Definition of White-Collar Crime
White-collar crime has paved its way across industries, and it continues to do so every day, making it harder to manage economic, reputational, and operational challenges. Sectors are suggested to understand the preventative measures to discourage white-collar crime.
Edwin Sutherland coined the term “white collar crime” in 1930, though it has evolved into a global issue to this day. White-collar crimes do not involve violence; their main motivation stems from financial reasons, and usually, people belonging to the upper class commit these kinds of crimes.
Driven by financial gain, these crimes involve concealment and deceit, and financial activities leading to a violation of trust.
Why Is White Collar Crime Important?
As a result of white-collar crimes, loss of finances, public image, and reliance appear in addition to weakened economic stability. In some cases, potential business growth and innovation can be prohibited by a high degree of crime since there is no effective law and scrutiny. Victims become financially vulnerable when faced with identity theft, identity fraud, and loss of savings.
What Are the Most Common Types of White-Collar Crimes?
Fraud
A crime that uses deception and manipulation of financial records to gain an illegal reward.
Example: The Wirecard Collapse Case in Germany
A corrupt business with accounting scandals deceived regulators and investors. The FinTech Company (Wirecard) collapsed in 2020 because of its fraudulent activities.
Embezzlement
A crime that consists of funds used for personal purposes by an individual of trust who manipulates the records to conceal illegal actions.
Example: Enron Scandal Case in the United States
A case that involved political implications since the company’s leaders were a part of the White House community in the USA. As a result of the illegal actions, the company went bankrupt and lost $74 billion. Enron's former CEO, Jeff Skilling, faced 24 years in federal prison starting in 2006.
Insider Trading
A crime in which confidential information is used unethically for personal purposes or advantages.
Example: The Nomura Case in Japan
Nomura Group was exposed in 2010 because three companies reported suspicious trading. The Japan Securities and Exchange Surveillance Commission investigated then later confirmed insider trading by Nomura sales officers.
Identity Theft
A crime is when someone steals a personʼs personal information and uses it as their own to benefit themselves. This leaves the victim with financial losses and emotionally strained.
Example: Philip Cummings Case (United States)
Philip Cummings, a help desk employee for financial institutions seeking to access credit reports. Cummings’s identity theft scheme affected more than 33,000 individuals and caused millions of dollars in losses.
Money Laundering
A crime where an individual or a group disguises illicit money as “clean moneyˮ.
Example: The Wachovia Bank Scandal Case
The Wachovia bank processed $373 billion in transfers over two years, mostly from drug trafficking. A $160 million fine for unreported transactions showed how banks can enable money laundering.
Bribery
A crime involving the act of receiving or offering an undue reward by or to any individual or sector.
Example: Airbus Case (France)
Airbus used several units to enable corrupted transactions. They used payouts and disguised them as commissions to push airplane sales. In 2020, the company was charged with bribery and had to pay a $4 billion fine
Tax Evasion
A crime involving the use of illegal means and actions so that paying taxes can be avoided.
Example: Shakira's Spanish Tax Evasion Case
Spanish judges claim that Shakira was legally obliged to pay taxes to Spanish government between the years of 2012 and 2014, and yet she didn’t. Thus, Shakira faces a €23.7 million penalty and up to 8 years in prison.
Forgery
A deception-motivated crime whose actions involve producing or changing a document, signature, item of value, or other type of object with no permission of affected individuals.
Example: Forged ID Use Case Study (United Kingdom)
In 2021, James Ibori, a Nigerian national, used a forged British passport to purchase a £1.2 million flat in London. The fake documents passed initial checks at a small private bank. His wife and mistress were ordered to repay £5.1 million and £2.6 million respectively. UK authorities froze £35 million in assets in 2007 and pursued confiscation.
Ponzi Scheme
A crime where a criminal recruits individuals to invest in a company that doesn't exist.
Example: Madoff Investment Scandal Case
Madoff deceived investors worldwide for decades by conducting multi-billion-dollar scams and was arrested in December 2008. Madoff’s fraud caused many people to go bankrupt financially and is deemed one of the largest Ponzi schemes ever by many people.
Cybercrime
A crime that is committed by using computers or the internet. Most of the cybercrimes are considered white-collar crimes since they are committed for financial reasons and do not involve any violence.
Example: Report from the GOV. UK
Since Robert Morris created the first computer virus in 1989, the complexity and scale of attacks have grown exponentially. Official statistics from the Government's Cybersecurity Breaches Survey 2024 show that half of businesses have experienced a cyber-attack within the last 12 months, and UK firms face 7.78m cyber-attacks a year.
