RESOURCE MATERIAL SERIES No. 55

EFFECTIVE COUNTERMEASURES AGAINSTECONOMIC CRIME AND COMPUTER CRIME
Mahavir Singh Bali*
I. INTRODUCTION
Economic crime has been a phenomenonof commercial life since the days of the
Romans, but in the latter half of the 20th
century, it has become a growth industry.
With the development of sophisticatedmeans of communication, jet travel,facsimile machines, the wire transfer ofmoney and now open borders, there are
now no barriers to those who would preyon our financial institutions, destroy the
economic stability of our commercial
enterprises or corrupt our governments.
Moreover, it is a crime of low risk and highgain, with usually very little investment
from the perpetrator. Access to a fax
machine and telephone are sufficient tools
with which to perpetrate massive frauds.
The detection, investigation andsuccessful prosecution of the economic
criminal is difficult enough for those
responsible for it in developed countries.
The cases being complex and multijurisdictional, require not only dedicationand commitment of the investigating
agencies and their governments, but also
the expertise, manpower and funding
necessary for the task. Developing
countries face an insurmountable task inthis regard. The officials of many of thesegovernments, as a result of a combinationof factors, including all pervasive corrupt
practices and low wages, are themselves
highly vulnerable and have little incentive
to change the situation. Many
Governments are loath to delve into
allegations of massive frauds and* Deputy Inspector General of Police, Central Bureau
of Investigation, Anti-Corruption Branch, India

158

corruption committed by theirpredecessors, for fear that their successors
may be inclined to do the same.
At the heart of all free market economies
lies a fundamental paradox. It is the needto provide the greatest degree ofcommercial freedom for the market toenable the entrepreneurial business toflourish, while at the same time ensuringthat those whose criminal activities would
subvert and undermine the commercial
effectiveness of those markets are denied
access to the benefits which that very
freedom allows. It is one of the great ironies
of western capitalism that in so manycases, the most apparently innovative andentrepreneurial financial schemes, which
are most attractive to investors are all too
often the brainchild of the white collar
criminal. For countries whose free market
economies are still evolving, it is extremely
difficult to strike the delicate balance
between the imposition of too great adegree of bureaucratic regulation, which
has a tendency to inhibit entrepreneurial
activity, and deliberately refraining fromintroducing tough regulatory legislation,
thereby allowing emerging markets tobecome infiltrated by criminally corrupting
influences (who offer the tempting shortterm profits, with accompanying long term
damage and subversion). Nevertheless, it
must be recognised at the threshold thatcriminal infiltration of the commercial
infrastructure of society is one of thequickest ways of ensuring the ultimate
corruption of the social and political fabric,with all the inherent implications whichsuch a scenario possesses for the very basisof a free democracy.

110TH INTERNATIONAL TRAINING COURSEPARTICIPANTS’ PAPERS
Economic crime, by the very disparate
nature of its component activities, isincapable of simple definition. White-collar
crime is expressed most frequently in theform of:• misrepresentation in financial
statements of corporations• manipulation in the stock exchange• commercial bribery• bribery of public officials directly or
indirectly in order to securefavourable contracts and legislation• misrepresentation in advertising andsalesmanship• embezzlement and misapplication offunds• short weights and measures andmisgrading of commodities.
• tax-frauds• misapplication of funds inreceivership and bankruptcies.
Measuring the underground economy of
any nation, much less of developing
countries, is an imprecise science, involving
only guesstimates and probabilities basedon imperical hypotheses. According to
Edger L. Feige, Professor of Economics,
University of Wisconsin-Madison;“the world economy appears to
subsume a hidden economy which
employs US currency as its medium of
exchange and is roughly 90 per cent aslarge as the US. economy”.
The Congressional Quarterly
Researcher, puts the size of the global
underground economy at a staggering US$
5.8 Trillion (1993). Generation of
unaccountable funds from an undergroundeconomy is not peculiar to the UnitedStates. Among other industrialised nations
the problem is equally severe. However,the problem is more acute in developing
economies, particularly, in Africa and South
Asia. The International Labour
Organisation estimates that the informal
economy employs 59 percent of the urban

labour force throughout Sub-SaharanAfrica, and accounts for as much as half
the GDP of some countries in the region.
In India, various estimates have been
made to ascertain the extent of blackmoney generated from time to time.
Amongst them, the most authentic is thatof the National Institute of Public Financeand Policy, New Delhi (NIPFP). NIPFP
estimated the black money income in India
at Rs. 405,000/- Million (USD $ 32,440
Million) in 1985, amounting to 18 to 21 percent of the GNP. This study also estimatedthat the tax evaded can be anywhere up to
70 percent. The main headings underwhich the estimates were made are as
below :i) Grant of licences and permits inreturn for bribes or politicalcontributions.
ii) ‘ S p e e d m o n e y ’ t o a c c e l e r a t eadministrative procedures.
iii) The sale of jobs, postings or transfers
in various public services.
iv) Regular bribes to petty functionaries
from different government
departments (for instance factoryinspectors, health inspectors, police,
tax inspectors, etc.). These collections
are often shared with higher officialsof the department concerned.
v) Bribes to alter land use, zoning or to
regularise unauthorised structures.
vi) Bribes to obtain and maintain scarcepublic goods and services, such as
electricity, telecommunications,
irrigation water, and rail wagon
allotments.
vii)Bribes to obtain public contracts.
viii)Bribes to political authorities atvarious levels, ostensibly to financeelections and post election
manipulations.
Apparently the above report did not take
into account many other factors responsible

159

RESOURCE MATERIAL SERIES No. 55
for generating unaccountable funds in
India. According to Prof. Suraj B. Guptaof the Delhi School of Economics, the blackincome in India stood at Rs.1,492,970
Million (US $ 113,241- Million) in 1987-88.
It is to be noted that most of theestimates of black income made byeconomists do not take into accountunaccountable funds generated in arms
sales, organised crimes, drug trafficking,terrorism and money laundering. The
underground economy by definition is
informal, invisible, subterranean and offthe-books. These factors make it extremely
difficult to guesstimate, let alone estimate,
the quantum of funds involved in thesetransactions.
India has a plethora of laws to curb
economic crime in its various
manifestations and dimensions. Appendix‘ A’ i n d i c a t e s s u c h c r i m e s a n d t h ecorresponding statutes to deal with them.
II. CORRUPTION (GOVERNMENT& CORPORATE)
Ingowalter identified four distinct
categories of payments which possess
corrupt characteristics:i) Bribes : Significant payments toofficials with decision making powers
to convince them to do their jobs
improperly.
ii) Grease : Facilitating payments tominor officials to encourage them todo their jobs properly.
iii) Extortion : Payment to persons inauthority to avoid damage fromhostile actions on the part of unions,criminals, utilities, etc.
iv) Political contributions : payments topolitical parties linked to favours or
threats of retribution in case of nonpayment.

