This blog is written by Anshika Agarwalt, a Second-Year Law Student of Vivekananda Institute of Professional Studies

Introduction

It is often believed that crimes are done only by people growing up in shady areas, without any moral upbringing, and that delinquency is more prevalent in economically disadvantaged areas. However, this ceiling was shattered down by Criminologist and Sociologist Edwin H. Sutherland. The term ‘white collar crime’ was coined by him for the first time in 1939 and was defined as crimes committed by a person of the upper socio-economic class who violates the criminal law during his occupational and professional activities. Thus, white-collar crimes are quite distinctive from traditional blue-collar crimes. Both these crimes are separated by the economic strata of those involved in committing these crimes.[1]. While white-collar crimes result in reputation and financial damage, traditional crimes cause physical and emotional harm both to the victim and the accused.[2]. In the case of State of Gujarat v. Mohanlal Jitamalji Porwal and Anr[3], the Supreme Court laid down differences between blue and white-collar crimes. Blue-collar crimes are usually done in the heat of the moment or sometimes even unintentionally, on the other hand, the latter involves meticulous planning and is motivated by greed for more money.

Types and Data on White Collar Crimes

India has been transforming into a digitized nation. It means that people have started introducing digital services such as online payments, and e-commerce in their day-to-day lives. This allows the white-collar criminals to commit Bank Fraud. It refers to illegal activities that are conducted to deceive a financial institution or a bank to get personal gain. On recording the number of frauds across banks, it was observed that there has been a 300% rise in the number of bank frauds from 9046 cases in the Financial Year 2022 to 36,075[4] cases in the Financial Year 2024. However, the amount involved in the fraud reduced from 45,358 crore to 13,930 crore in these two years which signifies a drop of 46.7% in the amount involved. Bribery is also a type of white-collar crime as it can only be done by a person of a high official position who gives the other person an exorbitant sum in return for some favour from them. The person doing such a favour might also be highly influential since he can fulfill the demand of the bribe giver. Cybercrime involves the use of computers and the internet. With the aid of both these tools, the criminals can carry out various illegal activities such as hacking data of other's computers and then threatening to pay them money or ransom to the criminals to access the data. This is also known as ransomware. Cyber fraud losses are continuously on the rise, year after year the amount of money that cybercrime costs India keeps on increasing. It all started from 44 crore in fiscal year 2022 which has now become multifolds to a whopping 144 crore[5] in fiscal year 2024. Another very prevalent form of white-collar crime is Insider Trading. Some people who have undisclosed information regarding investments due to their occupational position use that information to make stock trades before it is publicly available. This is extremely disadvantageous to the regular public and thus erodes their trust in the framework of share markets. When illegally obtained money is made to appear legitimate then it is known as money laundering. Firstly, the money obtained is introduced into the economy by depositing the cash into a bank or other methods, and then the origin of the money is obscured by transferring funds into different accounts or converting them into another currency. Then this money is used in lawful ways to block investigators from tracing back the origin of the money. Since 2014, 5297 cases have been registered under the Prevention of Money Laundering Act out of which the accused of only 40 cases have got conviction[6].

Legislations and Enforcement Agencies At Place

There are some legislations in force dealing with different types of white-collar crimes. The term white collar crime isn’t explicitly mentioned in the Bhartiya Nyaya Sanhita but there are legislations made up on different facets of the white collar crime. A punishment for fraud is defined under Section 447 of the Companies Act, 2013 which may extend up to 10 years along with a fine which would be 3 times the amount involved in the fraud. A whole Act is based on money laundering which is known as the Prevention of Money Laundering Act, 2002, and deals with property attachment, confiscation, and criminal prosecution. Cybercrime is completely governed by the rules and laws laid down in the Information Technology Act of 2000. Due to the fleeing of Indian nationals after committing crimes in India to escape jurisdiction, India passed the Fugitive Economic Offenders Act, 2018. The act allows the government to confiscate the property of economic offenders in India who flee to another country. Enforcement agencies such as the Central Investigative Agency, Enforcement Directorate, and Income Tax Department among others help in combating the perils caused by such crimes.

Conclusion

The fact that white-collar crimes are more detrimental to a country is undisputed. It makes people wary of entering into financial transactions online or trading in shares or afraid of believing in genuine schemes. The government needs to take strict actions and more measures to combat the threat caused by these types of nonviolent crimes. Legislation alone can't help in tackling the issue at hand, a complete overhaul of the system is needed. Reliance can be placed on forensic investigation and AI tools for early detection and deterrence of these crimes. There can be a central data repository centre that collects information on financial transactions and keep an eye on them to prevent any criminal activity.

Many a time, people don’t realize that they are committing a crime so public awareness campaigns can be started which educate people about such crimes and how to not fall prey to them. Roles of regulatory bodies such as the Securities and Exchange Board of India and Reserve Bank of India can be expanded and strengthened to monitor corporate transactions more effectively.

References

[1] BW Online Bureau, ‘White Collar Crimes In India, Evolution, Trends & Solutions’ BW Legal World (Delhi, 21 June 2021)

[2] PTI, ‘White-collar crimes present formidable challenge to judicial, economic systems: SC judge Hima Kohli’ Indian Express(New Delhi, 10 July 2024)

[3] State of Gujarat v Mohanlal Jitamalji Porwal and Anr [1987] AIR 1321

[4] ET Online, ‘Bank frauds up nearly 300% in last two years, digital frauds up 708%: RBI’ Economic India Times (31 May 2024)

[5] Sunainaa Chadha, ‘Cyber frauds cost India Rs 177 crore in FY24: How to protect yourself’ Business Standard(New delhi, 6 August 2024)

[6] Vijaita Singh, ‘ Over 5,000 money laundering cases registered since 2014, conviction in 40 cases, government informs Lok Sabha’ The Hindu (New Delhi, 6 August 2024)