
The person who enjoys a high social status in the company.
And has committed it during his profession or occupation.
There may be a violation of trust.

These crimes are quite rampant in third-world countries due to the rapidly increasing economy and ease of doing business. Edwin Sutherland stated that white collar crimes could harm society more than other normal offences mainly because of the financial losses that the public would incur. White-collar crimes can be traced back to the 15th century in the UK and later in the US during the civil war, which allowed large monopolies to take over and led to the enforcement of anti-trust laws to protect consumers and allow fair competition. With the world moving at a fast pace and the rate of development in technology and commerce it is fair to say that India is unable to deal with the increasing level of unprecedented growth which is leading to white-collar crimes such as cybercrimes. This also means that crime can be committed across any country’s border.

Related to the corporate sector, white-collar crimes are defined as non-violent crimes, generally committed by businessmen and government professionals. As crimes have changed significantly in a few years, traditional crimes have partially switched to white-collar crimes in the country. The primary difference between white and blue crime is that the ordinary i.e., the criminals of blue crime are people of the underprivileged section and the upper class is involved in white-collar crime and commits the crime in a very organized manner. They maintain their respect in society until the crime is discovered.

Reasons for Increase in White-collar Crimes in India

Some of the reasons augmenting the growth of white-collar crime in India are as follows:

Lack of Strict Laws: Though India already has laws against financial fraudulence, these need to be made more stringent to penalize offenders. Perpetrators tend to exploit loopholes in the existing laws and get away successfully. Furthermore, with the government promoting Digital India, the internet has become the most popular form of monetary transactions presently, giving a boom to cybercrimes, a form of white-collar crimes.
Lack of Awareness among the General Population: People who fall prey to white-collar crimes often fail to make sense of the nature of the crime that has been committed and is unaware of the procedures to be followed in order to register a complaint against such offence.
Modern Technology: White-collar crimes have reached a wider audience with the help of the internet and technology. Bank frauds are done with a single click on a link. This poses a great threat to people’s privacy and financial assets.
Biased Law: As white-collar criminals are mostly those who hold certain authority in institutions, they tend to escape their punishment through tie-ups with government officials and politicians that influence the country’s legal system.

Types of White-Collar Crimes

White-collar crimes have many forms, they come in different categories, with different characteristics and impacts. Some of these are:

Bank Fraud:

Fraud is a crime committed to deceive and gain undue advantage. Bank Fraud is a fraud committed on the banks. It is committed by fraudulent companies by making fake representations. It is also related to the manipulation of negotiable instruments like cheque bouncing, securities, bank deposits etc. Bank fraud is a concern to the public at large because there is a relation of trust between the banks and the public. It is the most common type of white-collar crime and also a corporate crime. It harms the public as well as the government of the country.

2. Bribery:

Bribery is another very common type of white-collar crime. By bribery, we mean giving money or some goods to a person in a high position in return for a favour. In simple words, bribery is when one man gives money to the other which is in authority. It is done for the purpose of insisting him to do something or to prevent him from doing something. It is the most common income of most of the public officials of our country.

3. Cybercrime:

Cybercrime is the biggest cause leading to these types of crime in India. It is the latest problem prevailing in the cyber world. Cybercrime is a crime which is related to ‘computer networks’. With the rapid increase of advancement of technology, there is also a rapid increase in crime related to the technology. Cybercrime involves persons who are experts in computer-related technology. It is committed against the victim directly or indirectly to cause harm to his reputation or to harm physically or mentally using the internet, networks, and other technological sources. Cybercrime threatens the nation as well as the person’s security and financial status. Cybercrime can cause huge financial losses to the country. Not only the financial loss but it can also threaten the privacy of a person. Disclosure of confidential information can create privacy problems. Also, cybercrime against women is rising. Using telecommunication networks, mobile phones cyberstalking, and sending obscene messages and pictures by criminals to women is also increasing. Hacking, Child pornography, Copyright infringement, Cyber terrorism, and Cyberstalking are some of the common examples of cybercrime.

4. Money Laundering:

When a person is successful in disguising illegally obtained financial assets as funds obtained from legal sources, a money laundering crime has been committed. Section 3 of the Money Laundering Act of 2002 defines it. Money laundering is a crime in which the criminals disguise the identity of the money. In this crime, criminals try to hide the original ownership of the money and the place where they obtained that money by illegal means. Laundering is done to make sure that money comes from legal sources. In simple words, money laundering means to show illegitimate money as legal money. For instance, if a person obtains money from black marketing or trafficking of illegal goods the money will be considered ‘dirty’ and he cannot deposit into the banks as it may seem suspicious if he directly deposits money into the financial institutions because he had to create statements and records stating that where the money came from. Money laundering involves three steps: Firstly, the owner of the money obtains the money from some illegal means and deposits it into the bank in some way. Thenthrough multiple transactions, the transfer of money is done. Lastly, they return the money to banks to make it legitimate.