160

The effect of such payments means that
ordinary commercial life soon becomesundermined, because the bribes paid areinevitably passed on by the payer of thebribe to the customer, who has to pay more
for inferior goods. At the same time, thecorrosive effect of institutionalised
corruption permeates every level of society.
This leads to the growth of a cynicaldisregard for subjects such as commercial
morality, public sector ethics or the rule oflaw.
Economic crime is invariably associatedwith corruption, which of course represents
an even more direct attempt on the
integrity of the State and its institutions.
Corruption, illegal gratification andconsiderations which are not due, involve
huge amounts of money and valuables.
These transactions not only breed blackmoney but are also potential grounds forparties with vested interests for thecommission and expansion of the activities
directed towards economic offences. Evenfew millions of illegal dispensation by wayof bribery is sufficient for economic
manipulation to the tune of billions, bythese offenders.
Corruption in public and corporate life
has assumed serious dimensions in India.
From the early eighties, political corruption
has been on the increase and many leading
political figures in India and many politicalparties have been accused of accepting
illegal monetary contributions from thebusiness world in the matters of arms
contracts, power and fertiliser contracts,
etc. Liaison agents, both of leading Indianand foreign firms, have been operating thissystem in conjunction with corrupt
politicians and bureaucrats. In some of thecases which have come to light, complicatedmoney laundering operations and “hawala”(underground banking operations) havebeen found to have taken place in order tostash illegal funds abroad. The higher

110TH INTERNATIONAL TRAINING COURSEPARTICIPANTS’ PAPERS
judiciary in India, particularly, theSupreme Court of India and various State
High Courts had to intervene and orderinvestigations against leading politicalfigures on the basis of public interest
litigations, when the normal criminal
justice system and the anti-corruption
machinery was found weak or insufficient
to proceed against them.
The issue of corruption in public life has
engaged the attention of the people, thejudiciary and the Government of India.
India has had the legislative tools (AntiCorruption laws) for the last five decades
to combat corruption in the public service.
The updated Prevention of Corruption Act,
1988 is quite comprehensive in its scopeand covers the bribe giver, the bribe taker,
their aides, abettors and conspirators
including the ‘touts’ or middlemen. Under
Criminal Law Amendment Ordinance
1944, assets acquired through corrupt
means, both in the name of self or“Benami”, can be forfeited. However, thelegal provisions alone are not sufficient totackle the problem on account of theenormity of the problem. Only a small
number of investigators are available totackle the task and a long time is taken in
investigation and trial. The informationcollected from the Central Bureau of
Investigation, India and various State

Vigilance Bureauxs in regard to punitive
actions against the public servants andothers is indicated in Tables I to IV.
Table I indicates cases registered by the
CBI and by the various State AntiCorruption Bureaus.
TABLE INo. of cases
registered
CBI States/Uts
1991 1180
1708
1992 1231
1772
1993 1282
1895
1994 1106
2104
1995 825
2064
Year

Persons
Arrested
CBI States/UTs
1325
1011
1167
463
2296
297
2604

Table II indicates departmental action
taken against various categories of public
servants by the CBI, for their involvement
in corruption cases. Table III indicatesdepartmental action taken against various
categories of public servants by the State/
UT Vigilance Bureau. Table IV gives
statistics with regard to the public servants
prosecuted by the CBI for theirinvolvement in corruption cases along withassets seized from them.

TABLE II
Year

1991
1992
1993
1994
1995

Persons
Persons
reportedreportedfor regular suitable forDept. action action by Dept.
1132
1338
1179
1922
735

364
582
NA
149
44

Departmental
punishment

Catagories of public
servants involved
in regularDept. action
Dismissal Removal Major Minor Gazetted NGO Pvt
35
10
NA
NA
608
493
31
54
24
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
22
22
137 256
249
187
1
11
11
133 194
392
322
21

161

RESOURCE MATERIAL SERIES No. 55
TABLE IIIYear

Persons
Persons
reportedreportedfor regular suitable forDept. action action by Dept.

1991
1992
1993
1994
1995

734
831
939
318
295

317
45
35
103
87

Departmental
punishment

Catagories of public
servants involved
in regularDept. action
Dismissal Removal Major Minor Gazetted NGOs Pvt
1917
207 207868
1623 159
6
2
45
45
1027
1253 151
18
10
52
52
411
1431 294
7
3
27
27
464
1176 229
27
14
53
53
1114
1278 499

TABLE IVYear

No. ofcases regd.

