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FINANCIAL CRIMES IN INDIA

Author: Vanshika Srivastava, II year of B.A., LL.B. from Lloyd Law College


INTRODUCTION

The term financial crime is frequently used but has no internationally accepted definition. Until the latter part of the 20th century, it had a limited scope and was understood to include corruption, bribery, fraud and money laundering (ML), the proceeds of drug trafficking and other serious crimes. The UK’s Financial Services and Markets Act 2000 (FSMA 2000), Section 6(3) broadly defines the term to include ‘any offence involving fraud or dishonesty; misconduct in or misuse of information relating to, a financial market; or handling the proceeds of crime’. Financial crime, therefore, covers a wide range of offences including insider trading, money laundering and also terrorist financing.


The world went through varied phases of transformation when the economic Revolution within the eighteenth century. Technology has created our lives easier since its invention however who’s to mention if humans run the globe or the technology? currently, we tend to one more transformation, forced to depend upon technology quote ever. UN agency would have thought of complete deprivation of human intimacy and dependableness on video imply personal or public interaction of any sort?


The ease of doing business is typically followed by the benefit of committing against the law. Everything comes at a value they assert; however, the question is what value are you willing to pay? There's a reason that Economic crimes are thought-about a lot of complicated and distinct criminal development. The Supreme Court has created a very important distinction between economic crimes and alternative crimes, P. Chidambaram vs board of directors of social control, (2019) nine SCC 5.


What Are Financial Crimes?

Economic Crimes called monetary crimes to involve crimes committed through deceit and square measure sometimes actuated by gain. It usually involves the unlawful conversion of the possession of the property to one’s own personal use. What separates them from common thieving or theft is that the abuse of a foothold of trust. Financial crime will be committed by An institution (public/private) just like the banks through non-payment, hiding, insurance fraud, market manipulation, etc. An individual (including public officials) through graft, larceny, fraud, forgery, etc.


TYPES OF FINANCIAL CRIMES

With each second, the world economy gets a lot more advanced and also the scope of economic crimes will increase with it. This section offers a summary of a number of the types/forms of economic crimes and their relevant legislation in Bharat.


FRAUD

‘Fraus Omnia Vitiate’ – Fraud vitiates everything.

Fraud within the broadest sense is an intentional deception created for private gain or to wreck another person/ entity. Fraud is really motivated by greed. Moreover, opportunities to commit such a deceitful act could arise thanks to weak management surrounding a company. A corporate fraud happens once an organization or an entity deliberately changes and conceals sensitive data. corporations adopt varied modus-operandi to commit such company frauds, which can embody information within the prospectus, manipulation of accounting records, debt concealment, etc.


RELEVANT PROVISIONS

The main statute governing criminal offences in Bharat is that the Indian legal code, 1860 and also the connected offences regarding fraud area unit dishonest misappropriation of property (S.403), criminal breach of trust (S.405), forgery (S.463), falsification of accounts (S.477A) and cheating (S.415). (The Indian legal code, 1860) Punishment for fraud regarding affairs of an organization or anybody company is outlined beneath Section 447 of the businesses Act as “Without prejudice to any liability together with compensation of any debt beneath this Act or the other law for the nowadays operative, a person United

Nations agency is found to be guilty of fraud involving a quantity of a minimum of 10 hundred thousand rupees or one percent” furthermore, Serious Fraud Investigation workplace (SFIO) has been come upon by the Ministry of Company Affairs (MCA) and has the facility to notice, investigate and prosecute clerical crimes and frauds with multi-disciplinary ramifications or involve public interest.


BRIBERY AND CORRUPTION

Corruption has seeped into each establishment of Bharat, there's no denying it. A worry that the system is thus corrupt that it's nearly not possible to stay honest within the face of it. Bharat is ‘Most Corrupt Country in Asia-Pacific Region’, in keeping with a recent study by Transparency International, a Berlin-based organization operating against corruption. Seven out of ten folks in Bharat, the study expressed, had to pay a bribe to access public services.


RECENT INITIATIVES

Fugitive Economic Offenders Act, 2018

This act seeks to confiscate the properties of economic offenders. The United Nations agency has left the country to avoid facing action at law or refuse to come back to the country to face prosecution. The Act permits for someone to be declared as a fugitive economic wrongdoer (FEO) if:


(i) Associate in Nursing warrant has been issued against him for any such as offences wherever the worth concerned is over Rs a hundred large integer, and


(ii) He has left the country and refuses to come back to face prosecution.

To declare someone, Associate in Nursing FEO, Associate in Nursing application ought to be filed in a very Special Court (designated underneath the hindrance of Money-Laundering Act, 2002) containing details of the properties to be condemned, and any data regarding the person’s whereabouts. The Special Court would require the person to look at such a place a minimum of six weeks from the difficulty of notice. (PRS INDIA).


CONCLUDING REMARKS: REFORMS AND THE ROAD AHEAD

The 1992 Republic of Indian stock exchange scam that casked India and directly highlighted the loopholes within the banking sector that benefited the corrupt stockholders and brought the collapse of the Indian stock exchange is one among the various lessons in history that we must always keep revisiting. It demanded basic restructuring and preventive reforms within the economic sector (Harshad S. Mehta &Ors vs The State Of geographical area, 2001). Presently we've got the legislation, what we tend to lack is the proactiveness of the money sector and therefore the implementation of those laws. Our judiciary is burdened with thousands of cases and therefore the delivery of justice is quite slow therefore folks have lost religion within the legal mechanism. An alternative is often Internal Investigation, it permits the corporate to properly assess the allegations and resolve the fact in the course of ending a rhetorical investigation into the affairs of the corporate.


Forensic Accounting could be a new and forthcoming field that may be explained because of the fruits of inquiring and accounting skills. It aims to cross-checks the assorted money records of a business to seek out an associate indication of fraud being committed and conjointly provides an in-depth analysis of the money books that might be bestowed within the court of law as proof


The evolution of technology is often accustomed to curb money crimes and promote safety infrastructure. Computer science (AI), Machine Learning (ML), and knowledge analytics (DA) are often accustomed to distinguish deceitful transactions from real transactions.


The Money Action Task Force (FATF) could be a world hiding and terrorist funding watchdog that sets international standards to stop misappropriated activities within the economic and money channels of a rustic and its inter-connected linkages across the globe. The same was reached to review India’s anti-money washing and terrorist funding regime this year as a part of a daily review cycle once ten years, however with a deadly disease on everyone’s mind that has been deferred. One will solely hope that the Republic of India takes into consideration the mandatory recommendations and moves towards a strong financial set-up. (Technical Report on Market Integrity – problems and standing, 2002)