International White-Collar Crimes: Tackling a Global Challenge from a Legal Perspective

Abstract

This short legal article portraits a dangerous phenomenon in a post-modern world, more precisely, white-collar crimes, also known as “crimes of globalization”. It particularly sheds light on its complex nature and the legal tools available to address it, while focusing on their relative efficiency nowadays. It also brings to the forefront the consistent increasement of these cross-border crimes due to the emergence of recent technologies.

Introduction

The white-collar crime concept in itself is quite ambiguous but its expansion to the international level is for sure one of the many implications of cross-border cooperation. It can be defined as generally non-violent crimes committed by individuals or organizations in positions of trust and authority usually for financial gain, posing a significant threat to global economic stability. Therefore, the detection process of white-collar crimes has surprisingly revolved around unmasking the activities of seemingly respectable occupational groups and organizations. Eventually, these crimes most of the time involve complex financial transactions which makes it more challenging to discover and prosecute, notably if committed across international borders.

Indeed, globalization has created remarkable opportunities for enrichment, whether legitimate enrichment or illicit enrichment. So, there are winners and losers in the global village since the unyielding domination of other cultures is eclipsing local tastes and customs even in some of the world’s most remote areas. For instance, the choices that people exercise after exposure to western culture may not always be in their best interest just like the case of infant formula that may be inferior to breast milk. Nevertheless, legitimate and illegitimate industries exploit every chance to move capital and production outside the reach of regulators. Consequently, both are involved in illegal forms of cross-border trading. 

Background

White-collar crimes, first coined by the American sociologist Edwin Sutherland in 1939 and according to his definition, refers to offenses committed by people of high social status and respectable in the course of their occupation. He is universally recognized as the founding father of white-collar crime scholarship. Some frequent examples of white-collar crimes can be as follows: fraud, money laundering, tax evasion, embezzlement, corporate misconduct, bribery and corruption… As a matter of fact, contemporary transnational criminals, due to a weak oversight and greedy motivations, take advantage of the jurisdictional challenges and complexities to commit a wide range of crimes. Subsequently, by moving money, goods, people and services, they tend to make pure economic gain and sometimes political violence. Thus, the study of crimes of the powerful is crucial to put an end to it or at least to prevent it.

The Insufficiency of International Legal Frameworks and Treaties Governing Transnational White-Collar Crimes

A major factor that contributes to the continuous rise in international white-collar crimes is the perceived low risk. Apparently, some offenders believe in the unlikeliness of being caught and that this type of crime is less punishable than a violent crime, which should not be the case.  Hence, the proliferation of such crimes has led to the development of international legal frameworks aimed at combating them. Actually, there is a large number of international agreements engaging the international community in the construction of standards and routines to deal with the detection, prevention and combat of transnational crime. In addition, this series of initiatives embodies different agendas that point to the progressive convergence of domestic regimes in the global fight against money laundering, terrorism financing, corruption and other similar crimes.

In the process of evolution on the international scene, the United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances[1] of 1988, in other words, the Vienna Convention was considered a milestone taking into account the introduction of the definition of money laundering and setting the recommendation for the criminalization of drug trafficking as well as establishing mechanisms for coordinating national authorities in order to exchange information and assure  international cooperation. Then in 2000 was signed in Palermo, the United Nations Convention on Transnational Organized Crime (UNTOC)[2], establishing the obligation of banks and financial institutions to register suspicious transactions and took into consideration the creation of Financial Intelligence Units (FIUs) to enforce the exchange of information. In parallel, corruption made it to the surface especially in 2003 in Merida, in the United Nations Convention Against Corruption (UNCAC)[3]. Moreover, other cornerstones to combat white-collar crimes have been added over time such as the establishment of intergovernmental institutions, the Financial Action Task Force (FATF) and the Organization for Economic Cooperation and Development (OECD). In 1997 was signed the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions[4]. As a result, the G7 Finance Ministers supported in 1998 the integration of AML actions with the tax information exchange mechanisms. Besides, the International Monetary Fund (IMF) integrated AML/CFT assessments into its work routine. As well, the engagement of the World Bank Group with the United Nations Office on Drugs and Crime (UNODC) which began in 2007, has substantially broadened the anti-corruption landscape. Other positive commitments were made at the Doha Declaration on Financing for Development[5] in 2018, which focused on the mobilization of domestic financial resources to promote development. Later, the UN 2030 Agenda for Sustainable development targeted key actions under the UN SDG-16.