1992
1993
1994
1995
1996
1997
1998

1025
1016
1117
1134
1189
988
430

GO
234
277
295
384
478
385
119

No. of public
servants involved
Convicted
Charge sheeted
Arrested
NGO GO NGO
GO
NGO
252
38
33
31
130
248
45
57
57
10
470
46
65
70
139
425
51
53
87
153
412
57
76
78
131
331
66
110
57
114
195
31
53
14
38

III. ABUSE OF FOREIGN AID
PROGRAMMES
Since World War II, the more developed
countries of the northern hemisphere haveprovided financial and economic aid tounderdeveloped nations in the “Third
World”. A proportion of the aid supplied
has been donated by religious and social
welfare charities who draw their funding,to a large extent, from voluntary
contributions given by private donors.
By far, the greatest proportion of aid
funds are provided by government
agencies. The terms under which such aid
packages are given are often associated162

Total seizure
during searches(Rupees)
6,70,54,928/8,31,94,603/4,55,14,180/3,07,34,994/9,07,95,209/5,60,59,639/92,79,954/-with parallel, reciprocal agreements suchas the supply of arms or other military
hardware, the provision of political advice
or consultancy, or guaranteeing (by therecipient government) the suppression of
the political ambitions of groups whose
aims are perceived to be antithetical tothose of the donor State.
Examples are payments made in the
Iran-Contra Affair. In an investigation in
1991, evidence surfaced of U.S.
Contractors improperly using foreign
military financial funds to pay
unauthorised commissions for contracts in
Egypt and Israel. Huge fortunes in foreign

110TH INTERNATIONAL TRAINING COURSEPARTICIPANTS’ PAPERS
banks, deposited by dictators ofunderdeveloped countries, are nothing but
the systematic plunder of nations by thoseleaders. In India, allegations havefrequently been made of misuse withcorrupt motives of foreign aid programmes
by both officials and politicians.
IV. SMUGGLING AND CUSTOMS/
EXCISE FRAUDS
Smuggling, which involves clandestine
operations leading to un-recorded trade, isanother major economic offence. The
volume of smuggling depends on the natureof fiscal policies pursued by theGovernment. The nature of smuggled
goods and the quantum thereof is also
determined by the prevailing fiscal policies.
India, with a vast coastline of about 7500
kilometres and open borders with Nepal
and Bhutan, is prone to large scale
smuggling of contraband and otherconsumer items. Though it is not possible
to quantify the value of contraband goods
smuggled into this country, it is possible toestimate the extent of smuggling from thevalue of contraband seized, even though it
may constitute a very small proportion of
the actual size. Table V shows the value ofgoods seized.

TABLE VYear Value of Goods Seized (in crores)
1988
443.14
1989
554.951990
760.08
1991
740
1992
535.71
1993
388.96
1994
535.22
1995
631.25The high point of smuggling was in 1990
when contraband worth Rs.760 Crores wasseized. The introduction of various
liberalisation measures, such as withregard to gold and silver imports in 199293, had an impact on customs seizures. The
total value of seizures came down by 30%(Rs.536 Crores in) 1992 and further down
to Rs.389 Crores in 1993. The value of
seizures of other important commodities
from 1991 to 1996 is shown in table VI.
The value of seizures of gold and silver
accounted for about 44% of total seizures
annually prior to the liberalised importpolicies. It came down to 21% after theannouncement of new policies and has
continued to fall. On the other hand, theseizures of commodities like electronic
goods, narcotics, synthetic fibres, wrist
watches, Indian currency, foreign currency,

TABLE VI
Items
Gold
SilverNarcotics
Electronic Items
Foreign Currency
Indian Currency
Synthetic Fabrics
Watches

1990-91
198.8
146.6
25.1
55.5
7.7
6.5
4.8
3.2

1991-92
188.5
147.7
21.8
23.1
10.8
5.6
2
6.2

1994-95
55.4
3.6
54.3
51.2
27.4
6.6
2.4
3.3

(in Crores)
1995-96
50.8
0.54
77.94
38
40.2
5.6
12.9
3.9

163

RESOURCE MATERIAL SERIES No. 55
etc, rose during 1994-95. The value of
seizures of electronic items rose from Rs.35
Crores in 1993 to Rs.51 Crores in 1995. The
value of Indian currency and foreign
currency seized rose from Rs.5 Crores andRs.20 Crores in 1993 to Rs.10 Crores andRs.43 Crores respectively in 1995. In 1987,
gold occupied the top position amongst thesmuggled items followed by narcotics,
electronics, watches and silver. In 1995,
however, narcotics occupied number one
position followed by gold, electronics,
foreign currency and synthetic fibres.
Table VII shows the number of persons
arrested, prosecuted and convicted under
the Customs Act. In addition, 758 persons
were detained under COFEPOSA in 1991;
423 in 1992; 372 in 1993; 363 in 1994 and
350 in 1995.
TABLE VII
Year Arrested Prosecuted Convicted
1991
2358
1669
574
1992
1745
1051
381
1993
1234
679
350
1994
1210
301
352
Sovereign countries of the free port
areas, with few exceptions, impose importtariffs on goods being brought within theirjurisdiction for the following reasons :(i) Indirect taxation.
(ii) To prohibit the importation of articles
which may pose a specific threat tothe host nation.
(iii)As a measure of protection to home
based industries.
Fraudsters find ways and means tocircumvent these regulations/duties. In
Europe, it takes the form of an attempt toobtain unlawful payment of agricultural
subsidies based upon the production offorged documents etc. In India, the various
schemes employed by the fraudsters are:

164(i) Over-invoicing of exports to takeadvantage of the DEEC scheme
wherein imports of duty-free raw
materials are made subject to theexport obligation being fulfilled. The
larger the value of the export goods,
the greater the value of the duty-free
imports permitted. Difficulty
experienced in countering this is that
the Customs Department has toprove the contract between the
Indian and the foreign parties is fake.
An unholy relationship between theexporter and the importer has to beestablished. This requires foreign
investigation which is both expensive
and time-consuming, and cannot be
undertaken in every case. Double
taxation treaties do not help as they
do not exist in every country.
Problems have been encountered byIndia, particularly with regard to theinvestigation of such deals between
Indian exporters and importers in
Dubai.
(ii) Another method adopted by the
fraudsters in India is to over-invoice
the exports, in which case the money
comes back to India through ‘Hawala’
or by the smuggling of narcotics, gold,
etc. Similarly, another method todefraud Customs is by underinvoicing the imports. In this case,money is transferred out of thecountry by ‘Hawala’.
(iii) Fraudulent importers also misuse theprovisions of value-based, advancelicensing schemes for importing raw
materials into the country, and later
for selling the same at huge profits
in the black market.
Table VIII gives the latest figures inrespect of the value of seizures under the
Customs Act.

