White Collar Crime

What is white collar crime?

The term white collar crime covers a whole range of offences, but generally involves the use of deception with a view to making financial gain. Examples of white collar crimes include:

  • fraud;
  • fraudulent trading;
  • conspiracy to defraud;
  • false accounting;
  • market abuse;
  • money laundering;
  • cartels.

Fraud

The Fraud Act 2006 introduced a general offence of fraud which is punishable with up to 10 years in jail. It can be committed in one of three ways:

  • by false representation (s 2);
  • by failing, in breach of legal duty, to disclose information (s 3);
  • by abuse of position (s 4).

To be guilty of an offence under any of the three limbs it must be shown that the defendant was dishonest and that his intention was to make a gain, or cause a loss to another.
It is also an offence to possess articles for use in fraud (s 6) and to make or supply articles for use in fraud (s 7).

Fraudulent trading

Under the s 993 of the Companies Act 2006, it is an offence to carry on any business with the intention to defraud creditors. A defendant found guilty of such an offences faces up to 10 years in jail. A similar provision under s 9 of FA 2006 applies in the same way to sole traders, partnerships, trusts, companies registered overseas, etc.

Conspiracy to defraud

The common law offence of conspiracy to defraud carries a maximum jail sentence of 10 years. It occurs if, for example, two or more directors of a company try to make an agreement between them to conceal secret profits. If one of the two defendants charged with conspiracy is acquitted the other one must be acquitted too: there cannot be an offence of conspiracy committed by one person only.

False accounting

False accounting under s 17(1) of the Theft Act 1968, 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/ herself or to cause loss to another.

Money laundering

Money laundering offences under the Proceeds of Crime Act 2002 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.

Market abuse

The European Union’s Market Abuse Regulation (MAR) which came into force on 3 July 2016, governs offences such as carrying on a regulated activity without authorisation, insider dealing, producing misleading statements and market abuse. Market abuse is some sort of an improper conduct which undermines financial markets or somehow damages the interests of participants.

Cartels

A cartel offence under s 188 of the Enterprise Act 2002 usually involves two or more enterprises which collude to avoid competition between them which would ordinarily arise. Dishonesty is not required to secure a conviction and someone is guilty of this offence if s/he makes arrangements with some other person to price fix, limit production or supply, market share, or engage in bid rigging.