Understanding White Collar Crime And Financial Crimes Is Crucial For Essay.

Defining White-Collar Crime and Corporate Crimes

“White collar crime may be defined approximately as a crime committed by aperson of respectability and high status in the course of his occupation. The financial cost of white collar crime is probably several times as great as financial cost of all the crimes which are customarily regarded as the crimeproblem”. Critically discuss the above statement and evaluate how ethics and controlcan help to prevent such costly financial crimes.

White-collar crime has been defined by Sutherland as a crime that is being committed by a person of high status and respectability during the course of his occupation. The concept of the white-collar theory has nothing to do with poverty, social pathology and physical pathology. Corporate crimes are the offences against the employees, consumers, investors, state and the public. Occupational crime on the other hand is related to fraud with customers, employee theft, fiddling expenses. White-collar crimes are committed for financial gain. However, there are ways to detect and prevent white-collar and financial crimes. Ethics play a major role to help prevent and detect financial crimes.

The term Financial Crime is also known as white-collar crime, which refers to a crime that is being committed by a person who belongs from a respectable high social status during  his occupation. Another alternate term of financial crime is corporate crime. This term refers to a situation where individuals or a corporation who are associated with a corporation commits a crime (Zaring, 2014). Occupational crime is defined as a crime that is committed by an opportunity that comes up during the course of employment. Financial crime is also related to economic crime which refers to a crime related to the cases of financial fraud and corruption. Therefore, financial crime is a complex term that is used widely. It consists of a range of criminal offences that has originated from the various portions of legislation. Financial crimes majorly deal with and comprises of corruption, fraud, terrorist financing, market abuse and money laundering. The various types of fraud that can take place and is included in the definition of financial crime are banking fraud, insurance, securities, investment fraud, and intellectual property fraud. Therefore, financial crimes are referred to the crimes against the property, which involves unlawful conversion of the ownership of property to someone for one’s own personal benefit. It also consists of further additional crimes like armed robbery, murder, elder abuse and computer crimes (Brickey & Taub, 2017). Victims of financial crimes are governments, individuals, economies and corporations. The exploitation of the confidential information or acquiring another person’s property by deception would consistently be done with the purpose protecting a benefit. However, there are such financial crimes that does not comprise of the unfaithful taking of a benefit. Instead protecting that benefit has already been achieved or to help in taking the benefit. Such conduct occurs when someone attempts to go for the criminal proceeds of another offence with the intention of placing the proceeds beyond the reach of law.

Types of Financial Crimes and their Offences

White-collar crime is referred to a non-violent crime that is being committed for financial gain. According to Sutherland, a certain type of people who belong to the high social status commits a crime is known as a white-collar crime. It also states that during the crime, the act should occur during the course of the occupation. Sutherland also stated that civil and administrative violations were a part of white-collar crime (Pontell, 2016). It aggravated the criticism from the legal scholars. White-collar crime takes time to form. It consists of planning, shady deals and misrepresentation to innocent stakeholders. White-collar crimes include that type of individuals who commit financial fraud, which includes business managers, executives and fund managers. Individuals who have committed such crimes faces prison time and fines if they are convicted of white-collar crimes. White-collar is considered to be special in the criminal justice system since it has a history dealing with criminals. Generally, white-collar crimes are motivated by social, economic and organizational factors. These factors include fear of failure in a competitive industrialist. White-collar crime is the outcome of bad luck, unfavorable financial situations that faces ethical agents and is the result of risky business instead of a criminal objective.

White-collar crimes face challenges and issues than facing dangerous crimes (Eassey & Krohn, 2018). It consist a few common characteristics. Firstly, it includes activities or actions that acquires money, property or to cover up criminal activities dishonestly. Secondly, the role of criminal intent is crucial in white-collar crimes (Gottschalk, 2018). For instance, in healthcare fraud cases, one must prove that the invoices were purposely falsified and not just the result of an accounting error. Thirdly, white-collar crime is different from the other types of crime that are non-violent in nature. Fourthly, maximum number of white-collar crimes consists of various actors who plot together and commit fraud. Fifthly, in case of white-collar crimes, the prosecutor’s main investigative head is the grand jury. The grand jury looks after the issues and obtains documents from the companies if needed.

Examples of white-collar crimes are Bernie Madoff and Nick Leeson. Madoff was pleaded guilty to 11 federal felony counts, which comprised of fraud, securities and money laundering at the age of 71. The scheme of Ponzi became a popular symbol of the culture of fraudulent and greedy (Ryder, 2018). Madoff was sentenced for 150 years of prison. His principal and public portfolio occurred to stick to safe investments. A Madoff victim fund was formed in the year of 2012 to help reimburse those who were defrauded by Madoff but the Department of Justice had to pay out an approximate amount in the fund. Trading that brought down the company took place in Singapore. Leeson was guilty of forgery and fraud in relation to the collapse of Barings (Rick & van den Brink, 2015). He was held and admitted at the charges of cheating and forgery at his trail at Singapore District Court. Therefore, the Judge sentenced Nick Leeson in prison for six and a half years.

