January 13, 2022

A crime is an act or omission declared to be crime by the State. A crime or offence is hazardous not only to an individual but also to the society at large or the state. In recent years, the crimes, based on their nature, objective, modus operandi and consequences, have been classified as ‘blue-collar crimes and ‘white-collar crimes’.

Blue-Collar Crime:

General cluster of crimes is widely referred to and categorized as ‘blue-collar crime’, though that is not an official legal classification. For the ease of understanding, a crime which is committed for immediate benefit or gain to the individual or a group involved is referred to as blue-collar crime.

The term ‘blue-collar crimes’ was originally coined to loosely define those crimes committed by someone from the working or lower echelons of society. It is understood that generally the people belonging to the lower-echelons of society are more likely to be pushed into crime due to their quest of survival than for greed or power. During the1910s in America, manual laborers who were from society’s lower-segment often opted for blue shirts so that stains gained from days at work were less visible. The term ‘blue-collar workers’ was attributed to them as defining low income earners.

Mostly blue-collar crimes are those crimes that are considered to be triggered by passion, rage or other emotions, unemployment etc. Crimes that cause injury to people or property, such as burglary, property crimes, theft, murder and other violent crimes, assault, sex crimes, breaking and entering and drug crimes are considered to be blue-collar crimes.

White-Collar Crimes:

In contrast to blue-collar crimes, ‘white-collar felony’ refers to financial shenanigans, non-violent crimes committed by persons who, often by virtue of their occupations, exploit social, economic, or technological power for personal or corporate gain. Typically, it includes fraud, bribery, ponzi schemes, insider trading, embezzlement, cybercrime, copyright violation, money laundering, forgery, corruption etc.

A white-collar criminal belongs to the upper socio-economic class who is skirting the law for economic gain while performing his professional assignments. White-collar crimes are committed with a cool mind, planned calculation and deliberate design. In general, the fundamental cause of white-collar crime is economic greed. It is often said “white-collar crimes are committed for greed, not for need”.

There are other contributory causes as well, such as opportunity to commit crime, situational pressure on the individual etc. Some offenders, in fact, do not really consider it a crime because the acts involved do not resemble street crimes. Some business people feel justified in committing white-collar crimes because they believe that government regulations do not really understand the business world or their activities or the problems of competing in the free enterprise system. These crimes are committed by persons who are socially, economically and occupationally well established as well as influential in society. Usually common people cannot make out these types of crimes, although they can perceive the effect of such crimes on them.

One of the prime causes of white-collar crime is ignorance of people about such crimes as their nature is totally different from traditional blue-collar crimes. Rationalizing greed is a common trait of white-collar criminals. Some white-collar criminals believe that everyone violates business laws, so it is not so bad if they also do so. Most white-collar crimes are, directly or indirectly, connected with distribution of wealth, encouraging growth of monopolies, the rise of a managerial class and intricate institutional mechanism.

The concept of white-collar crimes has seen phenomenal growth after colonization and industrialization in the eighteenth century. White-collar criminality has become a global manifestation with advancement of commerce and technology and the reason for its monumental growth is a meteoric rise in economies and industries in past decenniums.

White-collar crimes are dangerous to wider sections of society as these crimes directly affect the financial condition of the country itself by putting the nation into great financial hardship.They have a serious impact on society and thus they are serious offences. The methods by which taxes are evaded or black money is floated in the market and money laundered are all examples of such offences, which are committed purely for personal gains at the cost of heavy loss to the State.

White-collar crimes’ cause economic misbalance, which impacts society in the form of poverty, unemployment, economic slowdown, inflation etc. As a result, there is an artificial economic crisis in the market and the price of goods ultimately rises. When white-collar criminals evade taxes, partially or as a whole, the entire fiscal policy of the Government is disturbed. Therefore, due to the malpractice, the society is affected in many ways.

Legislations on White-Collar Crimes:

The Parliament from time to time brought legislations to deal with white-collar crimes and it has proved to be deterrent to an extent.

The Criminal Law (Amendment) Ordinance, 1944 (XXXVIII of 1944) was brought to prevent the disposal and concealment of properties procured by means of corruption, breach of trust and cheating. However, not all crimes under the Indian Penal Code are covered by the said Law.

The Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 covers penalty of illegally acquired properties of smugglers and foreign exchange manipulators and for matters connected therewith and incidental thereto.

The Narcotic Drugs and Psychotropic Substances Act, 1985 provides for the penalty of property derived from, or used in illegal traffic in narcotic drugs.

The Prevention of Corruption Act, 1988 and The Lokpal and Lokayuktas Act, 2013 are also legislations aimed at curbing white-collar crimes, though in a specific categories of persons.

The Fugitive Economic Offenders Act, 2018 covers the acquisition of properties, in India and abroad, which are Benami in nature or are covered under the concept of Benami transactions. The act works in coherence with the Prevention of Money Laundering Act, 2002 since the enforcing agency is the Enforcement Directorate. It lays down that a person would be qualified to become a fugitive economic offender only when a non-bailable warrant has been issued with regard to the scheduled offences as mentioned in the Act against the individual and in order to avoid criminal prosecution, the aforesaid individual has left India; or he is refusing to return to India to face the criminal prosecution. The Act has been accompanied by a schedule which provides a list of exhaustive offences under which a Fugitive Economic Offender can be booked. Further, the Fugitive Economic Offender must have committed a fraud or a crime of over Rs 100 crores to be booked under this Act. Lately, the Special courts have declared as fugitives Vijay Mally, Nirav Modi, Asif Iqbal Menon, Junaid Iqbal Menon and Hajra Iqbal Menon (Late Iqbal Mirch’sf amily), Nitin Sandesara, Chetan Sandesara, Dipti Sandesara and Hitesh Patel (Directors of M/s Sterling Biotech Ltd) among others.

The Prevention of Money Laundering Act, 2002 (PMLA) forms the core of the legal framework put in place by India to combat money laundering and obviate white-collar crimes. It has dual parallel provisions: firstly, provision for attachment and confiscation of property, secondly prosecution before the criminal court which has a maximum sentence of 7 years and in exceptional cases it is 10 years.

The Enforcement Directorate (ED) is a law enforcement agency responsible for enforcing economic laws and fighting economic crime in India. One of the main functions of the Enforcement Directorate is to investigate offences of money laundering under the provisions of PMLA and to take actions like attachment of property if the same is determined to be proceeds of crime derived from a Scheduled Offence under PMLA, and to prosecute the person involved in the offence of money laundering. India is a full-fledged member of the Financial Action Task Force and follows the guidelines of the same.

The evolving threats of white-collar crime and money laundering supported by the emerging technologies need to be addressed with equally advanced anti-money laundering mechanisms and laws.

Nitesh Rana is Counsel for the Enforcement Directorate.

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