Challenges In Investigation And Prosecution Of White Collar Crimes In India

White-collar crimes (WCC), historically associated with individuals of high social status engaging in non-violent, financially motivated misdeeds, have evolved significantly over time. This transformation mirrors changes in technology, regulation, and the global economic landscape. From its primitive roots to the modern digital era, the ambit of white collar crimes have expanded significantly and now it  transcends national borders which creates significant issues for the law enforcement agencies. This research explores the various challenges in  investigation and prosecution of  white-collar crimes in India. Understanding these complexities, ambiguities, and challenges is crucial for policymakers, law enforcement, and legal authorities to develop effective strategies to combat and prevent white collar crimes in India. 

The earliest incident and scope of White collar crimes (WCC)  were rooted in  a time where technological advancements were primitive and  governmental penetration or control was quite low.  Once associated primarily with businessmen and people in positions of power, this form of non-violent, financially motivated wrongdoing has evolved dramatically over the course of history. The evolution of white-collar crime is a reflection of the ever-changing landscape of business, technology, and regulation.  It exists in all nations, costing societies normous losses economically, socially, and spiritually

White-collar crimes  first defined by the sociologist named Edwin Sutherland in 1939 as “A crime committed by the person of respectability and high social status in the course of their occupation”. Although this definition is not inclusive of current needs and it narrowly deals with the presence of advanced crimes, it did begin scholarly explorations of the same. Notably, the term “white collar” originally referred to individuals of high social class or standing to provide a contrast to blue collar working class and their crimes which were more physically violent in nature such as armed robbery, murdery etc. 

White-collar crimes have likely existed as long as human societies have engaged in systems of trade, finance, and governance. In the book Arthashastra, Chanakya extensively talks about how to deal with crimes such as corruption or bribery, which can be considered the most primitive form of white collar crime.  According to Kautilya, human nature poses corruption. It is the human psyche. This type of wrongdoing was not limited to any particular culture or period but has been a recurring feature throughout history.

A pivotal shift in the nature of these crimes occurred during the 18th and 19th centuries, during  the industrial revolution. This period witnessed a proliferation of businesses and corporations, driven by global trade and mercantilism, emphasizing on export-led growth. Consequently this led to expansion of  opportunities for financial fraud and embezzlement and white-collar crime became more prominent. Fraudulent activities such as stock manipulation and embezzlement were not uncommon during this period. 

In the age of globalization, post the 2000s, technology has gotten even more sophisticated particularly with the advent of the digital age, the computer era, and the internet boom. In this era white-collar crime frequently transcends national borders. Money laundering, tax evasion, and other forms of international financial fraud have become more prevalent, requiring international cooperation and coordination in order to combat these crimes. Furthermore, modern experts also include identity theft, hacking, phishing, cryptocurrency-related tax evasion, terror financing, hawala transactions, and intellectual property theft, in the definition of white-collar crimes. In this evolving landscape and technological advancement of the era, Edwin Sutherland’s original definition of white-collar crimes appears inadequate.

Herbert Edelhertz provided an alternative definition of white-collar crime which is more comprehensive in nature. He considered it as “an illegal act or series of illegal acts committed by non-physical means and by concealment or astuteness, to obtain money or property, to avoid the payment or loss of money or property, or to obtain business or personal advantage.” He acknowledged the fact that white-collar crimes are not limited to individuals of high social status and can be committed by people from various social classes. This reflects the evolving nature of white-collar crime, especially in contemporary society where people have easy access to computers and mobile phones.. While Sutherland’s definition played a foundational role in initiating the scholarly exploration of white-collar crime, Edelhertz’s definition is considered  more comprehensive and better suited to address the broader and more complex nature of white-collar crimes as they exist in contemporary society.

However,  the Federal Bureau of Investigation (FBI) has adopted a narrower approach, in defining white-collar crime as “those illegal acts which are characterized by deceit, concealment, or violation of trust and which are not dependent upon the application or threat of physical force or violence”. This was possibly done to make the law as specific as possible and to prevent overlapping jurisdictions with the state agencies. 

Hence, a prevalent issue within the realm of white-collar crime pertains to the existence of definitional disparities. There exists a discrepancy between academic definition, which tries to be as broad as possible, and practical definition, which adopts a narrower approach to better suit the needs of law enforcement agencies. As a result many countries and governments define white-collar crimes according to their specific needs, similar to the approach taken by the FBI in the United States of America. 

Under most jurisdictions no specific law exists that defines and punishes white collar crimes. It rather acts as a classification for law enforcement and legal authorities to categorize a broad range of non-violent, financially motivated offenses, each of which may be governed by specific statutes and regulations designed to address the unique characteristics of these crimes. Furthermore, different agencies investigate different types of crimes based on their particular expertise or jurisdiction. This division of responsibilities allows for a more specialized and effective approach, although siloed creating various inter-coordination issues,  to addressing the distinct characteristics and complexities associated with each offense falling under the broad range of  white-collar crimes.

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Author: Kartik Gehlot