White-collar crime can be defined as “a crime that consistently involves stealing money from a company”. The crimes are more often than not financially motivated and usually committed by individuals who work in very important positions within the company. The specificity of the crimes that come under ‘white collar’ is inclusive of corporate fraud, embezzlement, and money laundering.
White-collar crime is commonly associated with the wealthy and the educated ever since 1949 when the term was first coined by Edwin Sutherland who defined white-collar crimes as “a crime committed by a person of respectability and high social status in the course of his occupation”.
As technology and new financial products & arrangements have evolved, so has how white-collar crimes are committed. High profile individuals who have been convicted of white-collar crimes in recent decades include Bernard Ebbers, Michael Milken, and Bernie Madoff.
Some definitions of white-collar crime are defined on the basis that the crime is committed based on self-interest, however, the FBI defines white-collar crime as being inclusive of large-scale fraud which is executed via a corporate institution.
A large proportion of corporate fraud cases involve accounting schemes that are premised on deceiving the investor, auditor, and or the analysts. The deception lies in exaggerating the true financial condition of a corporation or business. In such cases, manipulation of the financial evidence, share prices, or other valuation measurements of said business or corporation are adopted to make the financial performance of the business appear better than the reality.
Corporate fraud also includes cases whereby one or more employees of a company act in the name of self-interest at the expense of the investors or other parties. Self-dealing is when a fiduciary acts in their own best interest instead of putting said clients interests before their own.
The reason behind acting on self-gain is down to a conflict of interest which in turn is an illegal act and can result in litigation, penalties, and termination of employment for those who are involved.
The most common white-collar crimes committed come under insider trading cases. This is where individuals act upon or dissect information that is not public knowledge yet. This undisclosed information usually affects the share price and things such as company valuation once it becomes known to the public.
Insider trading becomes illegal when buying or selling securities based on material and non-public information which in turn is premised on a said person(s) having an unfair advantage to aid in financial gain.
Money laundering is another example of white-collar crime. Money laundering is the process of taking cash that has been acquired from illicit activities i.e., drug trafficking and making the cash appear to have been acquired from legal business activity.
The money from the illicit activity is often labelled as ‘dirty’ money and the laundering process is to make the money look ‘clean’. More often than not, where money laundering is concerned, the investigation is one of two. The initial investigation examines the money laundering and escorted by that is the investigation which examines how the ‘dirty’ money was acquired.
Criminals who engage in money laundering attain their cash in a variety of different ways which are inclusive of human and drug trafficking, healthcare fraud, public corruption, and terrorism. Alternately, with the change and advancement in finance, some criminals use a ‘dizzying’ number to launder the money by other means such as real estate, precious metals, international trade, and virtual currency such as bitcoin.
Conclusively, it is apparent the prevalence, the frequency, and the magnitude of which white-collar crime occurs. The advancement of technology and financial tools has aided criminals in being able to mix and match how they launder money or commit fraud and has widened the pool of ways in which a cover-up can be developed i.e., through real estate. The definitions of white-collar crime continue to differ in accordance with the institution.
To keep up with the latest commercial news, click on commercial to get your daily dose.
Donate & Support