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Published by Enhelion, 2021-11-09 02:09:02

Module 1

Module 1



White collar crimes are those which are linked with people of high stature and are distinct from
traditional crimes in the sense that there is a principle element of breach of trust by carrying
out unethical business practices cultivated by motivation to gain financially.1

The term white-collar crime was coined in 1939 by sociologist and criminologist Edwin
Sutherland. The term is now synonymous with the full range of frauds committed by business
and government professionals. It is a non-violent crime where the primary motive is generally
financial in nature- the motives may range from obtaining money or avoid losing money,
services or property. It may also be motivated by securing a personal or business advantage.
White-collar criminals are usually professionals in position of power or prestige or somebody
who commands well above average compensation.

The general nature of these crimes revolves around-
• deceit,
• concealment,
• cheating,
• violation of trust.

With the modernization of crimes, a worrying trend has emerged leading to an increase in
white-collar crime and economic offences. White collar crimes find their footing in history
upon intersection of business and the law, and its interaction with innovation, moral discourse
and public perception, as well as the changing nature of state policies over the centuries2.
Earlier theories of criminal law did not particularly criminalize white-collar crime as the
offenders were not perceived as typical criminal who engaged in violent criminal activities like
murder, rape, theft etc. The understanding of gravity of white-collar crime was further diluted
by the fact that it was largely considered to be a victimless crime in the absence of any


identifiable victim or section of victims. It has not been considered to be a “tradition or
conventional crime”.

There could be said to be three important characteristics for a crime to be categorised as a white
collar crime-

1. Such crimes are committed during the course of one’s job
2. The offender’s occupation is a central feature in the commission of crime
3. The offender’s occupation is perceived as a legitimate occupation by the society

There may be other distinguishing features like the status of the offender, location of the
offence etc.
Some of the common offences covered under white-collar crime are as follows-

• Classic white-collar crime

(this kind of crime involves a personal gain at the expense of the employer or client)

• Occupational crime

(personal violations that take place for self-benefit during the course of a legitimate

• Organizational or corporate crime

(this may involve increased profits of the organization)

• Embezzlement

(a kind of theft by an employee from his workplace)

• Corruption and briberies
• Economic crime

(a term particularly used in Scandinavian countries)- crimes of profit which take place
within the framework of commercial activity3

• Corporate or business fraud
• Insider trading and abuse of market
• Money laundering
• Terrorist financing

Herbert Edelhertz4 identified four main types of white-collar offending:

• personal crimes
• abuses of trust
• business crimes
• con games

Around 3766 incidents of fraud were detected in the Financial Year 2019, which saw a 15
percent hike from 2018. It is estimated that the losses in FY 2019 witnessed an 80% rise from
2018.5 Such intriguing figures of financial crimes do make it an interesting topic to explore.
White-collar crimes harm the society more greatly than the predatory crimes due to the huge
aftermath arising out of such crimes which may even cripple the economic stability of a country
by eroding the trust of people.

For the purposes of this course, we would be entering into a general discussion and various
academic concerns regarding white-collar crime. In the second module, we will streamline the
discussion to the general Indian context. We will see various kinds of white-collar offences
and the Indian legislative framework. In the third module, we will be discussing the detailed
Indian law on point, sentencing policies and need for reforms. Lastly, the fourth module will
briefly discuss some major white-collar crimes perpetrated in Independent India and the
aftermath impact on the regulatory regime.

3 Hazel Croall. Economic crime and victimology: a critical appraisal. In: International Journal Of Victimology
Tome 8, numéro 2 (2010). pdf_croal.pdf.
4 He was a criminologist and scientist who specialized in the study of white-collar crime and organized-crime
business activities.
5 Data as disclosed in a survey by the Indian National Bar Association.

In this module, we would be beginning our discussion with causes of white-collar crime. We
will then discuss origins of the term and the concept. We will discuss the difference between
blue-collar crime and white-collar crime to understand why such a classification is fruitful. We
will briefly analyse the definitional debates and the consequences of an improper definition on
public policy and implementation mechanisms. Core themes and theories and impact of white-
collar crimes shall be briefly touched upon. The discussion in this module will summarise by
discussing regulatory oversight.


