Financial crimes
Encyclopedia
Financial crimes are crime
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
), bank fraud
, payment (point of sale
) fraud, health care fraud
); theft
; scams or confidence tricks
; tax evasion
; bribery
; embezzlement
; identity theft
; money laundering
; and forgery
and counterfeit
ing, including the production of Counterfeit money
and consumer goods
.
Financial crimes may involve additional criminal acts, such as computer crime
, elder abuse
, burglary
, armed robbery, and even violent crime
such as robbery
or murder
. Financial crimes may be carried out by individuals, corporation
s, or by organized crime
groups. Victims may include individuals, corporations, governments, and entire economies.
raise significant issues with regard to prevention, detection and prosecution. Sophisticated techniques used to launder money and finance terrorism add to the complexity of these issues. Such sophisticated techniques may involve different types of financial institutions; multiple financial transactions; the use of intermediaries, such as financial advisers, accountants, shell corporations and other service providers; transfers to, through, and from different countries; and the use of different financial instruments and other kinds of value-storing assets. Money laundering is, however, a fundamentally simple concept. It is the process by which proceeds from a criminal activity are disguised to conceal their
true origin. Basically, money laundering involves the proceeds of criminally derived property rather than the property itself.
Money laundering can be defined in a number of ways, most countries subscribe to the definition adopted by the United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances (1988) (Vienna Convention) and the United Nations Convention Against Transnational Organized Crime (2000) (Palermo Convention):
i. The conversion or transfer of property, knowing that such property is derived
from any (drug trafficking) offense or offenses or from an act of participation in
such offense or offenses, for the purpose of concealing or disguising the illicit
origin of the property or of assisting any person who is involved in the
commission of such an offense or offenses to evade the legal consequences of
his actions;
ii. The concealment or disguise of the true nature, source, location, disposition,
movement, rights with respect to, or ownership of property, knowing that such
property is derived from an offense or offenses or from an act of participation in
such an offense or offenses, and;
iii. The acquisition, possession or use of property, knowing at the time of receipt that such property was derived from an offense or offenses or from an act of
Participation in such offense or offenses.
The Financial Action Task Force on Money Laundering (FATF), which is recognized as the international standard setter for Anti-money Laundering (AML) efforts, defines the term “money laundering” briefly as “the processing of criminal proceeds to disguise their illegal origin” in order to “legitimize” the ill-gotten gains of crime.
Crime
Crime is the breach of rules or laws for which some governing authority can ultimately prescribe a conviction...
against property
Property
Property is any physical or intangible entity that is owned by a person or jointly by a group of people or a legal entity like a corporation...
, involving the unlawful conversion
Conversion
-Economy and Finance:* Currency conversion or exchange rate* Conversion , one of the options strategies* Economic conversion-Law:* Conversion , conversion by taking a chattel out of the possession of another with the intent of exercising a permanent or temporary dominion over it, despite the...
of the ownership of property
Property
Property is any physical or intangible entity that is owned by a person or jointly by a group of people or a legal entity like a corporation...
(belonging to one person) to one's own personal use and benefit. Financial crimes may involve fraud
Fraud
In criminal law, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation...
(cheque fraud, credit card fraud
Credit card fraud
Credit card fraud is a wide-ranging term for theft and fraud committed using a credit card or any similar payment mechanism as a fraudulent source of funds in a transaction. The purpose may be to obtain goods without paying, or to obtain unauthorized funds from an account. Credit card fraud is also...
, mortgage fraud
Mortgage fraud
Mortgage fraud is crime in which the intent is to materially misrepresent or omit information on a mortgage loan application to obtain a loan or to obtain a larger loan than would have been obtained had the lender or borrower known the truth....
, medical fraud, corporate fraud, securities fraud
Securities fraud
Securities fraud, also known as stock fraud and investment fraud, is a practice that induces investors to make purchase or sale decisions on the basis of false information, frequently resulting in losses, in violation of the securities laws....
(including insider trading
Insider trading
Insider trading is the trading of a corporation's stock or other securities by individuals with potential access to non-public information about the company...
), bank fraud
Bank fraud
Bank fraud is the use of fraudulent means to obtain money, assets, or other property owned or held by a financial institution, or to obtain money from depositors by fraudulently representing to be a bank or financial institution. In many instances, bank fraud is a criminal offense...
, payment (point of sale
Point of sale
Point of sale or checkout is the location where a transaction occurs...
) fraud, health care fraud
Health care fraud
Health Care Fraud includes health insurance fraud, drug fraud, and medical fraud.Health insurance fraud occurs when a company or an individual defrauds an insurer or government health care program, such as Medicare or equivalent State programs. The manner in which this is done varies, and persons...
); theft
Theft
In common usage, theft is the illegal taking of another person's property without that person's permission or consent. The word is also used as an informal shorthand term for some crimes against property, such as burglary, embezzlement, larceny, looting, robbery, shoplifting and fraud...