110TH INTERNATIONAL TRAINING COURSEPARTICIPANTS’ PAPERSTABLE VIIINAME OF ITEM
Value of seizures (smuggling)
Duty value of evasion cases
Total(Value Rs. in Crores - a Crore is ten million).
1994-95
1995-96
1997
1998(to August)
587.46648.59539.96256.1866.83
364.87143.9873.01
654.29
1,013.46
683.94329.19Seizures of major
Commodities
Gold
Foreign currency
Synthetic yarn and fabrics
Electronic items
Narcotics
Narcotics (International value)
Chemicals
Agricultural produce
Ball bearings
Machinery & parts
Others including
vehicles/vessels/aircraft

1994-95

1995-96

1997

60.8
33.26
13.78
57.24
89.7
NA
2.68
NA
NA
NA
330

56.76
51.53
22.62
51.07
73.31
1,250.79
1.92
4.26
5.43
23.74
357.95

54.59
53.05
21.67
24.45
41.32
765.33
3.99
5.58
12.63
32.42
290.26

Major commodities in respectof duty evasion cases
Electronics
Synthetic yarn and fabrics
Machinery & parts thereof
Chemicals
Others

1994-95

1995-96

1997

NA
NA
NA
NA
NA

21.23
13.42
2.15
6.94
321.13

8.73
1.75
2.05
131.45

V. DRUG ABUSE AND DRUG
TRAFFICKING
This is perhaps the most serious(organised) crime with economic overtones
affecting the country, being truly transn a t i o n a l i n c h a r a c t e r. I n d i a i sgeographically situated between the
countries of the Golden Triangle andGolden Crescent, and is a transit point fornarcotic drugs produced in these regions,to the West. India also produces aconsiderable amount of licit opium, part of1998(to August)
30.25
26.77
7.41
5.78
12.9
209.59
14.77
2.6
5.05
16.96
133.691998(to August)
0.01
11.95
2.29
1.87
56.89

which also finds place in the illicit market
in different forms. Illicit drug trade in
India centres around five major substances,namely; heroin, hashish, opium, cannibas
and methaqualone. Seizures of cocaine,
amphethamine and LSD have not been
known, and if occur, are insignificant andrare.
The Indo-Pakistan border has
traditionally been most vulnerable to drugtrafficking. In 1996, out of the total
quantity of heroin seized in the country,165

RESOURCE MATERIAL SERIES No. 55
64% was sourced from the “Golden
Crescent”. The Indo-Mynamar border isalso quite sensitive but the percentage of
seizures from there is much smaller. The
Indo-SriLanka border has also started
contributing considerably to the drug trade.
The seizure of narcotic drugs from 1991
to 1995 and the persons involved in the
trade is indicated in Table IX. In 1996,
13,554 persons were arrested under the
Narcotic Drugs and Psychotropic
Substances Act (NDRS). Out of them, 130
persons were of foreign origin. Eighty
persons were detained under the NDPS Act
in 1991; Eighty each in 1992 and 1993; 123
in 1994 and 89 in 1995.
India has a draconian anti drug law the Narcotic Drugs and Psychotropic
Substances Act 1985, which provides aminimum punishment of 10 years foroffences under this Act. The conviction rate
in drug offences is rather low. It was 48.8%
in 1995. The acquittals mainly result due
to non-observance of statutory andprocedural safeguards, i.e. the enforcement
officer failing to volunteer themself for
personal search before conducting thepersonal or house search of the accused, or
failure in offering to have the accusedsearched by a Gazetted Officer or a
Magistrate. It is being contemplated toamend the Act to plug procedural loopholes

and to calibrate punishments by grouping
the offences.
Investigative skills need to be honed andtrials expedited. Inter-agency exchange of
information amongst the countries by thequickest possible means, coupled withexpeditious extradition proceedings, would
prove helpful in curbing the drug menance.
India has signed bilateral agreements with
the USA, UK, Myanmar, Afghanistan,
UAE, Mauritious, Zambia and the RussianFederation for drug control.
VI. CORPORATE FRAUD (THEFT &FALSE ACCOUNTING)
This consists of the formation of limited
companies which will then obtain large
quantities of goods on credit, in what would
appear to be a normal commercial deal.
The supplies are then secretly re-routed toother corporate entities or sold at‘knockdown’ prices. The proceeds from thesale are then passed back to the controllersof the fraud, whose names and antecedents
in most cases do not appear anywhere in
the company documentation. The maindifficulty lies in being able to differentiate
between a deliberate operation of such a
company and the activity of a wholly
legitimate concern; which falls upon hardtimes owing to economic recession or a fallin commercial demand for its products.
Once the proceeds from the crime have

TABLE IX
Drug Type
Opium
Marijuana
Hashish
HeroinMandrax
Persons Arrested(No.)
Persons Prosecuted (No.)
Persons Convicted (No.)

166

1991
2145
52633
4413
622
4415
5300
5546
855

1992
1918
64341
6621
1153
7475
12850
7172
761

1993
3011
98867
8238
1088
15004
13723
9964
1488

1994
2256
187896
6992
1011
45319
15452
9154
1245

1995
1183
57584
3073
1251
16838
14673
12918
2456

110TH INTERNATIONAL TRAINING COURSEPARTICIPANTS’ PAPERS
been secured, the directors of the company
allow it to be liquidated and start anothercompany in another town using the same
method. During the year 1992-93, theBritish Serious Fraud Office wasinvestigating fraud cases of this nature
where total losses exceeded 5,300 million
pounds.
In India it is very easy to register ac o m p a n y, p r i v a t e o r l i m i t e d , o r apartnership concern. Inter-company
transactions are established with a view
to defrauding income tax authorities. In
banks also corruption invariably plays apart, as in most of such deals, certain
officials of the departments/banks
concerned are compromised.
With the liberalisation of the Indian
economy, positive developments in thestock exchange, primary share/securities
markets, foreign investments,
opportunities for joint ventures abroad etc.,
there has been a sudden spurt in demandfor credit/finance from the corporate world.
Unfortunately, this has also resulted in a
growing incidence of corporate frauds
which can be clubbed in the following
categories :(i) Frauds in Public Issue of Shares:
Many private limited companies havefloated the public issues of shares.
On receipt of application money, theshares have not been allotted. At
times, against the public issue ofshares, bridging loans have beenobtained from the banks. The funds
so obtained have been diverted to thefront companies for various otherpurposes. One securities scam on ahuge scale took place in the country
and will be discussed under bank
fraud.
(ii) Non-banking Financial Companies,
Plantation Companies and Chit