• Greed
Human greed is limitless. Since, the offenders of white-collar crime are generally the
affluent and high-status individuals, it is difficult to attribute “need” as the cause behind
white-collar crime.

• Technology
With the advent and development of technology, it has become easier to access
information, spread misinformation and to find legal loopholes that are yet to catch up
the technological development. This technological advancement has opened up a lot of
opportunities for different kinds of crime to be perpetrated with the help of internet and
other technological advancements.

• Competition
With growing competition and constant updates, individuals need to give their best by
any means possible. The increase in unhealthy competition has resulted in people
resorting to illegal or immoral means to be ahead in the race.

• Work environment
Certain job profiles and work environment foster feasible conditions for white-collar
crime to be perpetrated. The low chances of being caught in certain job profiles
facilitate offenders to ignore or overlook the law and consequences of their actions.
Certain high profile or easy access professions may also lead to an increased chance of
a major fraud or scheme being executed without being detected for long. There are

some well-known examples of fraud of this kind, as shall be discussed in detail in the
fourth module.

• Lack of stringent laws
Lack of stringent laws or total absence of any legislative framework on an emerging
field is a very important cause of white-collar crime. Most of the major scams have
remain undetected for long due to absence of proper laws, rules, regulatory supervision
etc. which has nurtured the offenders and protected them from any stringent legal
sanctions even after being caught by law enforcement agencies.

• Access to information
Access to information is an important cause behind white-collar crime as it facilitates
inside information which helps the offenders devise cunning schemes to fool the
general public. Access to information may be gained during the course of one’s
employment or may be gained through unfair means.

• Lack of proper enforcement of legal and regulatory regime
Prosecution in most of the white-collar crime in India has highlighted the lack of proper
legal and regulatory regime in penalizing white-collar crime. This differs from other
kind of crime as almost all violent crimes have been adequately defined and penalized
under the Indian law. However, white-collar crime is yet to be dealt as strictly as other
kind of crime which leads to a structural problem of implementation of an already
inadequate legal and regulatory structure.

• Rationalization
Most of the offenders of white-collar crime end up rationalizing their actions and the
problems in identification of victims makes the rationalization process easier. The
offenders try to justify their wrongful actions by balancing it with some other
competing personal interest. This balancing becomes easier when the victim is
unknown and not immediately identifiable. It grants rationality to the actions of the


A crime is made punishable by the law and different sanctions are imposed on different crimes,
depending on the severity and nature of the crime. A crime is not synonymous to “immoral
actions” or other acts which the society considers to be wrong. The criminal law of any
jurisdiction may classify certain immoral acts as crimes and may penalize them. Society’s
perception of what is incorrect or wrong is sometimes manifested in the criminal law of the
country as well. For example, the society considers murder and rape to be wrong and immoral
actions, and the State, by law, has also classified these offences as deserving penal sanction.
However, this may not always be the case. For example, the society may consider adultery as
wrong or immoral, but the State may not recognize it as a crime6. This discussion highlights
that in most cases, societal perceptions of right and wrong are manifested in the criminal law,
but that may not be the case at all times.

Even though categorization of an offence in a modern democratic system is based upon the
legal understanding and theories of criminology. But, the common perceptions of the society
regarding crime, also play a major role in how the criminals are prosecuted. Public perception
of crimes as well as that of criminals impact the State’s criminal regulatory regime. When we
think of crime, we often think of violent crimes, such as assault or murder. Economic or
financial crimes do not invoke the same reactions from the public as most violent crimes do.

One of the most important (and informal) categorization of crimes is-
• White-collar crime; and
• Blue-collar crime.

These two types of crime are categorized on the basis of the class or profession of the offender,
among other things.

