In the legal world, ‘white-collar crime’ is a crime that can also be described as ‘corporate crime’. It refers to “a crime committed by a professional in his or her capacity in the professional world against a large corporation, agency, or other professional entity.” White-collar crime is a term that was first used in 1939 to describe non-violent crime, often committed by governments or those involved with businesses.
Typical white collar crime offences
There is a range of different offences that can be categorised under the term ‘white collar crime’. Some of these offences include:
- False accounting
- Fraud
- Fraudulent trading
- Conspiracy to defraud
- Money laundering
What is false accounting?
According to Section 17 of the Theft Act 1968, false accounting is defined as “an offence where an individual intentionally falsifies, alters or submits false, inaccurate or deceptive records for accounting purposes – in some cases, to make a company’s performance appear stronger than it is.”
Many cases of false accounting relate to the submission of tax or VAT records or the changing of documents or figures that are submitted as part of an application for a business loan or grant.
For people who are convicted of false accounting, punishment can involve a prison sentence and they may also lose their business as well as struggle to work in business after this.
What is fraud?
The 2006 Fraud Act sets out the details of the offence of fraud. In the act, fraud can be defined in one of three different ways:
1. False representation – This is wholly focused on the defendant, with them dishonestly and knowingly having made a false representation, and with the intent to make a gain for them or another person or a loss to another person – or risk of a loss.
2. Failing in breach of a legal duty to disclose information – When the defendant has sought to make a gain or cause a loss through the failure to disclose information to another person when it is their legal duty.
3. Abuse of position – When the defendant has sought to make a gain or cause a loss through abusing the position that they are in when they are expected to safeguard against (or not act against) the financial interests of somebody else.
When it comes to abuse of position, it is important to remember that the abuse can be as a result of omission, not simply an act.
In order to prove fraud, the prosecutor must be able to show that the defendant was dishonestly intending to make a gain for themselves or cause a loss for someone else.
What is fraudulent trading?
Fraudulent trading is applicable only to businesses and its definition is set out in s. 993 of the Companies Act 2006. There are, however, similar laws that cover the actions of sole traders and partners, for example. Fraudulent trading refers to businesses that continue to trade, with the intent of defrauding their creditors – or for any other fraudulent purpose.
It is important to remember, however, that there must be ‘actual dishonesty’ for a case to be considered to be fraudulent trading.
It should also be noted that it is not only the company directors that are eligible to be accused of fraudulent trading. Employees are also held responsible if they can be proved to have been acting dishonestly with the intent to defraud.
What is conspiracy to defraud?
Conspiracy to defraud is the offence of two or more people planning to dishonestly commit fraud on another person in pursuit of their gain or the other’s loss. It is a common-law offence, and it should be remembered that this offence is centered on the planning of the fraud, not whether it was done or not.
An example of someone who is guilty of conspiracy to defraud would be two company directors who have agreed to hide company profits.
What is money laundering?
The offence of money laundering is set out in the Proceeds of Crime Act 2002. The basic principle of money laundering is that offenders have taken money that was obtained through crime and made to look like it was obtained through legitimate means.
The process of money laundering normally happens in three steps (but can often be more complicated):
1. Placement – The money will often be in cash. It will often be used to carry out processes such as paying a loan, investing in a safe bet, investing in property, or changing it to a different currency.
2. Layering – Criminals will often then move the money around to help to disguise its history – often changing currencies and countries and owners.
3. Integration – Finally, the criminal will then receive the money back in a legal manner – through an art investment or property purchase, for example.
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Last reviewed on 11/07/23 by Glenn Cook who is a Solicitor