Differences Between Blue-Collar and White-Collar Crimes
| Type of Collar | White Collar Crimes | Blue Collar Crimes |
| Type of violence | Non-violent offenses | Violent offenses |
| Who commits the crime? | Position of trust and authority | Lower social |
| Examples |
Mortgage fraud Embezzlement Identity theft Cyberstalking Medicare fraud Money laundering Intellectual property theft |
Murder Armed robbery Drug offenses (i.e., possession, distribution, or trafficking) Prostitution Vandalism Sexual assault |
| Investigators | The Federal Bureau of Investigation (FBI) | Local law enforcement |
What Are the Penalties for White Collar Crime?
- Fines- Criminals may have to pay a certain amount of money.
- Restitution- To make up for the victims’ financial loss, individuals or companies who acted illegally can make direct payments to victims.
- Imprisonment- Offenders of more serious crimes can be sentenced to prison, whose duration can change in accordance with the harshness of the crime.
- Asset forfeiture- Possessions that were gained by illegal actions can be taken away from the owner who committed the crime. These possessions can be money, property, or resources.
- Longer sentences for insider trading- As a result of damaging the market integrity, criminals who are involved in insider trading may be sentenced to prison for longer prison term than others.
How To Detect White Collar Crime
- U.S. Securities and Exchange Commission (SEC)
THE SEC authorities hold violators of the federal securities laws accountable for their misconduct.
- FBI / FINCEN
FBI, together with FINCEN, investigates white-collar crimes. They assess suspicious transactions to eliminate money laundering and terrorist financing.
- Interpol + FCA
Interpol and the FCA look after UK markets, protect consumers, and promote fair competition. Both coordinate on global white-collar crime.
Techniques
| Technique | FBI | FINCEN | Interpol | FCA |
| Forensic Accounting | Actively Use | Actively Use | Actively Use | Actively Use |
| Digital Evidence | Actively Use | Actively Use | Actively Use | Actively Use |
| Whistleblower Programs | Limited Use | Not Applicable | Not Applicable | Actively Use |
What Are Compliance Regulations Against White Collar Crime?
| Key Regulators | Description |
| The Sarbanes-Oxley Act (SOX) | It strengthens corporate governance, financial disclosure, and internal controls. SOX has helped to promote a culture of compliance and prevent corporate misconduct |
| AML and KYC Requirements | They guarantee customers' identity verification by businesses, screen financial activities, and expose or detect illicit financial affairs. |
| General Data Protection Regulation (GDPR) | It establishes ground rules for businesses for properly collecting, storing, and utilizing consumer data. |
| The Foreign Corrupt Practices Act (FCPA) | It is a federal law that was passed in 1997 and aims to stop illegal bribery of foreign officials and enhance ethical behaviors in workplaces globally. |
| The Dodd-Frank Act | It's a financial reform law that aims to avert possible future financial crises by consolidating regulatory frameworks, improving corporate regulation, and increasing consumer protection. |
How Can Businesses Prevent White Collar Crime?
- Complying with policies, procedures, and processes implemented by internal controls to identify threats before they amplify
- Selection of the right tools from AML software, such as Sanction Scanner, which uses advanced means that effectively mitigate threats, even the small, out-of-the-ordinary financial behavior.
- A strong ethical culture helps eliminate white-collar crime. Ethics training reduces immoral dilemmas, conflicting loyalties, and the temptation to exploit illicit money.
How Does Sanction Scanner Help You with White Collar Crime?
Thanks to Sanction Scannerʼs advanced technology and robust database, organizations have access to solutions that prevent white-collar crime. Here are the solutions Sanction Scanner can provide:
1. Sanction Scanner provides compliance screening, detecting blind spots, screening of politically exposed persons (PEPs), sanctioned entities, and enforcement actions.
2. Sanction Scanner detects suspicious activities by closely monitoring transactions in order to prevent illegal activities such as terrorist financing.
3. Sanction Scanner assesses the degree of risk or threat a company may face. As a result, we offer comprehensive and regular updates of the company’s financial actions.
FAQ's Blog Post
White collar crime refers to non-violent, financially motivated offenses typically committed by professionals. Common examples include fraud, bribery, and embezzlement.
These crimes are usually committed by individuals in corporate, government, or professional positions. They often exploit their authority or access for personal gain.
Fraud, insider trading, money laundering, and tax evasion are among the most frequent. Each involves deception for financial benefit.
White collar crime involves financial manipulation and deception, often without physical violence. Blue collar crimes typically involve direct physical action or force.
Penalties may include hefty fines, restitution, and imprisonment. In some cases, professionals also lose their licenses or reputations permanently.
Authorities like the FBI, SEC, or financial regulatory bodies use audits, surveillance, and forensic accounting. Investigations can span months or years.
Yes, organizations can face legal penalties if they fail to prevent or detect such crimes. Regulatory fines and reputational damage are common consequences.
Despite lacking physical violence, it can cause large-scale financial harm to individuals, businesses, and the economy. It also erodes public trust in institutions.