Economic crimes are crimes
against property, involving the unlawful conversion of the ownership of
property (belonging to one person) to one's own personal use and benefit.
Financial crimes may involve fraud (cheque fraud, credit card fraud, mortgage
fraud, medical fraud, corporate fraud, securities fraud (including insider
trading), criminal misappropriation, payment (point of sale) fraud, health care
fraud); corruption; scams or confidence tricks; tax evasion; bribery;
embezzlement; identity theft; money laundering; and forgery and counterfeiting,
including the production of Counterfeit money and consumer goods and include
computer and cyber-crimes. It may be carried out by individuals, corporations,
or by organized crime groups. Victims may include individuals, corporations,
governments, and entire economies.
In a broad
way, the former can be subclassified as : Crimes involving government
finances(eg. tax evasion, duty evasion, subsidy frauds etc.), Crimes involving
individuals’, finances (eg.cheating, misappropriation, breach of trust etc.),Crimes related to corporate management (eg. commissions as
bribes, illegal gratification, floating fake firms, copyright violations etc.),
Crimes affecting national economy (eg. foreign exchange, stock & commodity
market manipulations, counterfeiting currency etc.)
Economic Crimes creates black market or
underground economy a market in which goods services are traded illegally. The
key distinction of a black market trade is that the transaction itself is
illegal. The goods or services may or may not themselves be illegal to own, or
to trade through other, legal channels. Because the transactions are illegal,
the market itself is forced to operate outside the formal economy, supported by
the established state power. Two common motives for operating in black markets
are to trade contraband, or to avoid taxes or price controls. Typically the
totality of such activity is referred to with the definite article as a
complement to the official economies, by market for such goods and services,
e.g. "the black market in bush meat".
Money
itself is traded on the black market. This may happen for one or more of
several reasons: the government sets ("pegs") the local currency at
some arbitrary level to another currency that does not reflect its true market
value, government makes it difficult or
illegal for its citizens to own much or any foreign currency, the government
taxes exchanging the local currency with other currencies, either in one
direction or both (e.g. foreigners are taxed to buy local currency, or
residents are taxed to buy foreign currency), The currency is counterfeit, The
currency has been acquired illegally and needs to be laundered before the money
can be used.
Impact
on National Economy: Economic crimes
cause significant damage to the general economy of the country, adversely
affecting the growth and development of the nation. Internationally it erodes
confidence in the financial credibility and stability of the nation, thus
weakening its global competitiveness and further, becoming unattractive to
investments from within as well as outside. Where there is a high incidence
level of economic crime, the government and bureaucracy are also viewed as
being corrupt and weak. Some of the major impacts on the national economy that
may be caused by the economic crimes are:
Increase in inflationary pressure, Uneven distribution of resources and
creation of elitism, Marginalisation of tax base, Generation of abundant black
money, Creation of parallel economy, Undermining of developmental
works/efforts, Becomes a breeding ground for corruption, Illicit businesses
thrive affecting licit business, Resources of financial and commercial
institutions are diverted and distorted,
Weakens morale and commitment of citizens, Poor/weakest continue to be
at risk, Countries economic equilibrium
is at stake. Economic offences, such as counterfeiting of currency, financial
scams, fraud, money laundering, etc. are crimes which evoke serious concern and
impact on the Nation’s security and governance.
A significant
corollary to the above is the diversion and investment of the Black money
acquired by committing such crimes into furthering crimes and the hegemony of
the criminal syndicates rule. The threats to public security and eventually
national security, would appear imminent as an ultimate consequence.
The black money market situation
in India is epidemic. India currently tops the list for illegal monies in the
entire world, estimated to be almost ₹
90,54,136 Crores stored in Swiss banks
in the form of unaccounted money as per the
data provided by the Swiss Banking Association. India has more black money than the rest of
the world combined. Indian Swiss bank account assets are worth 13 times the
country’s national debt, and, if this black money is seized and brought back to
the country, India has the potential to become one of the richest countries in
the world. In 2007, Indian authorities
began investigating Hasan Ali Khan an Indian businessman n for suspicion of
money laundering. He reportedly had a Swiss bank account with $8 billion in
deposits and has stashed away billions into Swiss bank accounts with the help
of Kolkata based businessman, Kashinath Tapuria using hawala. In December 2012, Finance Ministry told the
Standing Committee on Finance that recovery of Hasan Ali's tax arrears (of
approximately Rs 91,000 crore) is not possible. Evidence available with
Enforcement Directorate shows that he had transactions of over 112,000 crore
between years 2005 and 2006, and he is only one of the big tax offenders and
this stash is only a part of the huge illicit outflow from India. This amount
is enough to fund the national drinking water project in all the six lakh
villages in India for the next 10 years.
Pakistan-based
terror outfits are targeting the Indian economy by pumping in massive amounts
of fake currency; the Indian government informed the Parliament in Aug 2013
that it was the Lashkar-e-Taiba and Pakistani intelligence agencies which were
involved in the operation. Ministers speaking in both Houses pointed to the
Pakistan connection in the Fake Indian Currency Notes (FICN) racket which has
assumed serious proportions in the wake of reports that the counterfeit
currency is also being used for terror funding. Instances have also come to
notice where FICN printed in Pakistan has been routed to India via China, Bangladesh
and Nepal route. A recent report compiled by the Financial Intelligence Unit of
the Union Finance Ministry estimated a 400 per cent increase over recent years
in counterfeit transactions in India's financial channels.
Most of the
Economic Crimes in India are committed through the cooperation and nexus
between the corrupt politicians, bureaucrats, industrialists, businessman and
middle-men. As far as criminality is concerned these economic offences, while
bearing similarity to traditional offences, constitute a separate class by
virtue of their scale and dimension; modus operandi; and in making
individuals/state/society as collective victims of financial loss. With general
acceptance on this fundamental, the call of tomorrow may be a comprehensive
“economic offences code”, distinct from penal codes, to effectively counter
economic crimes. Criminologists, prestigious commissions and research bodies
agree that governments must go beyond law enforcement and criminal justice to
tackle the risk factors that cause crime, because it is more cost effective and
leads to greater social benefits than the standard ways of responding to crime.
Interestingly, multiple opinion polls also confirm public support for
investment in prevention. Criminologist Waller uses these materials in Less
Law, More Order to propose specific measures to reduce crime as well as a crime
bill.
Published in Organiser weekly the RSS mouth piece magazine on 2 February 2014
