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The basic concept of white-collar crime is basically to derive attention towards vast area of criminal behavioural aspects which are generally overlooked and they are seldom brought within the scope of the theories of criminal behaviour, and such concepts and aspects, when are included, demands for modification in the prevalent theories of criminal behaviour. The white-collar crime may be defined as a crime committed by a person holding a respectability position and high social status during the course of his employment. It may also be considered as offence committed by corporate officials for their companies and the offence of the company itself.

White-collar crime may be violations of a criminal law or a civil law or violations of regulatory laws or an act committed as workplace deviance. White-collar crime may be an occupational crime or a violation occurring in occupational systems. White-collar crime may further be a moral or ethical violation and it may cause social harm. The offence committed by individuals in the course of their employment and the offence of employees against their employers and further the illegal acts of omission or commission of an individual or a group of individuals in a formal organization in accordance with the operative goals of the organization, which have serious physical or economic impact on employees, consumers, or the general public. These acts are instances where the criminal law has been violated during the course of employment. Most professions and industries have standards, procedures, and regulations that are designed to administratively guide and direct workplace activities. In most instances, some form of wrongdoing is uncovered. These instances of wrongdoing, however, are not violations of criminal law or civil law; rather, they are violations of regulatory law.

White Collar - Crime Social Economic and Legal Aspects

India has Legislated statutory laws against the evils of white-collar crime in country. The Government has made various legislation for identifying and curbing white collar crime. The legislations are The Prevention of Corruption Act 1988, The Prevention of Money Laundering Act, 2002, Companies Act, 1960 and now Companies Act 2013, The Income Tax Act, 1961, Indian Penal Code, 1860, The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, Prohibition of Benami Property (Benami Transactions Act) 1988 subsequently amended in 2016 and very recently Fugitive offenders Act 2018.

The Prevention of Corruption Act, 1988 came into force by repealing Prevention of Corruption Act 1947 in new form with larger scope and influence in running time. By the passage of time and rapid changes in technology and social and economic structure of the society, the Prevention of Corruption (Amendment) Act 2018 came into force on 26.7.2018. This amendment brought essential changes in outspreading the parameters of the Act. In pursuance to this amendment the Act now extends its scope to those who give or promise to give undue advantage to a person with an intent to induce or reward a public servant to perform their public duty improperly, which makes it punishable with maximum imprisonment of seven years and / or fine. Importantly, the Act makes no specific distinction between facilitation payments and other forms of bribery. Thus, with such essential amendments now any undue advantage including facilitation payments to public servants is now an offence. However importantly the amended Act, now grants immunity from prosecution in favour of those who are compelled to give such undue advantage provided such persons report the matter to the law enforcement authorities within seven days from the date of giving the undue advantage. Hence, it could be deciphered that the amended Act seeks to distinguish between those pressured by the organization to offer bribes and those intentionally seeking to involve in corrupt practices. Specific provisions have been incorporated with a deterrent policy for private parties (including companies and their officers) engaging in corrupt practices. Further by means of amendment dated 26.7.2018 the Act clarifies and authorises the power to the authorities to prosecute commercial organizations also. The outcome of these amendments and insertion of these provisions would have far reaching consequences considering the fact that directors / officers can be prosecuted for acts of commercial organisations. However, it becomes imperative that positive protections and implementation of these provisions should be adhered to so as to prevent its abuse and individuals within companies should not be prosecuted and harassed to defeat the sanctity of principles of vicarious liability to protect the misdeeds of directors and other responsible persons. The amended Act further requires investigating officer to obtain prior prosecution sanction before conducting enquiry into any offence committed by public servants. The principle applies even in respect of retired public servants. However, the provision binds such sanctioning authority to pass its decision within three months, further extendable by a month. However, such prior sanction would not be required in cases of arrest of officials caught red-handed accepting or attempting to accept any undue advantage for himself or for any other person. The amended Act further empowers for attachment of property, confiscation of assets movable or immovable tainted by corrupt activities. The provisions of the Criminal Law Amendment Ordinance, 1944 are now applicable to such attachment proceedings. The time frame for concluding the criminal trial for the offences under the Act has also been stipulated by virtue of this amendment which have to be held on a day to day basis and endeavour to be made to conclude it within two years.

It is to be noted that Crime, by its very nature, has significances for individuals and public. White-collar crime which is basically non-conventional in nature, in particular, has a set of significances that may be different from the kind of consequences that arise from conventional crimes. In particular, the consequences can be characterized as (1) individual economic losses, (2) societal economic losses, (3) emotional consequences, (4) physical harm, and (5) “positive” consequences.