Blue-collar Crime
The term ‘blue-collar crime’ was coined in the 1920s. It was meant to include people involved
in manual jobs, often wearing ‘blue-collars’ or dark colored clothing. Such a classification was
based on an archaic understanding of criminal behavior in which the poor or less resourceful

6 The crime of adultery under the Indian Penal Code has been held to be unconstitutional by the Supreme Court
of India. Therefore, adultery is no longer a criminal offense in India. It is, however, a ground for seeking
matrimonial remedies under personal laws.

were believed to be more violent and criminally inclined than the rich and the affluent. Blue-
collar crime refers to violent acts, such as murder, rape, sexual assault, armed robbery etc.
However, it may not always be a violent crime as it may also include gambling, prostitution,

White-collar Crime
White-collar crime, on the other hand, consists of a range of criminal actions committed by
government and business professionals. Typically, white-collar criminals don’t rely on
violence or weapons. Such crimes include- embezzlement, frauds, election law violations etc.

Differences between blue-collar and white-collar crime
As opposed to blue-collar crimes, white-collar crimes have a unique ability to victimize several
people and cause significant monetary damage. Such crimes cause significant damage to
individuals as well as organization.

Another important distinction between blue-collar and white-collar crime is the issue of
jurisdiction. Blue-collar crimes usually fall under a single jurisdiction or under identifiable
jurisdiction, and hence, do not pose confusions regarding jurisdiction. White-collar crime, on
the other hand, commonly crosses state lines as it may involve various bank accounts, different
computer systems, monetary transfers etc., which may be located in different jurisdictions.
Some of the common white-collar crimes are- corporate fraud, money laundering, securities
and commodities fraud, embezzlement, etc.

Another important difference is regarding public perception of blue-collar and white-collar
crimes. Even media and societal attention focusses more on blue-collar crimes as compared to
organizational, white-collar crime. The public may have a disproportional and biased view due
to less media coverage, general perception of rarity of white-collar crime and misplaced
understanding of the nature and impact of white-collar crime. Blue-collar crime is generally
easier to understand as there is a clear perpetrator/s and victim/s of the crime. In white-collar
crime, the nature, extent, impact and identification of the victim is not so obvious.

It has been demonstrated that white-collar crime is more likely than street crime to-

• Involve a large number of victims

• Assume a national and/or international importance
• Involve organizations as victims
• Follow characteristics of a pattern
• Be committed over a period of time without detection
• Be committed in an organized set up7

It is important to classify crime as blue-collar and white-collar for theoretical and policy
reasons. It is important to identify different regulatory strategies suited for different kinds of
crime on their classification as blue-collar or white-collar as implementation of a uniform
approach may not lead to a desired result.


Edwin Sutherland, a renowned criminologist, first introduced the concept of white-collar crime
in the year 1939 during a presentation to the American Sociological Association. Almost a
decade later, Sutherland, in his book- White Collar Crime, defined the concept as “crime
committed by a person of respectability and high social status in the course of his occupation”
(Sutherland, 1949, p. 9).

Sutherland’s elaboration on white-collar crime was loosely based upon the “criminaloid
concept” which was first used by E A Ross in 1907 in Sin and Society. Before this introduction,
the upper class of the society were considered to be largely incapable of indulging in criminal
activity. Interestingly, when Sutherland published his book, several efforts were made by some
of the largest companies of America to get the book heavily censored. The term ‘white-collar’
was used to denote and emphasize upon the occupational status assigned to individuals. This
was one of the first attempts to highlight that criminal acts were committed by individuals from
all social and economic backgrounds. Sutherland eventually founded the Bloomington School
of criminology at the State University of Indiana.

Sutherland has emphasised upon the role of class, however, there is difference of opinion in
the academic field regarding this. Some believe that the status of the offender may matter less

7 Understanding White-Collar Crime. default/files/upm-binaries/43839_2.pdf.

than the actual harm done. It is also interesting to note that certain harmful activities of business
or professional groups are not subject to criminal law but to regulatory or administrative bodies
and may attract only penalties or sanctions. White-collar crime may also be defined as ‘an
abuse of a legitimate occupational role that is regulated by law’8.

Marshall Clinard, an American sociologist and criminologist, has defined white collar crime

“A violation of the law committed primarily by groups such as businessmen,
professional men, and politicians in connections with their occupations”.

Having discussed the definition of Sutherland and various other definitions, it is important to
discuss that Sutherland’s definition has been challenged by people who believe that the
conviction for criminal acts with specific characteristics, like securities fraud should be the
basis of defining white-collar crime and not the status of the accused. There has been
disagreement in academic discourse with respect to the definitions of white-collar crime and
on whether it should be offender-based or offence-based.

