White Collar Crime

What is white collar crime and what offences does it normally involve?

White collar offences are offences mostly connected to fraudulent actions and intentions. White collar offences are crimes involving an intentional lie which deceives another party. It was defined by the case law as ‘dishonestly prejudicing or taking the risk of prejudicing another’s rights knowing that there is no right to do so.’ The list below is non exhaustive and gives examples of some of them.

The following are some of the more common white collar criminal offences:

Money Laundering and fraudulent misappropriation of funds under the Proceeds of Crime Act, Insider Dealing under Criminal justice Act, Some offences under Financial Services and Markets Act, Fraudulent trading under Companies Act, Offences under Fraud Act, other common law offences relating to conspiracy to defraud or making false statements by directors. All these are more specifically described in the particular Acts of Parliament.

The requirements given by the Statute must be complied with before a person can be charged with that specific offence.

Conspiracy to defraud 

Conspiracy to defraud occurs if for instance the directors try to make an agreement between them to conceal secret profits. Two or more persons must commit this offence in order for it to take place. The intention of the parties to conspiracy is the key element. If one of the two defendants who are charged with conspiracy is acquitted the other one must be acquitted too, there cannot be an offence of conspiracy committed by one person only. The police and the Serious Fraud Office prosecute and charge this offence on a frequent basis.

Offences under the Fraud Act 

The Fraud Act introduced an offence of fraud. Sentencing for this offence is a maximum ten years imprisonment. The Act specifies three particular ways in which fraud can be committed. These are: fraud by false representation, fraud by wrongfully failing to disclose information if it is a legal obligation to disclose them and fraud by an abuse of position. It is also an offence to posses or has in control an article which is for use in fraud as well as making or supplying articles for use in fraud. 

Fraudulent trading under the Companies Act and participating in fraudulent business carried on by a sole trader 

It is an offence to carry on any business with the intention to defraud creditors.  A person who carries on such a business can be liable to a fine or to an imprisonment. The imprisonment is a maximum of ten years. It is also an offence to participate in a fraudulent business carried on by a sole trader and it is an offence to obtain services dishonestly with the intention to avoid payment for them. 

False accounting under the Theft Act

False accounting includes making false applications, false valuations, supplying false documents, supplying false bills, making false entries in accounts, false purchase invoices etc. It is also an offence to destroy, falsify or conceal any account or any document which is important for any accounting purpose with the intention of gain for himself or to cause loss to another. 

Offences under the Financial Services and Markets Act

The Aim of the Financial Services and Markets Act is to increase public awareness of financial services industry, to promote public confidence, to protect consumers and of course to  reduce financial crime which involves dishonesty, fraud, misuse of information, any sort of market manipulation, misconduct, the use of the crime proceeds etc. One of the main offences under the Act is carrying on a regulated activity without authorisation other offences are insider dealing, producing misleading statements, or market abuse. Market abuse is defined by the Financial Services Authority as some sort of an improper conduct which undermines financial markets or somehow damages the interests of participants. Other offences are making misleading statements and engaging in a misleading course of conduct in order to induce some other party to enter into an agreement. Thus, the person is guilty of an offence if he intentionally or recklessly induces another person to e.g. enter into an agreement.  The offence of market abuse can be enforced either in criminal courts whereby prosecution for insider dealing (contrary to the Criminal Justice Act) takes place or the regulatory route whereby enforcing the offence of market abuse. Prosecution for insider dealing is usually less successful. Criminal prosecution is more appropriate if dishonesty or abuse of trust is involved.  The following are the types of behaviour which amount to market abuse, these are; the behaviour which is based on the relevant information inducing a person to have a particular idea of the transactions in investments, the behaviour which gives a person false or misleading impression of e.g. the price of the investments, the behaviour which could distort the market in investments etc.

Offences contrary to the Enterprise Act 

The Enterprise Act introduced a cartel offence. A cartel offence usually involves two or more enterprises which make an agreement or collusion between themselves in order to avoid competition between them which would under normal circumstances most definitely arise. An individual is guilty of this offence if he or she makes arrangements with some other person in relation to prise fixing, the limitation of production or supply, market sharing, and bid rigging (agreements relating to how to bid). These are called anticompetitive agreements also known as cartel activities.

Other related offences 

Money laundering offences

Money laundering offences involve proceeds of a crime (dirty money) which change ownership so that it seems that this money comes from a legitimate source and is not dirty money any more.