; scams or confidence tricks
Confidence trick
A confidence trick is an attempt to defraud a person or group by gaining their confidence. A confidence artist is an individual working alone or in concert with others who exploits characteristics of the human psyche such as dishonesty and honesty, vanity, compassion, credulity, irresponsibility,...
; tax evasion
Tax avoidance and tax evasion
Tax noncompliance describes a range of activities that are unfavorable to a state's tax system. These include tax avoidance, which refers to reducing taxes by legal means, and tax evasion which refers to the criminal non-payment of tax liabilities....
; bribery
Bribery
Bribery, a form of corruption, is an act implying money or gift giving that alters the behavior of the recipient. Bribery constitutes a crime and is defined by Black's Law Dictionary as the offering, giving, receiving, or soliciting of any item of value to influence the actions of an official or...
; embezzlement
Embezzlement
Embezzlement is the act of dishonestly appropriating or secreting assets by one or more individuals to whom such assets have been entrusted....
; identity theft
Identity theft
Identity theft is a form of stealing another person's identity in which someone pretends to be someone else by assuming that person's identity, typically in order to access resources or obtain credit and other benefits in that person's name...
; money laundering
Money laundering
Money laundering is the process of disguising illegal sources of money so that it looks like it came from legal sources. The methods by which money may be laundered are varied and can range in sophistication. Many regulatory and governmental authorities quote estimates each year for the amount...
; and forgery
Forgery
Forgery is the process of making, adapting, or imitating objects, statistics, or documents with the intent to deceive. Copies, studio replicas, and reproductions are not considered forgeries, though they may later become forgeries through knowing and willful misrepresentations. Forging money or...
and counterfeit
Counterfeit
To counterfeit means to illegally imitate something. Counterfeit products are often produced with the intent to take advantage of the superior value of the imitated product...
ing, including the production of Counterfeit money
Counterfeit money
Counterfeit money is currency that is produced without the legal sanction of the state or government to resemble some official form of currency closely enough that it may be confused for genuine currency. Producing or using counterfeit money is a form of fraud or forgery. Counterfeiting is probably...
and consumer goods
Counterfeit consumer goods
Counterfeit consumer goods, commonly called knock-offs, are counterfeit or imitation products offered for sale. The spread of counterfeit goods has become global in recent years and the range of goods subject to infringement has increased significantly...
.
Financial crimes may involve additional criminal acts, such as computer crime
Computer crime
Computer crime, or cybercrime, refers to any crime that involves a computer and a network. The computer may have been used in the commission of a crime, or it may be the target. Netcrime refers to criminal exploitation of the Internet. Such crimes may threaten a nation’s security and financial health...
, elder abuse
Elder abuse
Elder abuse is a general term used to describe certain types of harm to older adults. Other terms commonly used include: "elder mistreatment," "senior abuse," "abuse in later life," "abuse of older adults," "abuse of older women," and "abuse of older men."...
, burglary
Burglary
Burglary is a crime, the essence of which is illicit entry into a building for the purposes of committing an offense. Usually that offense will be theft, but most jurisdictions specify others which fall within the ambit of burglary...
, armed robbery, and even violent crime
Violent crime
A violent crime or crime of violence is a crime in which the offender uses or threatens to use violent force upon the victim. This entails both crimes in which the violent act is the objective, such as murder, as well as crimes in which violence is the means to an end, such as robbery. Violent...
such as robbery
Robbery
Robbery is the crime of taking or attempting to take something of value by force or threat of force or by putting the victim in fear. At common law, robbery is defined as taking the property of another, with the intent to permanently deprive the person of that property, by means of force or fear....
or murder
Murder
Murder is the unlawful killing, with malice aforethought, of another human being, and generally this state of mind distinguishes murder from other forms of unlawful homicide...
. Financial crimes may be carried out by individuals, corporation
Corporation
A corporation is created under the laws of a state as a separate legal entity that has privileges and liabilities that are distinct from those of its members. There are many different forms of corporations, most of which are used to conduct business. Early corporations were established by charter...
s, or by organized crime
Organized crime
Organized crime or criminal organizations are transnational, national, or local groupings of highly centralized enterprises run by criminals for the purpose of engaging in illegal activity, most commonly for monetary profit. Some criminal organizations, such as terrorist organizations, are...
groups. Victims may include individuals, corporations, governments, and entire economies.