Funds: In the recent past, there has
been a mushroom growth of NBFCs,
Teak/Agro Plantations, Chit Funds,
etc. These promised very high andattractive returns on investments
made with them. Funds thus
collected have been diverted for otherpurposes and most of thesecompanies have become defunct.
(iii) Imports into Bonds: Gold, as an
unfinished product, is imported into
bonded warehouses by specified
agencies without payment of
Customs duty. From the bonded
warehouses, gold is then issued toexport-oriented units for
manufacturing finished products forexports. However, it has been
observed that in a large number ofcases, gold was found to have been
diverted to the local markets for huge
illegal profits.
VII. BANK AND SECURITIESSCAMSAll the free market economies are based,
to a large extent, on trust. Indeed, without
a degree of trust, it is doubtful whether anyof the instruments of the free market
economy would work successfully. At theheart of that trust lies the reputation of
the banking sector. All international trade
is conducted on a documentary basis ; billsof exchange, certificates of deposit, bills of
lading, letters of credit, cheques, bankdrafts, telegraphic transfers andcollateralised lending, to name but a few
of the financial documentary services
provided by banks.
Apart from the obvious kinds offraudulent activities to which the banking
sector is exposed and well-attuned to iecheque and credit card fraud, forged credit
documentation etc, banks are increasingly
concerned about the egregious use of their167

RESOURCE MATERIAL SERIES No. 55
computer systems by dishonest employees
or criminal outsiders to obtain cash.
In the last two decades, India has seena transformation in banking from classbanking to mass-banking. There has beena phenomenal growth in banking - both interms of size and activities/businesses.
This large scale expansion has not been
without attendant risks. It has brought in
its wake, dilution in the quality of various
services, weakened supervision and control
mechanisms in many banks. In 1976,
commercial banks reported to the Reserve
Bank of India 930 cases of fraud involving
an amount of about Rs.9 Crores. During
1990, these figures had gone up to 1785
cases of fraud involving amounts more thanRs.110 Crores. The public sector banks hadreported a total number of 24,918 cases offraud involving an amount of Rs.512 Croresfor the period from 1976 to 1990.
Analysis of the fraud cases reported bybanks to the Reserve Bank, however,broadly indicates that frauds perpetrated
on banks could be classified into thefollowing categories :(i) Misappropriation of cash tendered byt h e b a n k ’s c o n s t i t u e n t s , a n d
misappropriation of cash inremittances.
(ii) Withdrawals from deposit accounts
through forged instruments.
(iii)Fraudulent encashment of negotiable
instruments by opening an accountin a fictitious name.
(iv) M i s a p p r o p r i a t i o n t h r o u g hmanipulation of books of accounts.
(v) Perpetration of frauds throughclearing transactions.
(vi)M i s u t i l i s a t i o n o f l e n d i n g /discretionary powers, non-observanceof prescribed norms/procedures incredit dispensation etc.
(vii)Opening/issue of letters of credit,bank guarantees, co-acceptance of168

bills without proper authority andconsideration.
(viii)F r a u d s i n f o r e i g n e x c h a n g etransactions, mainly through nonadherence to Exchange Control
Manual Provisions.
Category-wise, classification of frauds
reported by the 19 Public Sector Banks to
the R.B.I. during the period from 1/1/90 to
3 0 / 6 / 9 1 i s g i v e n i n Ta b l e X . T h eperpetration of frauds are mainly
attributable to :(i) Laxity in observance of the systems
and procedures by the operational
staff and also by supervisory staff.
(ii) Over-confidence in the bank’s
constituents, who often indulge inbreach of trust; and(iii) Frauds committed by unscrupulous
constituents taking advantage of thelaxity on the part of the officials in
the observance of established timetested safeguards.
An expert committee has undertaken thetask of devising ways and means fortightening regulatory procedures, as well
as for devising effective countermeasures
for the prevention of bank fraud. The
committee has recommended that steps be
taken by the bank authorities in thefollowing areas :(i) Matter of handling cash, valuables
and other negotiable instruments tostop diversion of scarce credit
resources for unrelated purposes, andfor regulating the growing tendency
to use banking channels for money
laundering etc.
(ii) Prevention of fraud in investment
portfolios.
(iii) Prevention of fraud in advances
portfolios.
(iv)Prevention of frauds in the area of
foreign exchange operations.

110TH INTERNATIONAL TRAINING COURSEPARTICIPANTS’ PAPERSTABLE X
Category
Fraudulent encashment,
manipulation of books ofaccount and conversion
of property
Cheating and forgery
Misappropriation or
criminal breach of trust
Negligence and cash shortage
Unauthorised credit facility
extended for illegal gratification
Irregularities in foreignexchange transactions
OthersNo. of frauds(1990)
729(Amount in Crores of Rupees)
Amount No. of frauds Amount(1990)(1991 to June 30) (1991 to June 30)
28.28
345
8.64

215
162

5.7
4.81

134
89

4
6.04

53
18

0.2
3.12

25
7

0.06
0.43

11

0.9

10

0.19

54

5.05

53

4.94

(v) P r e v e n t i o n o f f r a u d s i n acomputerised environment.
(vi)Ensure the effectiveness of existing
systems of inspection, audit andcontrol returns.
(vii)Tone up the vigilance set up in the
public sector banks.
(viii)Co-ordination amongst various
agencies like the Central Bureau of
Investigation, Police and the Bank
Vigilance machinery to ensure
prompt detection and effective
prosecution of fraud cases.

worth of an individual stock offer, as thiswould impose an artificial standard on theworking of a free commercial market. In
other words, it is axiomatic in free market
economies that investors must be free tomake imprudent commercial decisions
which act to their financial detriment. The
need to ensure a continued uniform policyof anti- fraud surveillance of theinternational securities market has become
more acute in the last decade, following agreater degree of internationalisation of thecapital markets.