In response to mounting concern over money laundering, the Financial Action Task Force (FATF) on Money Laundering was established during the G-7 Summit in Paris in the year 1989 in order to develop a co-ordinated international response against this concern. One of the first tasks of the FATF was to prefer recommendations aimed out to suggest the measures national governments should take to implement effective anti-money laundering programmes. India had and still is an active member of the FATF.  India became member of the FATF in 2010. Government of India is committed to tackle the menace of Money Laundering and has always been part of the global efforts in this direction. It is also noteworthy that The Prevention of Money Laundering Act, 2002 got enacted in the year 2002 by the Parliament of India and came into force with effect from 1st July, 2005. Under the Preamble to the Act, PMLA,2002 has been defined as an Act to prevent money-laundering and to provide for confiscation of property derived from, or involved in, money-laundering and to punish those who commit the offence of money laundering. It is pertinent to ponder upon here that the PMLA, 2002 traces its origin squarely and largely to the Unlawful Activities Prevention Act, 1967. UAPA, 1967 as a legislation was enacted to target the ‘proceeds of terrorism’ and to an extent the provisions therein have been substantially bodily lifted and incorporated in the PMLA, 2002 to target the ‘proceeds of crime’. As such, the scope and extent to which PMLA, 2002 applies is magnificently vast as against that of UAPA, 1967 which was merely restricted to the proceeds of terrorism. However, in character and in force the PMLA, 2002 shares the same veracity in both penal as well as procedural provisions to that inherent in UAPA, 1967.

Arguably, the nature of offence under the PMLA, 2002 is ‘additional’ in nature i.e. for an offence to attract the provisions of this Act or to be constituted as an offence under this act, it is required that the said offence must be an offence under the Acts mentioned in the Schedule of the PMLA, 2002. The ‘proceeds of crime’ must have been generated through any unlawful activity for the purposes of legislations listed out in the Schedule to the PMLA 2002. It is only when a person tries to transform or color such illegally-gotten ‘proceeds of crime’ into an untainted character, that the offence of money laundering is deemed to be committed. For instance, taking a bribe per se is not an offence under PMLA, 2002 but only a separate offence under the Prevention of Corruption Act, 1988. However, at the very moment, when there is an attempt to utilize that illegal gratification in a manner to provide it an untainted character, the offence under this Act is established to be committed.   Therefore, the offence under this act is deemed to be in addition to the offence under Prevention of Corruption Act, 1988 at this very instance. Similarly, ransom amount received on account of an offence of kidnapping is at this stage only an offence for the purpose of section 363 of the Indian Penal Code. However, the moment that ransom amount is being tried to be projected as an untainted ‘proceed of crime’, the offence of money laundering is committed. Therefore, a predicate offence is one that is scheduled in the PMLA, 2002 and is the one through which ‘proceed of crime’ is prima facie generated and only when, so generated proceed of crime is being either projected or attempted to be projected as untainted, the offence under the PMLA, 2002 is said to be committed.   Therefore, initially, not all crimes predicate the offence of money laundering except those provided specifically in the schedule. However, with the 2019 amendment to the PMLA, 2002 this position now stands altered and consequential Intricacies involved have been dealt in subsequent relevant chapters.

Similarly, if we peruse the Companies Act, 2013, wherein Serious Fraud Investigation Office (SFIO), has been constituted to examine and investigate serious fraud cases committed by officials of big organizations. It is a multi-disciplinary organization comprising of experts from several arenas like corporate law, criminal law, banking, accounting, forensic audit, capital markets, taxation, etc. The solitary purpose for establishing SFIO was to protect the interest of stakeholders who invest the money and stand at actual risks. They may be considered as the real stake holders of the company. However, the management and administration of the company vests under the Board of Directors. Various amendments were introduced by the Ministry of Corporate Affairs under Companies (Arrest in connection with Investigation by Serious Fraud Investigation Office) Rules, 2017 under subsection (8) to (10) of Section 212 of the Companies Act in order to increase the working efficiency of SFIO. Now in cases other than government companies, an arrest can be made by the Director or Additional Director or Assistant Director of SFIO by a general or special order on the basis of material in possession, if he believes that the person under investigation is liable to be arrested under Section 212(6) and he must inform the reason for such arrest to that person. Further, Sections 212(9) and 212(10) lays down the procedure for making such an arrest. In case, the matter involves a government or foreign company, such an arrest must be made with prior approval of Government of India and managing director of that company must be informed of such an arrest. After the arrest, the procedure prescribed under Criminal Procedure Code 1973 has to be followed, wherein the arrested person is produced before a judicial or metropolitan magistrate within 24 hours of his arrest.

Recently Fugitive Offenders Act 2018 has also been enacted to provide for measures to deter fugitive economic offenders from evading the process of law in India by staying outside the jurisdiction of Indian courts, to preserve the sanctity of the rule of law in India and for matters connected therewith or incidental thereto.

White-collar crime and non-conventional crime are not such challenges that could be embattled, encountered, condemned, and conquered once and for all. Rather they are basically, forms of group behavioural aspects that could be predicted to surface repeatedly time and again in pursuance to new scenarios and times, or to avoid the financial loss, loss of property, or personal benefits. Since continuous protection and overcoming the white-collar crime in every sector and organisation are not achievable, general objective of the society should be to arrange its public and private administrative, research, and law enforcement resources to comprehend white-collar crime, that is, to prevent, detect, investigate, and prosecute these offences under the statutory laws. In reacting to white-collar crime challenges, we will have to differentiate and discriminate more carefully between sociological and economic effects and doing so should help to set enforcement priorities and allocate resources.

Anuuj Taandon | Advocate Allahabad High Court Lucknow Bench |

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May 2024