Unfortunately, when it comes to the application phase, the effectiveness of these frameworks along with various bilateral agreements depends on the willingness and ability of countries to implement and enforce them domestically because the speech and language of the international tools and institutions are still very diplomatic, but to have the problem acknowledged in the political sphere and then convert it into concrete actions is still possible.

The Illusion of Combatting Cross-Border White-Collar Crimes: Multifaceted Challenges

One of the primary challenges in facing international white-collar crimes is none other than jurisdictional complexities. In short, these crimes are normally committed in one country yet harm victims in another[6] or pass on illicit funds through an alternative jurisdiction. In fact, one of the significant problems relies in the contradiction between Common Law and Civil Law legal systems. On the one hand, Common Law relies on case law and broad statutes. On the other hand, Civil Law requires explicit codification of offenses.

Another pressing issue is the enforcement mechanism that differs from a country to another, taking into consideration that developed nations with strong and more sophisticated legal systems are apt to combat international white-collar crimes comparing to less developed countries with weaker regulatory environments even if some efforts were made. However, the lack of resources, political will and expertise, amplifies the current problems.

Though, the interference of international organizations plays a sine qua non condition to bridge actual enforcement gaps. Thus, entities like INTERPOL, the International Monetary Fund (IMF) and the World Bank assist in investigations, provide financial expertise and advocate best practices. Nonetheless, bureaucratic limitations and conflicting priorities make the coordination weaker between these organizations and national authorities and therefore less fruitful. For example, requests for evidence can take years, e.g., Danske Bank money laundering case[7].

International White-Collar Crimes and The Rise of Advanced Technologies: A New Hurdle in an Era of Globalization

In the XXI century, white collar overcriminalization is majorly due to digital innovations witnessed especially in the fields of digital finance and blockchain. The emergence of cryptocurrency seems a golden opportunity for criminals to launder money and engage in other illicit activities, which made it way more difficult to trace perpetrators of financial crimes. Moreover, committing cybercrimes got facilitated with the anonymity provided by the internet and consequently the investigation and prosecution process of the offenders became more challenging.

In parallel, aiming to address white-collar crimes properly in a digitalized world, governments and international organizations are heavily investing in new technologies and strategies for detecting and prosecuting white collar crimes, which includes the enhancement of cutting-edge forensic tools for tracking cryptocurrency transactions and working tirelessly to address cybercrime through law enforcement.

Discussion

As jurisdictional conflicts delay justice, considerable gaps still exist between nations when it comes to address transnational white-collar crimes. While some nations have vigorous regulatory frameworks, the others lag behind creating safe havens for offenders. Hence, it is crucial to develop stronger international cooperation and not only implement existing legal frameworks but also adapt to new threats. In addition, extraterritorial laws are effective even though they face resistance. Thus, reinforcing mutual legal assistance treaties, standardizing legal definitions, and developing capacity-building initiatives in some countries are critical steps forward.

Conclusion

To put it in a nutshell, governments are leaning more towards severely punishing offenders of high social status with all the law enforcement resources available. Since the complex nature of white-collar crimes requires robust international cooperation, treaties provide a solid foundation, yet significant challenges remain. As for suggestions to fix these issues, an international anti-corruption court can be created, faster evidence-sharing protocols can improve MLA treaties and adopting FATF standards universally can of course harmonize AML laws.

Reference(S):

[1] United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances 1988

[2] United Nations Convention on Transnational Organized Crime (UNTOC) 2000

[3] United Nations Convention Against Corruption (UNCAC) 2003

[4] OECD Anti-Bribery Convention 1997

[5] Doha Declaration on Financing for Development 2018

[6] Thomas G. Snow, The Investigation and Prosecution of White-Collar Crime: International Challenges and the Legal Tools Available to Address Them, 11 Wm. & Mary Bill Rts. J. 209 (2002), https://scholarship.law.wm.edu/wmborj/vol11/iss1/7

[7] Bjerregaard, Elisabetta and Kirchmaier, Tom, The Danske Bank Money Laundering Scandal: A Case Study (September 2, 2019). Available at SSRN: https://ssrn.com/abstract=3446636