A. Fraud in the Securities Market
This subject is as old as the markets
themselves. The decision to buy or sell aparticular security is based, in many cases,
upon nothing more than a representationof its future value made by a promoter ofthe share itself. Therefore, the potential
for a fraudulent share offering is very high,and it is with the aim of preventing a fraudin the sale of securities that all mature freemarket economies design their securitiesl e g i s l a t i o n . H o w e v e r, s u c h f r a u dprevention activities cannot be brought tobear on the determination of the specific

The main areas of fraudulent activity,
which possess the greatest degree ofcommercial risks, in the trade of securities
are :(i) Market Manipulation: individuals orgroups operating in such a way as tobring undue influence to bear,
thereby affecting the value of a share.
(ii) Insider Dealing: is a criminal activity
whereby an investor, knowing that abid is about to be made for aparticular stock or having

169

RESOURCE MATERIAL SERIES No. 55
information gained from connections
with the management of a firm which
could directly affect the price of aparticular share, makes aconsiderable short-term profit bybuying as much of the stock as they
can acquire prior to theannouncement of the bid, and thensells the same once the share value
has risen.
(iii)Trading of Worthless Securities: An
example is to famous Wall Street
crash of 1929 before whichapproximately 20 million Americans
took advantage of the post-war
prosperity and tried to make afortune on the stock market.
Between 1918-1929, out of the USD$50 billion worth of new securities
offered to the public, half proved to
be worthless. Variations of this fraud
can be the well-known “PONZI”
scheme to “Pyramid” schemes orchain-letters or the lotteries by“Caritas” of Romania.
The investment in the securities market
has provided organised crime with a fertile
ground for fraudulent activity. Around1990, India and a few developing countries
have started to restructure theireconomies. Economic and fiscal policies
have taken a turn towards liberalisation,
deregulation, non-control and nonlicensing, and the economy has opened up
resulting in macro-adjustments.
As a part of the liberalisation process,foreign exchange regulations were relaxed,
multinational companies and overseas
corporate bodies were permitted to invest
in Indian companies (up to 51 percent
barring a few selected sectors) and foreignbanks were allowed to operate. Under thesame process, there is a talk of the services
and insurance sectors being opened up.
Public sector banks were allowed to set up

170

Mutual Funds and Portfolio Management
Schemes. Public sector companies werepermitted to raise funds from the publicthrough bonds. Government encouraged
companies both in the private and public
sectors to reduce surplus staff through‘golden handshakes’ or other similar
schemes. This resulted in considerable
sums of money entering the market.
The weakness of the securities exchangemechanism was exposed when a massive
security scam, running into several billions
of rupees, surfaced in April 1992 involving
the Standard Chartered Bank, theNational Housing Bank, many othernationalised banks, Mutual Funds andother financial institutions. The committee(CBI) set up by the RBI estimated the loss
at Rs.40,000 million (US$ 1,279.63 million).
In the estimation of the CBI, the loss has
been Rs.83,830 million (US$ 2,665
million). This case was a deliberate andpremeditated misuse of public funds
through various types of security
transactions, with the sole object of illegally
siphoning funds from the banking systemand public sector undertakings.
After the above experience, the Indian
Government set up a Securities andExchange Board of India (SEBI) with thesole objective of regulating the shares andsecurities business. Needless to say,certain individuals and institutions
involved in the above mentioned securities
scam are facing prosecution in a special
court.
VIII. INSURANCE FRAUDAs large funds are available withinsurance companies, they are liable to be
subjected to a high degree of fraudulent
activity. Competitiveness of the insurance
market is such that rather than attract a
reputation for being unsympathetic toclient claims, the companies will pay out

110TH INTERNATIONAL TRAINING COURSEPARTICIPANTS’ PAPERS
claims which they know may be made byprofessional fraudsters, but will be pursued
vigorously by the claimants. However, thesmaller but honest claims, more difficult
to pursue, will suffer because thecompanies feel that the claimants will
eventually get tired of the remorselessbureaucracy and abandon the claim.
The insurance salesmen indulge inwidespread mis-selling of financial policies
in order to enhance their own commission
income and to ensure a regular cash-flowof new capital. In India, at the moment,
both the life insurance and generalinsurance are in the public sector and are,therefore, subject to strict government
regulations and audit requirements.
However, small and medium scale frauds,
do sometimes take place. These frauds aremostly related to the filing of false or
exaggerated claims on the insurancecompanies. Most of the times, these frauds
are perpetrated in collusion with theemployees of the insurance companies likethe surveyors and field agents, who, for
corrupt motives, tailor their reports to theadvantage of the claimants.
IX. FRAUD IN INTERNATIONAL
TRADE
Fraud in the international trade takes
the following forms :(i) Shipping of adulterated products.
(ii) Theft of goods in transit, as in the
Nigerian Oil Fraud.
(iii) Hijacking and piracy at sea.
(iv)Deviation of ageing, low-value ships.
(v) Phantomship fraud in which corrupt
employees, with the registries of suchcountries as Panama and Honduras,
indulge in false registration. The
high-value cargo simply disappears
with the ship, which later appears
again under a new name and guise.
(vi)Product counterfeiting, whereby

cheaper and less stringently
produced products are manufactured
to lower tolerance levels and are
introduced in to the market.
Counterfeit aircrafts parts or bogus
pharmaceuticals with lower chemical
standards, are sold. It is estimatedthat 6 percent of the total world trade
involves trading in counterfeit
products.
X. TAX EVASION & MISUSEOF TAX HAVENSWith the passage of time, the impositionof taxes has become as much a politicalmeans of social and economic control, as it
is a measure of raising revenue. The
dichotomy expressed, in the moral
conundrum of the difference between
lawful tax avoidance (generally perceived
to be the legitimate work of bona fide tax
advisors) and criminal tax evasion (theillegitimate activities of those who hide
lawfully taxable proceeds from the fiscal
authorities) has been reflected in thecompeting effectiveness of tax-shelters as
opposed to tax havens.
Tax-shelters are a legal form of tax
avoidance, expressed most usually, in thecreation of a tax saving incentive for highworth individuals, encouraging them toinvest theoretically in socially responsible
activities, or in schemes which attract alower rate of tax. Since these provisions
are subject to the changes in law and court
rulings, they less popular than tax havens.
Tax-Havens are sovereign off-shore
countries with an advanced degree ofwillingness to permit foreign, non-resident,
high-rate taxpayers to deposit funds
secretly behind anonymous corporate
fronts, or by forming highly complex trust
arrangements.