5. Tax Evasion:

Tax evasion is committed to conceal one’s actual taxable income and one’s original position to the authorities. This concealment of income is done to reduce the tax liability in the eyes of the government. In simple words, it means to hide the money obtained from illegal means in order to reduce one’s liability to pay tax and to show low income to the tax authorities. Tax evasion has a negative impact on social values as it demoralizes honest taxpayers and they might also want to do tax evasion also it gives the economy power in the hands of a few undeserving people. Evasion of tax is a punishable offence under the Income Tax Act of 1961.

6. Identity Theft:

Identity theft is one of the easiest types of crime these days. Due to the advancement of technology, it is very easy to access the personal information of anyone. Identity theft is the crime in which the criminal accesses unauthorized information such as name, address, phone number, etc., and uses this information to gain money. In simple words, identity theft is committed by using some other person’s identity to commit fraud or to gain money by illegal means.

7. Counterfeiting Currency:

Section 28 of the IPC defines counterfeiting as a criminal act. It is the practice of imitating something authentic like coins and currency or even items like clothes, bags, and shoes among others.

Effects of White-Collar Crimes

White-collar crimes can impact their victims in various ways. They can cause heavy losses for companies forcing them to increase product prices, laying off employees, or deducting salaries in order to recover. This in turn affects the end users and the nation’s economy. With rising cases of white-collar crimes, consumers have started having trust issues regarding the authenticity and safety of the products or services they tend to use which has a negative impact on market demand. White-collar crimes can affect the victims mentally and psychologically, making them feel helpless, and causing suicidal tendencies as many of them incur unbearable losses. These crimes shake the very roots of the economy on which a country is surviving.

White-collar crime is also called as a socio-economic crime because it has a direct impact on the society. When a white-collar crime is committed huge losses on business occur which have a direct impact on the consumers and the society. Various numbers of frauds and scams have been exposed in our country in the past few years like the 2g scam, the banking scam, the fodder scam, and many more. Due to these frauds and scams, the economy has shambled. And then to make up for these losses of fraud or any scams, they increase the costs. This means higher prices for the consumers in the way of higher taxes, government revenue, and increased insurance costs. There is a loss in every field from the costs of commodities to the securities and insurance. One financial fraud can affect businessmen, investors, and the government. In the case SEBI v. Burman Plantation and Others, the main claim of the counsel made the legislatures raise the punishment from 1 year to 10 years and increase the fine which may now extend to 25 crores by amending the laws under section 24(1) of the SEBI Act. Abhay Singh Chautala v. C.B.I. and Binod Kumar v. State of Jharkhand & Others are other two prominent recent cases on white-collar crimes.

Preventive Measures

A few measures that can be adopted to prevent white-collar crimes are:

The top investigating agencies of the country like the CBI, the ED, the Income-tax Department, need strengthening, by way of implementing strong regulating policies. The Central Vigilance Commission should monitor the working of the officials sitting in top positions and cross-check their works, to ensure transparency in the system.
Provide efficient training to the investigating officials.
Implement stringent laws. Fast-track courts and tribunals should be set in all parts of the country for the early disposal of these cases. The tribunal should be provided with the power to fine or imprison someone who has been held guilty.
Spread Awareness. The electronic and print media should be utilized in the right way to spread awareness about white-collar crimes. Also, the public must be made aware of the remedies they could seek in case they become victims of such crimes

Conclusion

White-collar crimes have become a significant problem in India, and they have a detrimental impact on the country’s economy and development. The government and regulatory bodies need to take proactive measures to prevent these crimes and prosecute those responsible for committing them. Strengthening the legal system, improving the regulatory framework, increasing awareness, and implementing whistle-blower protection are some of the steps that can be taken to prevent white-collar crimes in India and create a more transparent and accountable business environment.

It is important to note that preventing white-collar crimes requires a coordinated effort from all stakeholders, including the government, regulatory bodies, businesses, and the public. The investigating officials need training to acquire the necessary skills to bring the criminals to light. The investigating officials’ work should be scrutinized to ensure transparency in the work as white-collar crimes are committed by people enjoying higher social status in their occupation.

The media has a key role to play in reducing the rate of increasing white-collar crimes. It has been noted that most white-collar crimes go unreported. So, if the media becomes more active towards publishing frauds and scams at higher levels and revealing how the people at higher positions in a company use their powers arbitrarily and make efforts to make people aware of the white-collar crimes and avoid corrupt practices, it would considerably help in reducing the rate at which the white-collar crimes are being committed.

References