Challenges and Issues in White Collar Crimes

Singapore has introduced ICA Financial Crime qualification to deal with the issues and matters (Mohamed Faizal, M & Lee, 2015). Firms or financial institutions must take suitable actions when a corporate customer or members of the senior management are subjected of an investigation by a law enforced body. They should also recognize the compulsion they will have to report the suspicions of money laundering. Firms can detect and prevent financial crimes by using effective systems. Organizational structure and processes decrease the opportunity of crimes in the companies. Reducing the opportunity within organizations is a theory of common sense more than the strategy. For instance, in small organizations it is easy to obtain the different duties between the employees that authorize and record the custody of the cash, which is related to transactions. A temporary substitution will alert the potential misconduct. To reduce the level of white-collar crimes, verification systems should be implemented. Employees must not be allowed to go through or deal with all the contracts or any monetary transactions (Brody, 2016). No one in the organization should have the liberty or power to conduct crimes. Internet activities should be tracked to reduce the level of white-collar crime since it often involves the use of internet. Internet usage policy must be secured. Employees needs to be monitored so that no criminal activity can take place. Effective equipments like video cameras should be kept for monitoring. Implementing the RFID tagging system that will help in regular survey will naturally decrease the risk of white-collar crime (Purpura, 2016).

Ethics is regarded as a set of rules that define right and wrong conduct. Business can ethics can either be written or unwritten (Erwin, Gendin & Kleiman, 2015). There are code of principles and a set of values that overviews the activities and decisions within a company. Ethics help to prevent white-collar crimes in various ways. Firstly, there must be a clear code of conduct and ethics. A well written policy must be prepared that covers the protection of the company data. It must be frequently reviewed and maintained (Dion, Weisstub & Richet, 2016). Secondly, certain top executives should be appointed. Employees must have the liberty to report any form of misconduct if they witness. Thirdly, the reasons that cause the white-collar crimes must be identified. Generally, employees commit fraud due to ill behavior and under pressure. Awareness must be spread in every organization regarding the ways or methods to control the risk of white-collar crime. It can also be reduced by implementing shared centers to provide accounting services to various other locations. The risk of misappropriation of funds that can be decreased by imparting a central lockbox at a bank for collecting payments instead of receiving it at the various locations of the agents.

Examples of White-Collar Crimes

Conclusion

White-collar crime has been in the picture for many years. As societies developed, the rate of crimes also increased and of various patterns. This is so due to advancement of science and technology. Firms should gratify that they have effective risk methods and internal control mechanisms to manage the possibility of financial and white-collar crimes. Risk must be assessed in the business like customers should be identified, proper healthy understanding must be there and services must be produced accordingly. Ethics should be present in organizations and companies to reduce the amount of these crimes as discussed above. The criminal justice system of Singapore is set up to control white-collar crime but it also has a few restrictions. The criminal justice system is difficult to be applied in the corporate world. It has a reactive reaction against the white-collar crimes. Deterrence is the most dominant concept in criminal justice and hence it becomes difficult to prove. However, white-collar is a very dangerous crime. This is because it causes high rate damage to societies and countries. Agencies are used for fighting white-collar and financial crimes. Therefore, effective and efficient measures should be incorporated by law enforcement to stop the increasing damage of the societies and the countries.

References:

Brody, R. G., Brody, R. G., Perri, F. S., & Perri, F. S. (2016). Fraud detection suicide: The dark side of white-collar crime. Journal of Financial Crime, 23(4), 786-797.

Brickey, K. F., & Taub, J. (2017). Corporate and white collar crime: cases and materials. Wolters Kluwer Business.

Dion, M., Weisstub, D. N., & Richet, J. L. (Eds.). (2016). Financial Crimes: Psychological, Technological, and Ethical Issues (Vol. 68). Springer.

Gottschalk, P. (2018). Characteristics of White-Collar Crime. In Investigating White-Collar Crime (pp. 1-12). Springer, Cham.

Ryder, N. (Ed.). (2018). White Collar Crime and Risk: Financial Crime, Corruption and the Financial Crisis. Springer.

Rick, S., & van den Brink, G. J. (2015). Mitigating rogue-trading behavior by means of appropriate, effective operational risk management.

Eassey, J. M., & Krohn, M. D. (2018). Differential Association, Differential Social Organization, and White?Collar Crime. The Handbook of the History and Philosophy of Criminology, 156-172.

Mohamed Faizal, M. A. K., & Lee, J. N. (2015). Criminal procedure, evidence and sentencing. Singapore Academy of Law Annual Review of Singapore Cases, (Annual Review 2015), 396.

Erwin, E., Gendin, S., & Kleiman, L. (Eds.). (2015). Ethical issues in scientific research: An anthology (Vol. 814). Routledge.

Purpura, P. P. (2016). Internal Threats and Countermeasures. Effective Physical Security, 181.

Pontell, H. N. (2016). Theoretical, Empirical, and Policy Implications of Alternative Definitions of “White-Collar Crime”. The Oxford Handbook of White-Collar Crime, 39.

Zaring, D. (2014). Litigating the Financial Crisis. Virginia Law Review, 1405-1481.