171

RESOURCE MATERIAL SERIES No. 55
Since the foreign depositors are likely toface considerable difficulties in their homejurisdictions, an obsessive level of secrecy
and the guarantee of complete discretionin the handling of clients affairs are thehallmarks of the most successful tax
havens. Such havens have been one of themain influences on the proliferation ofchannels for moving criminally generated
money, whether it be in the form of theproceeds of drugs, crime or for terrorist
purposes. A typical example of the transfer
of money to off-shore tax havens is thetransfer of money from the USA to the
Bahamas, from where it ultimately lands
in Swiss Banks.
XI. MONEY LAUNDERING &“HAWALA”(UNDERGROUNDBANKING)
Money laundering means the conversionof illegal and ill-gotten money into
seemingly legal money so that it can be
integrated into the legitimate economy.
Proceeds of drug-related crimes are an
important source of money laundering
worldwide. Besides this, tax evasion andthe violation of exchange regulations play
an important role in merging this ill-gotten
money with tax-evaded income, so as to
obscure its origin. The aim is generallyachieved via the intricate steps ofplacement, layering and integration, sothat the money so integrated in thelegitimate economy can be freely used by
the offenders without fear of detection.
Besides the traditional methods ofmoney laundering, with the advent of theInternet, cyber-laundering by means ofanonymous digital cash has also come tothe fore. E-cash may facilitate money
laundering on the Internet. Moneylaundering thus poses a serious threat
world over, not only to the criminal justicesystems of countries, but also to theirsovereignty.

172

The United Nations Convention Against
Illicit Traffic in Narcotics Drugs andPsychotropic Substances Act 1988 (known
as Vienna Convention), to which India is ap a r t y, c a l l s f o r c r i m i n a l i s a t i o n o flaundering of the proceeds of drug crimes
and other connected activities, and for theconfiscation of proceeds derived from suchoffences. There are no reliable statistics
as to how much money is laundered inIndia, but the problem is certainly serious
and a lot of drug money is being laundered
and integrated into the economy. The
tainted money is being accummulated byorganised racketeers, smugglers, economic
offenders and antisocial elements, and isadversely affecting the internal security of
the country. In order to curb the menanceof money laundering, the Government ofIndia is in the process of enacting the
Money Laundering Prevention Act 1998.
In the proposed Act, money laundering has
been defined as:(i) Engaging directly or indirectly in atransaction which involves property
i.e. proceeds of crime; or(ii) Receiving, possessing, concealing,
disguising, transferring, converting,disposing of within the territory ofIndia, removing from or bringing into
the territory of India, the property i.e.
proceeds of crime.
“Crime”, as defined in the Act, covers
several Penal Code offences, i.e. waging
war against the Government of India,
murder, attempted murder, voluntarily
causing hurt, kidnapping for ransom,
extortion, robbery, dacoity, criminal breachof trust, cheating, forgery, counterfeiting
currency, etc. Also for certain provisionsof the Prevention of Corruption Act 1988;
NDPS Act 1985; Foreign Exchange
Regulation Act 1973; and the Customs Act
1962. Thus, crime has been defined very
comprehensively in the Act. The money
generated through crime is liable to be110TH INTERNATIONAL TRAINING COURSEPARTICIPANTS’ PAPERS
confiscated by the State.
Illegal currency transfer via nonbanking channels is called “Hawala”. It isan underground banking system. Secretflows of money can take place in freecurrency areas, as well as in areas where
currency conversion restrictions arepractised, due to the shortage of foreignexchange. An example of the operation is
as follows - somebody in the USA deposits$1000 with an underground banker for apayment to be made to an Indian in India.
The US underground banker contacts theircounterpart in India immediately via
phone, and sends some coded message forpayment to the Indian recipient. The
hawala operator in India would contact therecipient and fix a meeting place. The
recipient, in the meanwhile would have got
instructions on the telephone about thecodeword s/he has to exchange with the
hawala operator. Thus, the hawala
operator in India would, after the exchangeof codeword, hand over money to the Indianrecipient. Of course, the hawala operator
in the USA would charge some fee for theservices rendered. There is no physicaltransfer of money in hawala transactions,as in the regular banking channels. This
channel is generally used by drugtraffickers, smugglers and kidnappers.

Investigations in hawala-related crimes
are conducted under the Foreign Exchange
Regulation Act. Even though the word
‘hawala’ has not been defined in FERA, theessence of the Act is that any person who
retains foreign exchange abroad or sends
foreign exchange abroad, without theReserve Bank’s permission, is violating theprovisions of the Act. In the liberalised
economic atmosphere, the Government ofIndia has felt it necessary to ease
restrictions in the flow of foreign exchange,
both into and out of the country. Thus, a
new draft Act called Foreign ExchangeManagement Act (FEMA) has recently
been introduced in the Parliament toreplace the FERA. After the passage of theAct, foreign exchange offences will acquire
the character of civil offences, as against
criminal offences as is at present. It is
hoped that with ease in transactions
relating to foreign exchange after thepassage of FEMA, the propensity to makeuse of hawala channels will decrease.
Table XI shows figures relating to crime
involving illegal transactions in foreignexchange in India. Table XII shows thedata relating to cases registered, offenders
prosecuted, etc. with regard to foreignexchange offences in India.
XII. COUNTERMEASURES

Basically, the system operates on an
ethnic network and is based on mutual
trust. The network may include more than
three or four countries. The principal
operators engage agents and sub-agents invarious countries for collection anddisbursement of money. Hawala iswidespread in India. Families who havemembers earning abroad are clients of thesystem. The dangerous aspect of thehawala system is the nexus between thehawala and illicit arms smuggling, drugtrafficking and terrorist crimes.

