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Finance Crime  

Arjan Reurink

Finance crime, that is, white-collar crime that occurs in the markets for financial goods and services, appears to be pervasive in 21st-century capitalism. Since the outbreak of the global financial crisis of 2007–2008, virtually all established financial institutions have been implicated in finance crime scandals, ranging from the mis-selling of financial products to money laundering and from insider dealing to the rigging of financial benchmarks. The financial stakes involved in such scandals are often significant, and at times have the potential to destabilize entire economies. This makes the phenomenon of finance crime a highly relevant topic for white-collar crime researchers. A major challenge, however, for those studying the phenomenon of finance crime is to engage with the complex mechanics of finance crime schemes. These often involve esoteric financial instruments and are embedded in arcane market practices, making them seem impenetrable for those unfamiliar with the intricacies of financial market practices. A helpful way to make the empirical universe of finance crimes intelligible is to construct a typology. This can be meaningfully done by distinguishing finance crimes by the different rationales that underlie the laws and regulations they violate. Doing so renders five main types of finance crime. These are (i) financial fraud, (ii) misuse of informational advantages, (iii) financial mis-selling, (iv) market price and benchmark manipulation, and (v) the facilitation of illicit financial flows. White-collar crime scholars have taken various theoretical and analytical approaches to the study of finance crime. Some scholars have studied finance crimes in the light of their macro-institutional contexts. Such approaches are based on the premise that actors find meaning—motivations and rationalizations—and opportunities for their actions in the cultural and institutional environments in which they are situated and that such environments can be criminogenic in the sense that they structurally facilitate or even promote illegal behaviors. Others have studied the organizational dimensions of finance crime, looking at both the social networks through which finance crimes are perpetrated as well as the ways in which these networks are embedded in broader organizational and industry structures. Still others have studied the costs, consequences, and victims of finance crimes. Finally, some white-collar crime scholars have studied the ways in which societies create legal regimes that prohibit certain financial market practices as well as how these prohibitions are subsequently enforced by regulatory agencies, public prosecutors, and the courts.


White-Collar Crimes Beyond the Nation-State  

Nicholas Lord, Yongyu Zeng, and Aleksandra Jordanoska

Historically, white-collar crime scholarship, including and since the seminal work of Sutherland, has tended to concentrate empirical, conceptual, and theoretical focus on manifestations of associated crimes and deviance, their dynamics and generative conditions, within individual nation-states. While white-collar crime scholarship itself has expanded across the globe, this predilection for analyses of local and/or national-level cases and the nature, extent, and scope of these white-collar crimes has largely remained. Notwithstanding, it is not entirely uncommon for white-collar crime scholars to make reference to the international, multinational, transnational, or global aspects of the crimes they study, even if these are predominantly national in nature, but the corresponding features and components of these “beyond-national” dynamics have not been comprehensively unpacked or conceptualized. Similarly, conceptualizing and interrogating the dynamics of white-collar crimes that go beyond national boundaries as part of their organization and nature, while recognized as significant, is often not a core analytical concern. Understanding the varying characteristics and features, as well as the differing configurations, interrelations, and organizational dynamics of those white-collar crimes that in some way transcend jurisdictional boundaries, is significant for white-collar crime theory and research. Examining these issues in further detail and thinking through the implications of the beyond-national aspects of white-collar crimes is a useful framework for interrogating white-collar crimes and understanding the necessary and conditional relationships of the white-collar crime commission process that overlay onto common patterns of routine business activities. There are notable examples from the academic literature but also from real cases of white-collar crime that demonstrate how white-collar and corporate offenders have organized their criminal activities across jurisdictional boundaries, how they have externalized the risks associated with their crimes, how they have exported their crimes to take place in other jurisdictions, and/or how they have utilized cross-jurisdictional structures and systems, including digital spaces and infrastructures, to facilitate their criminal activities and associated concealment, conversion, and control of illicit finances. Such analyses have often been accompanied by reference to purported processes of globalization as a generator of new and increased opportunities for white-collar crimes (though little is known about why some opportunities are realized but not others). Globalization, despite itself being a contested concept, has emerged as a significant factor for analyses of white-collar and corporate crimes that extend beyond individual nation-states as greater interconnectedness, increased mobilities, and increased interdependencies are seen. These purported processes of globalization have been identified as possessing varying intensity and speed that have influenced opportunities for, and the organization of, white-collar crimes. That said, globalization per se does not inevitably generate more white-collar crimes organized beyond the nation-state if they can be productive without having to do so. In these terms, globalization of white-collar crimes is not automatic, but is one explanatory factor that contributes to how some white-collar crimes have beyond-state aspects, usually alongside the expansion of routine business activities. Nevertheless, there is a need to explore the spatial (including digital) contexts of white-collar crimes that have beyond-national scope with a view to questioning how useful it is, or can be, to understand how different white-collar crimes pertain to, are associated with, or are restricted to particular “territories” at the domestic (i.e., nation-state), international, transnational, multinational, supranational, and global levels and how this has implications for research, policy, and practice.