Money Laundering
For most countries, money laundering and terrorist financingTerrorist Financing
Terrorist financing came into limelight after the events of terrorism on 9/11. The US passed the USA PATRIOT Act to, among other reasons, attempt thwarting the financing of terrorism and anti-money laundering making sure these were given some sort of adequate focus by US financial institutions...
raise significant issues with regard to prevention, detection and prosecution. Sophisticated techniques used to launder money and finance terrorism add to the complexity of these issues. Such sophisticated techniques may involve different types of financial institutions; multiple financial transactions; the use of intermediaries, such as financial advisers, accountants, shell corporations and other service providers; transfers to, through, and from different countries; and the use of different financial instruments and other kinds of value-storing assets. Money laundering is, however, a fundamentally simple concept. It is the process by which proceeds from a criminal activity are disguised to conceal their
true origin. Basically, money laundering involves the proceeds of criminally derived property rather than the property itself.
Money laundering can be defined in a number of ways, most countries subscribe to the definition adopted by the United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances (1988) (Vienna Convention) and the United Nations Convention Against Transnational Organized Crime (2000) (Palermo Convention):
i. The conversion or transfer of property, knowing that such property is derived
from any (drug trafficking) offense or offenses or from an act of participation in
such offense or offenses, for the purpose of concealing or disguising the illicit
origin of the property or of assisting any person who is involved in the
commission of such an offense or offenses to evade the legal consequences of
his actions;
ii. The concealment or disguise of the true nature, source, location, disposition,
movement, rights with respect to, or ownership of property, knowing that such
property is derived from an offense or offenses or from an act of participation in
such an offense or offenses, and;
iii. The acquisition, possession or use of property, knowing at the time of receipt that such property was derived from an offense or offenses or from an act of
Participation in such offense or offenses.
The Financial Action Task Force on Money Laundering (FATF), which is recognized as the international standard setter for Anti-money Laundering (AML) efforts, defines the term “money laundering” briefly as “the processing of criminal proceeds to disguise their illegal origin” in order to “legitimize” the ill-gotten gains of crime.
See also
- Black market
- Credit card fraudCredit card fraudCredit card fraud is a wide-ranging term for theft and fraud committed using a credit card or any similar payment mechanism as a fraudulent source of funds in a transaction. The purpose may be to obtain goods without paying, or to obtain unauthorized funds from an account. Credit card fraud is also...
- Financial Crimes Enforcement NetworkFinancial Crimes Enforcement NetworkThe Financial Crimes Enforcement Network is a bureau of the United States Department of the Treasury that collects and analyzes information about financial transactions in order to combat money laundering, terrorist financiers, and other financial crimes.As reflected in its name, the Financial...
- Financing of terrorism
- FraudFraudIn criminal law, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation...
- GreenmailGreenmailGreenmail or greenmailing is the practice of purchasing enough shares in a firm to threaten a takeover and thereby forcing the target firm to buy those shares back at a premium in order to suspend the takeover....
- Grey marketGrey marketA grey market or gray market also known as parallel market is the trade of a commodity through distribution channels which, while legal, are unofficial, unauthorized, or unintended by the original manufacturer...
- MafiaMafiaThe Mafia is a criminal syndicate that emerged in the mid-nineteenth century in Sicily, Italy. It is a loose association of criminal groups that share a common organizational structure and code of conduct, and whose common enterprise is protection racketeering...
- Money launderingMoney launderingMoney laundering is the process of disguising illegal sources of money so that it looks like it came from legal sources. The methods by which money may be laundered are varied and can range in sophistication. Many regulatory and governmental authorities quote estimates each year for the amount...
- Organized crimeOrganized crimeOrganized crime or criminal organizations are transnational, national, or local groupings of highly centralized enterprises run by criminals for the purpose of engaging in illegal activity, most commonly for monetary profit. Some criminal organizations, such as terrorist organizations, are...
- Securities fraudSecurities fraudSecurities fraud, also known as stock fraud and investment fraud, is a practice that induces investors to make purchase or sale decisions on the basis of false information, frequently resulting in losses, in violation of the securities laws....
- Skimming (casinos)Skimming (casinos)"In May of 1963...the FBI turned over to the Justice Department a two-volume document called "The Skimming Report," which detailed the illegal siphoning off of gambling profits by Las Vegas casinos to avoid taxes." The report documented how pre-tax profits from casinos were being routed to various...
- Skimming (fraud)Skimming (fraud)A form of white-collar crime, skimming is a slang termhttp://dictionary.reference.com/browse/skim that refers to taking cash "off the top" of the daily receipts of a business and officially reporting a lower total.- Examples :* A skimming crime may be simple tax evasion: the owner of a business...
- Structuring (smurfing)
- Tax havenTax havenA tax haven is a state or a country or territory where certain taxes are levied at a low rate or not at all while offering due process, good governance and a low corruption rate....
- White-collar crimeWhite-collar crimeWithin the field of criminology, white-collar crime has been defined by Edwin Sutherland as "a crime committed by a person of respectability and high social status in the course of his occupation" . Sutherland was a proponent of Symbolic Interactionism, and believed that criminal behavior was...