White Collar Crime Essay

White collar crimes are defined as being either directly or indirectly committed, mainly financial in nature and non-violent. In fact, white collar crime has become more prevalent and its incidence has increased, and the majority of offenders are professionals who hold important positions in either commercial banks or government structures with key political roles. (Michelle Gallant, 2014). Over the years, there have been numerous debates about Wall Street and corporate boardrooms’ roles in white collar crimes that explicitly involve money laundering. However, a clear understanding based on the literature review by Croall (2001) indicates that the problem is a globalized challenge with a chain of operatives that cannot be controlled by independent institutions. Nevertheless, white collar crimes could encompass individuals as well as small factions, as well as established systems of cartels and corporate multinationals. In the US, both the federal and state governments have done a lot in the legislation segment, to tailor laws, rules, and regulations that can tame such crimes with ease, inside of the country and beyond.

Organized Crime

Criminal offenses, such as the white collar illegalities, when carried out and committed by or on behalf of established institutions whose primary objective is to operate outside of the dictates of the law is termed organized crime (Croall, 2001). As opposed to the understanding of racketeering in the confines of the law, organized crime could not expressly be certified as a form of white-collar crime. Nevertheless, because of the close interrelationship and inseparable criminal linkage between the two elements, organized crimes cannot prevail successfully without the incorporation of the white collar criminal tactics (Michelle Gallant, 2014). Consequently, tax evasion and money laundering are business related criminal acts which go hand in hand with organized crimes as well as the white collar criminal offenses.

Money Laundering

When financial and business profits of corruption and criminal acts are transformed into the supposedly legitimate property and assets, then, the process is defined as money laundering. Nevertheless, on a global scale, money laundering could mean and be understood differently as opposed to the national confines, because of the criminal mutations and interactions those who perpetrate the act employ (Buchanan, 2004). As such, financial efforts and processes of economic crimes that could facilitate the evasion of international sanctions and finance terrorism entail money laundering. For instance, in the regulatory and legal systems that involve sensitive and critical financial procedures like digital currencies, securities, traditional currency, and credit cards would easily facilitate money laundering. Indeed, the laws and regulations put in place to obstruct and tame money laundering often dwell on two critical functions. One is the destination of the money which most likely is meant for terrorist financing, and two is the source of wealth which helps conflate money laundering. In simpler terms, therefore, money laundering entails all intentional and inadvertent means and financial operations that seek to obscure and obfuscate the source and destination of money, hence impairing the transparent and successful tracking of the movement of such monies (Buchanan, 2004). Nevertheless, in the US laws, money laundering could extend to the level of confiscating the legally available funds in the country, whose origin is considered illegal in America, though termed as legal in the state of origin.

Discussion

Money Laundering and the Various Applicable Laws

The laws and statutes established to contain money laundering are centrally founded on the objective that; the transfer of funds derived from all criminal agenda, including terrorist activities, organized crimes, drug trafficking and transactions as well as white-collar offenses are contained. Such monies end up in supposedly legitimate destinations and expenditure; channels that bolster the falsified understanding that the origin of such funds is legitimate (Michelle Gallant, 2014).

Many rules and regulations have been enacted both nationally and internationally to tame money laundering. The statutes seek to establish barriers, and further derive punishment for those found culpable to the criminal acts of this caliber. Most of these laws were primarily put in place to monitor and deter the actions of the Mafia, an organized group of criminals which functioned proficiently in Sicily and Italy (Compin, 2008). Nevertheless, following the mutation of criminal offenses and the overflow to other parts of the world, the distinct nature of such diverse demands, including terrorism, drug trafficking, money laundering, and business fraud, policies and statutes guarding against the prevalence of the same became a real demand for the legal systems.

In the US, the laws meant for containing money laundering acts began in the early 1970s. The Bank Secrecy Act was founded to ensure that all critical information about transactions is forwarded to the U.S. Department of Treasury by all financial institutions. Financial institutions were under obligation to deliver primary details of all operations more than $5,000 (Compin, 2008). Later on, after five years, the figure was lifted to a minimum threshold of $10,000. Furthermore, the professionals in the banking institutions and all government organizations that dealt either directly or indirectly with the finance segments were under obligation to report all transfers of funds that looked suspicious, or even those transactions in which the people involved appeared to fear the alerts from the Bank Secrecy Act officers (He, 2010).