Sutherland has argued that popular notions of criminality attached to poverty, immigrant status,
broken homes, mental ailments etc. are inadequate to understand all kinds of criminality. He
was of the opinion that these reasons fail to account for illegal acts by powerful individuals in
course of their business or profession.

Many legal scholars and social scientists of a Yale Law School study on white-collar crim have
disagreed with the definition of Sutherland. Paul Tappan, in 1947, has argued that for the
purposes of criminology, a person who has been convicted in a criminal court is the only
reasonable subject. It is true that the definition of white-collar crime, as provided by Sutherland
may not be an all-inclusive definition, however, its essential focus on the abuse of power by
influential individuals in the course of their profession stands out as a very important public
policy issue that needs to be stringently regulated.

Some of the common basis of classification of a white-collar crime are-

8 Hazel Croall. Victims of White-Collar and Corporate Crime. crim_soc.pdf.

• Based on social harm
• Based on violations of criminal law
• Based on violations of civil law
• Based on violation of moral or ethical code
• Based on violations of regulatory code
• Based on violation of workplace ethics and professionalism
• Based on violation of trust
• Based as occupational crimes

Different schools of criminology and sociology differ in their approach of defining white-collar
crime. There is a conflict with respect to ideologies. Some scholars believe that the offender
needs to be separated from the offence in order to avoid a social bias in the perception and
prosecution of crime. Others believe that white-collar crime is a result of the positional
peculiarity of the offender, hence, classification on the basis of status of offender is important
to prevent white-collar crime.

Use of power, status and privilege are the central themes behind white-collar crime, and any
definitional approach which intends to overlook these factors will eventually lead to a
misplaced understanding of white-collar crime, which in turn, would affect formulation and
content of the public policy required to prevent such crimes.

Trivialization of the definition of white-collar crime happens due to the hidden nature of such
crimes and dearth of public awareness on the matter. The most consequential forms of
corporate crime are not correctly accounted for due to this definitional trivialization and lead
to inadequate regulatory regime which is not properly equipped to prevent such crimes from
occurring in the first place. A status-based definition of white-collar crime helps understand
the nature of such crimes and pinpoints the focus on organizational settings that may even
contribute in the commission of such crime. Important factors like corporate governance
structures, political influence, bureaucratic considerations etc. may get overlooked if the focus
is shifted away from the status-based definition of white collar crime. Denying the tie between
“respectability” and “social status” with the commission of these offenses essentially denies
the meaning of the term “white-collar crime” itself.

Preventing white-collar crime in a global setting presents grave challenges. With the rising ease
of doing international business, regulatory loopholes have become more prominent in the
context of cross-border crimes. International cooperation has largely focussed upon war crimes
and international organized crime. Not much attention has been paid to the regulation of white-
collar crime internationally.


The definition of white-collar crime is largely controversial. It substantially influences the
subjects of study and influence the general conclusions about the nature of white-collar crime.
Irrespective of different definitions, the offenders of white-collar crime differ from other
offenders in regard to their class, social standing, demographic characteristics and
psychological attributes. Individuals who hold managerial or influential positions in
organizations or businesses have plenty of opportunities and a low likelihood of being caught.
With respect to consequences of different kinds of crime, control mechanisms for white-collar
crime incline toward regulation and fostering compliance while other kinds of crime control
generally focus on punishment and deterrence.
Criminality by the upper class or the elite challenges certain criminology theories which
explain crime in terms of personal inadequacies or poverty etc.
White-collar crime requires a theoretical analysis for the law to be customized accordingly to
be the most effective.

Theory of Differential Association
Sutherland tried to explain the criminality in his theory of differential association. It is a
learning theory of deviance.
Sutherland says:

The hypothesis of differential association is that criminal behaviour is learned in
association with those who define such behaviour favourably and in isolation from
those who define it unfavourably, and that a person in an appropriate situation engages
in such criminal behaviour if, and only if, the weight of the favourable definitions
exceed the weight of the unfavourable definition.9


Sutherland believed that such crime is a natural product of conflicting values in the differing
economic and class structures. The theory puts emphasis on learned behavior and does not rely
upon personal characteristics or deficiencies as the root of crime.
This theory is generally criticized for failing to take into account individual differences.

