White collar crime is an incredibly broad umbrella that covers a range of criminal acts that center around illegal financial schemes and the use of deception. Non-violent by definition, acts that meet the criteria include bribery, Ponzi schemes, embezzlement, money laundering, forgery, and identity theft, just to name a few. Another key component is that perpetrators typically have a comparatively high social standing, often holding key positions in business or politics.
Prosecution and Prevention
Crimes of this nature are often sophisticated, well-planned, and difficult to track, making their prosecution difficult as well. Likewise, definitions for some crimes are so vague that it’s possible to commit a crime by accident, requiring the intervention of a financial lawyer. This commonly includes instances where individuals inaccurately fill out a tax form not out of malice or criminal intent, but due to ignorance or confusion.
Even when perpetrators are prosecuted, they are frequently relegated to comparatively easier punishments than violent or low-level criminals face. Western countries typically use a combination of minimum security prisons, probation, fines, and other punishments. Other countries are less lenient. For example, China authorizes the use of the death penalty in severe, high-profile cases.
Most Prevalent Types of White Collar Crime
Logically, the most prevalent white collar crimes include those available to the broadest range of the corporate structure, as well as those outside but still meeting the definition. In other words, it’s important to note that financially-motivated acts committed outside of a business or political setting can still meet the definition. Keeping that in mind, the most prevalent types of white collar crime are tax evasion, embezzlement, money laundering, and various forms of fraud.
Tax evasion can be as simple as a private citizen knowingly using false information on a tax form or withholding income figures when filing their end of year forms. Embezzlement, the misappropriation of a business or organizations funds, occurs from the smallest nonprofit to the international level. The average losses from embezzlement in 2016 totaled $807,443 per organization.
Money laundering, often used in conjunction with embezzlement, involves funneling illegally acquired money through legitimate channels in an attempt to mask its source.
White Collar Crime by Profession
While white collar crime is not limited to occurring within a business structure, these instances are often the most damaging. One employee’s action can easily tear down even the most secure and well-established organization, incurring massive costs and repercussions for employees and customers alike. As such, crimes occurring within a professional environment require intense efforts both from prosecuting agencies and, on behalf of the accused, financial lawyers and other legal professionals.
Corporate fraud, in the U.S. at least, is one of the most concerning forms of white collar crime. This includes insider trading and efforts to mislead investors about a business or institution’s actual level of financial success. Pharmaceutical companies, real estate agencies, retail manufacturers, and insurance providers have all faced instances of illegal internal activity. That said, investment firms have been subject to some of the most high-profile cases with the last 30 years. Much of this can be attributed to the relatively arcane nature of global finance and the massive quantity of both funds and transactions involved. Bernard Madoff, the Enron scandal, and other recent cases immediately spring to mind.
A Serious Threat
While it may be nonviolent, white collar crime still poses a huge risk. The average company in the U.S. loses 6 percent of its profits each year, which says nothing of the cost to investors. Around 5000 white collar arrests are made in the U.S. each year, hardly accounting for the actual number of instances, as 1 out of every 4 households can expect to suffer from some form of white collar crime. Given the sheer cost and damage, white collar crime is a serious issue that warrants the utmost attention of local, state, and federal authorities.