In 1986, however, money laundering and all processes that seemed to perpetuate this financial crime were on escalating, and necessary efforts to deter the same were urgently needed. The perpetrators would be brought to the law under the newly passed Money Laundering Control Act of 1986. Individuals and groups were compelled to quell all transactions that entailed suspicious money transfers and proceeds of related crimes (He, 2010). Consequently, the phrase financial transaction acquired a broader definition, whereby even the transfer of money from one individual to another in a private operation was termed as such. Later on, in 1992, the money laundering ACT of 1886 would gain reinforcement from the Annunzio-Wylie Anti-Money Laundering Act of 1992 (Stokes, 2012). Nevertheless, because of the complicated nature of the organized crimes and the globalization of the challenges of money laundering, the authorities responsible for containing the menace had difficulties meeting the objectives of their work. Consequently, in the quest to countering the problems, new Acts were drawn into place to offer a more sophisticated barrier for the criminals. For instance, the 1998 Money Laundering and Financial Crimes Strategy Act came in place barely four years after the establishment of the 1994 Money Laundering Suppression Act (Stokes, 2012).

The tragic incident of September 11, a terrorist attack that claimed tens of hundreds of lives in the US, created need for the 2001 USA Patriot Act to be passed. Among other legal restrictions, the constitutional statute was meant to trace and monitor financial transactions, bring to book, and tame money laundering acts inside of and outside of the American borders. For instance, the part II of the Act was essentially centered on International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001 whose focus was limited to international money laundering schemes that facilitated terrorism and other organized criminal acts of the white collar nature (Araujo, 2010). The Patriot Act was an improvement upon all other ACTs passed before, because unlike the initial understanding that individual criminals were to be tracked down and brought to justice, The Patriot Act opened a new window of judgment, hence expanding the atmosphere in which money laundering would be easily tamed. For example, all financial institutions inside of or outside of the US whose transactions directly or indirectly affect or is affiliated to the US must certify the credentials of their customers, to avoid blinded purchases. Accordingly, financial firms that partnered with criminals were under watch for as far as the Patriot Act was concerned (Araujo, 2010). Finally, the law made it a requirement that banks and other commercial entities train their staff about the new updates, and nature their internal audits to comply with established standards.

Moreover, the Patriot Act makes it a necessity that all clients are critically scrutinized to obtain essential data about them. The gathered information would then be used by the respective financial bodies to contact forensic audits of criminal activities. For instance, the names of individuals, their places of origin and destined destinations could be rated against blacklisted names of wanted terrorists and drug barons (Schneider & Windischbauer, 2008). All these details were are summed up in need to knowing one’s customers and hence the forthcoming requirements. All the statues aforementioned hitherto, are useful in strategically striking loopholes in the organized criminal scandals, money laundering, and white collar crimes, to lay platform for the Office of the Comptroller of Currency, the Federal Reserve, as well as the reference of such matters to criminal prosecution (Schneider & Windischbauer, 2008).

Enforcement Groups For Anti Money Laundering

Money laundering needs a well-established mechanism of combating all loopholes linked to organized crimes of the ilk, and the international standards on this front are set by the Financial Action Task Force (FATF) (Alldridge, 2008). The statutes and regulation that make it impossible to practice money laundering are established and enforced by the FATF, a body founded in 1989 by member countries and affiliated financial organizations worldwide. Money is the facilitating tool for all other criminal activities, including terrorism and drug trafficking, hence making it an organized crime among the many that thrive under the white collar crimes. Subsequently, the rules and regulations by the FATF are established to counter money laundering and all other related criminal activities that pose a risk at the international financial stability and affiliated commercial systems (Alldridge, 2008).

In 2012 for instance, the 35 member states of the FATF and the respective organizations came up with statutes that are in conjunction with the policies poised for controlling the organized crimes and white collar crimes, to limit and eliminate money laundering. Such efforts were aimed at managing the spread of terrorist activities, weapons of mass destruction, and drug trafficking (Alldridge, 2008). Whereas the FATF seeks ground to come up with new and more efficient statutes, the member states are under obligation to ensure the functioning of the rules at the national level. Because of the diversity in culture, policy, leadership, and technology; the FATF offers best practice and guidance scheme for the member states, who then tailor the principles of law into functioning tools that properly monitor, halt, and deter money laundering. Many efforts have been made to enforce the laws put in place to counter money laundering. For instance, in 2000, the FATF resorted to a name and shame approach, whereby countries that had zero participation in the process and did nothing to expose money laundering crimes were named and condemned publicly (Alexander, 2005).