General Strain Theory10
General Strain Theory (GST) is a recently developed theory to explain criminality and
delinquency. It differs from the control and learning theories as it focusses majorly on negative
treatment by others as breeding criminality. It is the only major theory which highlights the
role of negative emotions behind criminal actions. It is a refined version of the classic strain
theory and was developed by Agnew in 2006.

According to this theory, the experience of stress or strain is likely to generate emotions such
as frustration, anger, depression and despair. Such negative emotions are said to create
pressures for corrective action, with crime or criminal action being one possible response.

General Strain Theory argues that higher class individuals may also experience goal blockage
and may respond with crime, including white-collar crime. General strain theory resembles the
classic strain theory and helps understand the criminology behind white-collar crime.

There are three major types of strains suggested in this theory-
1. Inability of individuals to achieve their goals or goal blockage
2. Presentation of noxious or negatively valued stimuli
3. Loss of positively valued stimuli

One Theory Doesn’t Fit All
The most important theoretical implication of white-collar crime is that it presents a problem
almost exclusively sociological, or at least sociolegal, in nature. Regardless of whether such
deviation is “really” crime, it is a highly-significant social problem, reaching to the broadest,
but in a way most basic, of our culture patterns. It cannot be explained by somatotypes, infantile
regression, low intelligence, psychopathy, broken homes, or the host of other "deprivation"


hypotheses. In order to comprehend it at all, a fundamental knowledge of class structure,
values, roles and statuses, and the many other essentially social processes and concepts is


White-collar crime has a ripple effect on the society in general and the economy in particular.
The extent of victimization is seldom accurately evident and hence, in the name of a victimless
crime, it creates a larger impact on the society as compared to other crimes. The first major
effect is on the company. Consequences of such crime in the form of losses to the company
have the potential of directly and exponentially impacting the overall profitability of the
company. It also leads to tarnishing of the reputation of the company, the true impact of which
is difficult to quantify.

The second major victim is the customers. Whenever any company or business is involved in
malpractices or indulges in illegal activity, it creates an uncertainty in the minds of the

The third major impact is on the society in general. This is the most difficult to gauge due to
the extent and nature of victimization. Such crimes have a direct financial impact on the society
and the economy. When a company shuts down due to illegal activities or alleged criminality,
this leads to loss of jobs, dip in stock prices eroding the capital of shareholders and a general
loss of confidence in the economy. It also results in loss of public confidence in the financial
institutions of the country.


Defenders of Opportunity Theories argue that certain offenders may be highly skilled at
committing crimes, but in the absence of proper opportunity, the possibility of commission of
such crimes is quite low. Opportunities are the central theme in this theory wherein it is
believed that certain conditions make criminal activities attractive to a potential offender due
to less risk of detection or penalty.


Financial markets attract white-collar criminals due to the ample number of opportunities
available. Proper legislative framework to detect and curb crime are necessary to protect the
economic interests of the country.

If proper public attention is not attracted by employing media and other channels, special
interests will benefit from a lack of proper oversight by exploiting regulatory loopholes as has
happened in various economic scams that have plagued the economy of India.

Structural reform that imposes proper controls and punishes the breach of such controls
effectively is needed to address white-collar criminality. The problem doesn’t end simply at
making a robust legal regime as the same also has to be implemented in the correct spirit. For
financial elites, as regularly observed, punishment is diluted even in clear evidence of
criminality which imposes a heavy burden on the public in general.

Regulatory oversight is the first pillar in maintaining a free and open market economy and
protecting the interests of the public.


The discussion on white-collar crime has highlighted the importance of proper studies behind
understanding the criminality of white-collar criminals. The discussion also brings to attention
various causes and impact of white-collar crime. The need for understanding various concerns
in the academic discourse has also been highlighted in the context of conflicting definitions of
the crime. The course will focus on understanding different kinds of white-collar crime in the
Indian context. An analysis of the legal regime and the innovative nature of offences shall also
be discussed to highlight the need for detailed policy reforms and stricter implementation of
the existing regime.

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