The Historical And Legal Evolution Of White-Collar Crime

Blog / The Historical And Legal Evolution Of White-Collar Crime

In modern law codes, particularly in criminal law, each criminal case is carefully examined to identify its unique characteristics based on a "structure of the crime." This structure is applied to every aspect of the crime, including its essential elements such as the objective element (event, causal link, and modality) and the subjective elements (causes of justification, conduct, subjective and legal capacity/ability), which are necessary for the commission of a criminal offense. Additionally, the doctrine of Criminal Law distinguishes between a "proper crime" and an "improper crime" by considering the author, a natural person, and their particular duties or qualities of work. This distinction is made when an individual engages in active or omissive actions towards either any person or specific individuals responsible for social responsibility or legal contract. Understanding these concepts is crucial to comprehending the meaning of "white-collar crime"

The Emergence of the Criminal Law of Economics

The Criminal Law of Economics, a distinct category of criminal law comprising legal and economic disciplines, has been in existence since the 19th century. This specialized branch of law focuses on offenses involving the transfer of money related to economic crimes. It requires that these offenses be committed by "deviant" professionals who belong to the classic category of white-collar workers qualified to operate in economic, market, and financial sectors (e.g., lawyers, notaries, accountants, bankers, credit intermediation agents, etc.). Often referred to as "criminals in the shadows," these individuals have been entrusted by state and government financial supervisory authorities to perform specific reporting tasks for suspicious economic operations, particularly those outlined in Anti-Money Laundering and Anti-Corruption regulations.

Financial Crimes are criminal activities carried out to provide economic benefits through illegal methods.

What are these special crimes?

  • Corporate (holding) fraud
  • Insider trading
  • Theft of intellectual property
  • Money laundering / Terrorist financing
  • Securities and commodities fraud
  • Ponzi schemes
  • Fraudulent bankruptcy
  • Tax havens (tax and fiscal offenses)
  • False declaration
  • Corruption
  • Trade and customs offenses
  • Criminal offenses/infiltration of public tenders

The Criminal Law of Economics has evolved over time, thanks to the contributions of professors and professional experts from various sectors, including jurists, academics, investigators, and economists. These experts have identified specific elements such as modus operandi and the authors of these crimes. Consequently, combating these offenses has necessitated the implementation of specific measures in both the private and public sectors.

The Influence of Edwin Hardin Sutherland

Professor Edwin Hardin Sutherland played a pivotal role in the development of the Criminal Law of Economics. In 1939, he coined the term "white-collar crime," shedding light on the connection between financial transactions and the specific categories of individuals who are more prone to committing these serious economic offenses. Sutherland's convictions aimed to shift the focus from the illicit object (money) to the individuals responsible for perpetrating the crimes.

Organizations in the payment industry create AML programs to protect themselves from financial crime threats.

To combat and mitigate the impact of white-collar crime in the aftermath of the 1970s and 1980s, many states implemented various legislations to crack down on these offenses. In the United States, notable examples include the introduction of the RICO Act (Racketeer Influenced and Corrupt Organizations Act) and the Bank Secrecy Act of 1970, which aimed to enhance banking transparency.

Unfortunately, in the 21st century, this specific category of crimes, as well as the broader field of Criminal Law, continuously undergoes evolution due to the emergence of new criminal cases and behaviors. The legislature intervenes to regulate these new types of crimes, such as those related to the computer sector, including cyber-laundering, cyber-financing terrorism, and the theft of sensitive data for subsequent online sales. These new developments inevitably intersect with the realms of economy and law.

Contemporary Challenges and Evolving Crimes in White-Collar Crime

White-collar crime, a term first coined by Edwin Hardin Sutherland in 1939, refers to non-violent offenses committed by individuals or organizations in business or professional settings. Over the years, white-collar crimes have evolved in response to advancements in technology, globalization, and changing economic landscapes. As the world becomes more interconnected, new challenges arise, and authorities struggle to keep up with the sophisticated tactics employed by perpetrators. In this article, we will explore some of the contemporary challenges and evolving crimes within the realm of white-collar crime.

One of the significant challenges faced today is the rise of cybercrime. With the advent of the digital age, criminals have found new avenues to exploit individuals and organizations. Cybercriminals employ techniques such as hacking, phishing, identity theft, and ransomware attacks to gain unauthorized access to sensitive information and financial assets. The scale and complexity of these cybercrimes pose a significant challenge for law enforcement agencies, as they require specialized skills and resources to investigate and prosecute the perpetrators.

Money laundering, another persistent challenge in white-collar crime, has also evolved with the changing times. Criminals have become adept at exploiting the global financial system to disguise the origins of illicit funds. They utilize complex networks of shell companies, offshore accounts, and digital currencies to launder money obtained from various illegal activities, including drug trafficking, corruption, and fraud. The cross-border nature of money laundering presents jurisdictional issues and necessitates international cooperation for effective detection and prevention.

Corruption continues to plague societies worldwide, undermining economic development and eroding public trust. While traditional forms of corruption, such as bribery and embezzlement, remain prevalent, new forms have emerged in the digital age. Corruption in public procurement processes, nepotism, and abuses of power in the private sector are among the evolving manifestations of this crime. Combatting corruption requires robust legal frameworks, transparent governance structures, and the empowerment of anti-corruption agencies to investigate and prosecute cases without fear of political interference.

European Parliament Corruption Scandal

Securities and investment fraud have also become increasingly sophisticated in recent years. Ponzi schemes, insider trading, market manipulation, and fraudulent investment schemes lure unsuspecting individuals with promises of high returns or exclusive opportunities. The complexity of financial markets, coupled with the manipulation techniques employed by fraudsters, makes it challenging to detect and prevent these crimes. Regulators and financial institutions must enhance their surveillance mechanisms, employ advanced analytics, and promote investor education to mitigate the risks associated with these fraudulent practices.

The global nature of white-collar crime presents challenges in terms of jurisdiction, legal frameworks, and international cooperation. Perpetrators often operate across borders, exploiting regulatory gaps and seeking safe havens in jurisdictions with lax oversight. To effectively combat these crimes, countries must strengthen their legal frameworks, harmonize regulations, and enhance international cooperation through information sharing, extradition treaties, and joint investigations.

Technological advancements, while offering numerous benefits, have also facilitated new forms of white-collar crime. Cybersecurity threats, data breaches, intellectual property theft, and privacy violations are among the contemporary challenges stemming from the digital landscape. Organizations must invest in robust cybersecurity measures, employee training, and incident response protocols to safeguard their assets and protect sensitive information from malicious actors.

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