The International Monitory Fund (IMF), is another strong partner in the fight against money laundering at a global level. Since 2000, the IMF has been steadily advancing in an objective, and hence gaining more ground to combat money laundering, considering that to date the body is supported by 189 member states globally (Croall, 2001). The 2001 September 11 terror attack compelled the IMF to become an active partner in interfering with the terrorist activities, by conquering all means of money laundering and hence terrorist financing (Croall, 2001). Beyond common measures though, the IMF began the assessment of member countries on the compliance against money laundering activities, and the efforts have since remained to be core pillars in taming terrorism, organized crimes, as well as all other forms of white collar crimes.

Special attention is paid by IMF to all activities that create room for money laundering in different parts of the world. Persons who launder money in most cases target third world countries, and those with weak institutional regulations. By capitalizing on such weaknesses, those who thrive well on white-collar crimes, organized crimes, as well as money laundering proliferate to unimaginable levels (Leeper Piquero, Carmichael, & Piquero, 2008). Indeed, the IMF has since recognized such weaknesses and hence put in place laws and policies to help tame the advances. For instance, the challenges faced by individual member states because of one or several weaknesses at the national level are shared to other partners, and together better and robust mechanisms are developed to counter the criminal schemes linked to the same. By offering an international forum for the affected countries, The IMF is thus capable of creating solutions that could be applied uniformly, by the existing laws for each member state, hence efficiently containing money laundering. Moreover, the IMF helps in the evaluation of member states when it comes to the compliance of the laid down laws and regulations to deter money laundering (Leeper Piquero et al., 2008). Therefore, all efforts by IMF are focused on making every country develop laws in line with the FATF principles, identify and strengthen their respective weaknesses and hence establish better grounds for controlling organized crime and money laundering among other forms of white collar crimes.

Nevertheless, although the comprehensive descriptions of the criminal offenses surrounding money laundering and organized crimes, the Bank Secrecy Act and the Patriot Act are limited in operation, preferably, not to the extent of the implicit nature of the perpetrators of the law in this scheme (Klenowski, Copes, & Mullins, 2011). As such, not all persons or business organizations that deal with and transact money are under the direct regulation of these statutes. For instance, according to the definition of the Bank Secrecy Act of 1970, credit card institutions, banks, broker-dealers, and insurance companies were defined as financial institutions. However, the organizations and individuals covered by such economic bodies were defined differently under this statute. By and large, it is critical to note that for both the Patriot Act of 2001 and the Bank Secrecy Act of 1970, the transfer agents and the investment advisers are not included as a party to the transactions made (Vadera & Aguilera, 2015). On the other hand, the financial organizations, business entities, or investment partners do overlap on either side of these laws. However, explicitly put, all other companies and such financial agencies registered under the Investment Company Act of 1940 are party to and limited by these laws.

Conclusion

The laws and regulations put in place to combat money laundering primarily focus on activities that entail trade of illegal commodities, market manipulations, tax evasion, as well as the corruption of public funds, plus the efforts aimed at concealing such illegal operations. Money earned through criminal acts, organized crimes, and white collar offenses is termed unauthorized by law, and hence the launder performs a spree of legal transactions to make such funds appear legitimate. Once such operations are performed and there is clear record to confirm the money was legally obtained, the launders then would derive a bold background to do other regular and unquestionable transactions under the law without suspicion. Money laundering is a complex operation, which needs well-established systems to be successful. For example, legitimate financial institutions and companies owned by criminals hook up and collaborate with launders to perform questionable transactions that facilitate their objectives. On the contrary, huge sums of money could be distributed among partners in criminal activity, who camouflage as tourists. When the purported tourists enter foreign countries, they sum up the money and invest into real-time assets, which they would later auction to supposedly gain a legitimate amount of huge liquid capital, to remit it back to the home country. Therefore, the financial institutions are under obligation to monitor, manage, and trace the details and transactions of their clients. Such traps would typically go without effect, considering that some senior managers in such institutions would occasionally collude with criminals to launder money. To make the processes achieve an international aim, the FATF was founded in 1989 and hence was responsible for putting in place the global standards that help tame money laundering. Consequently, the statutes are aimed at creating financial advantages of credible and legitimate financial markets. Money is a limited resource, whose illegal accumulation significantly affects the flow of capital into profitable industrial operations. Moreover, the purchasing power of a country would be jeopardized by printing more money because of laundering. Consequently, the rule of law must be given an environment to operate, to avoid the erosion of financial institutions and the economy, as is perpetuated by the organized criminals and money launders.

References

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