Identity Theft  

Dylan Reynolds

Identity theft commonly refers to the illegal theft and misuse of another person’s identity information, resulting in a benefit to the offender or harm to the victim. With the rise of technological payment systems, identity theft increased dramatically in the 1990s and 2000s and impacts almost 1 in 10 adults annually. Identity theft can be difficult to measure, in part because few victims report it to law enforcement and government agencies and because victims often have limited knowledge about how their information was obtained and misused. Identity theft can involve the misuse of existing bank, credit, or other accounts, the creation of new accounts, or other fraudulent misuses of personal information. Moreover, the methods of acquiring identity information vary and include hacking, phishing, and stealing physical documents. While identity theft’s rise results from increasing technological reliance, the relative prevalence of online and offline forms remains unknown. The limited research on identity theft offenders finds that their motives and techniques vary, but that committing identity theft is usually a rational choice and that offenders often use techniques to neutralize identity theft behaviors. More research exists on identity theft victims, due, in part, to identity theft victimization surveys, which find that victims face a range of consequences and reporting options. Globally, both criminal and consumer protection laws have been implemented or modified to respond to identity theft, although victims must typically advocate for themselves to resolve identity theft’s consequences.


Money Laundering: History, Regulations, and Techniques  

Benjámin Villányi

The goal of money laundering is to hide the tainted origin of criminal revenue. In this sense, it is a secondary crime that is always connected to another breach of law. These offenses can be different types of theft, trade in illicit goods, as well as other non-violent acts such as tax fraud, bribery, and, nowadays more relevantly, cybercrime. Depending on the size of the unlawful income, criminals may launder on their own or collaborate with other specialists. Especially in cases of large-scale tax evasion, grand corruption, transnational drug trafficking and similar highly organized forms of crime, laundering can entail very complex schemes performed in multiple countries. To describe and analyze this activity, a three-stage model is a widely accepted framework. The placement is the first step, when the illicit money is introduced into the financial system. The layering involves multiple transactions to remove the traces of these funds, while in the last stage criminals attempt to integrate the laundered money into the legal economy through various kinds of investments. Beginning with the 1970s, increasing international cooperation aimed to counter this activity and set standards that were later adapted to national judicial systems. Different types of crime were the focus of such approaches, which also shaped the methods used. During the Prohibition era rum-running and illegal gambling raised the most concern, later the war on drugs, and from the early 2000s the war on terror, and more recently the cryptocurrencies are in focus of anti-money laundering. The financial extent of worldwide money laundering is difficult to estimate with reasonable precision, but it is comparable to national economies in magnitude. Money laundering can have a social as well as financial impact, especially when it helps corrupt politicians to stay in power, decreases tax morale to unfeasible depths or enables organized criminals to take over whole economic sectors and geographic areas.