Increase in international law
enforcement activity is having a very
positive result and the doomsday-based
scenario is changing. Organised crime cannever be eradicated, but it can be cappedand controlled. However, there is much to
be done in the form of assisting lessdeveloped countries with expertise,guidance and encouragement. Since work
against the Mafia is resource-intensive andexpensive, it requires talented and skilled
personnel to be able to travel and operatewith the same freedom as the criminals.

173

RESOURCE MATERIAL SERIES No. 55
TABLE XIYear

No. ofCurrency Seized Currency confiscatedFines
Searches Seizures Indian Foreign Indian Foreign Imposed Realised/Raids / Recoveries
1991
2319
1482
11.8
3.6
1.1
1.5
2.8
1992
1215
738
3.9
2.5
2.4
2.2
2.3
1993
1234
843
6.7
4.5
3.1
3
3.2
1994
1540
1046
9.8
8.1
1.8
2.2
27.8
3.4
1995
1175
832
10.2
6.5
1.2
2.3
10.6
2.2
(Cases under FERA in Indian Rs. inCrores)
TABLE XIINAME OF ITEM
Searches & Seizure
Searches conducted
F.E. seized*
I.C. seized*
Total of F.E & I.C
Investigations
Initiated
Disposed
SCNs issued
Amount involved in SCNs issued*
Penalties
Imposed*Prosecutions
Launched
Disposal
Arrests
Persons arrested
Cofeposa
Orders issued
Detained(* in lakhs of Rs.)

1994

1995

1996

1997

1540
314.26974.781,289.04

1175
541.34
1,021.02
1,562.36

1164
724.42
1,083.16
1,807.58

1238
555.481,269.49
1824.97

6,601
5,633
5,486
5,511
6,300
4,652
4,347
5,219
2,771
2,456
2,291
2,721
76,265.32 144,728.58 39,095.21 209804.07
2,775.32

1,067.29

7,804.19

8380.59

264
265

202
125

101
64

92
49

365

228

213

159

107
74

62
67

38
43

49
39

A. Steps at the International Level
Some of the steps which have been takenby the international community andindividual nations as counter measuresagainst economic crime are still in theirinitial stages. As more nations participate
in taking steps against this type of crime,

174

there is every hope that the world economicorder will become more stabilised.
International Co-operation
Efforts have been made in the last five
years for increasing co-operation between
the national police forces and the customs

110TH INTERNATIONAL TRAINING COURSEPARTICIPANTS’ PAPERS
and excise services. It has been matchedby the efforts of government departments,
legislators and judiciaries particularly, theMember States of the European Union, G7 Group of States, the OECD and theBritish Commonwealth, in providing themachinery for assisting each other in the
pursuit of suspected and convictedcriminals, and for their repatriation,prosecution, also for the recovery of theproceeds of crime. Given the disparities
between domestic legislation, judicial
systems, penal codes and the applicationof domestic law to foreign citizens, the taskof harmonising practices internationally isimmensely complex and results have been
mixed. However, the pace of international
co-operation has quickened significantly
during the last five years.
Some of the useful international
conventions in this direction have been:
Council of Europe Convention on
Laundering, Search, Seizure andConfiscation of the Proceeds of Crime;
European Community Directive on
Prevention of the Use of the Financial
System for Money Laundering; European
Convention on Extradition. In thisdirection, some of the other steps
recommended for the collective action of thenations are:(i) Development and regular upgradingof networks of national contact points
on police/customs co-operation andjudicial co-operation.
(ii) Exchange of information regarding
the scale and trends of organised
crime.
(iii) Regular exchange of information on
the provisions and effectiveness ofnational laws relating to organised
crime.
(iv)Continuing study of the scope tosimplify the legal arrangements forjudicial co-operation between States,
to overcome difficulties associatedwith differences in national laws suchas offence definition and prosecution
time limits.
(v) In relation to money laundering,further study of the desirability andpracticability of applying theobligation to report suspicioustransactions (currently applicable tofinancial institutions) to otherrelevant professions andorganisations, and the sharing of
information derived from disclosures.
(vi)E x c h a n g e o f e x p e r i e n c e a n d
information about witness protection
methods and consideration ofeffective measures to protect otherpersons involved in theadministration of justice.
Confiscation
International conventions, as well as
corresponding domestic legislation relating
to confiscation of the illegal proceeds ofserious crime, have their origin inmeasures designed to stop the criminals
from being able to retain and use theproceeds of their criminal activities. A keyelement in the national and international
strategy is to deny criminals the huge
profits derived from organised crime, in theform of laundered money. The aim ofmeasures authorising the confiscation oflaundered money are :(i) Deterrent: making organised crimeless profitable.
(ii) Preventive: stopping reinvestment of
the proceeds in further criminal
activities.
(iii) Investigative: enable investigators tofollow the money trail, thereby
making it easier to identify anddismantle criminal organisations.
As in all aspects of internationalorganised crime, co-operation is vital if
confiscation measures are to be successful.
Major criminals are skilled in concealing

175

RESOURCE MATERIAL SERIES No. 55
and putting their ill-gotten wealth beyond
the reach of the law through the use ofmodern banking, and communications
technology and practice.
In this regard, some of the majorinternational and national efforts havebeen in the form of: European Convention
on Extradition (fiscal offences) Order 1993;
United Nations Convention against Illicit
Traffic in Narcotic Drugs and Psychotropic
Substances; the Prevention of Terrorism(Temporary Provisions) Act 1989 passed by
UK; Vienna Convention 1988; and theproceedings of the Basel Committee on
Banking Regulations and Supervisory
Practices (1990).
National crime control organisations like
FINCEN of the USA, NCIS Financial
Intelligence Unit of UK, TRACFIN ofFrance and AUSTRAC of Australia aresome of the new specialised agencies
making use of financial intelligence anddata-communications in the field of
economic crime. In India, the DRI(Directorate of Revenue Intelligence) andthe EIB (Economic Intelligence Bureau)
have been collecting intelligence, as wellas investigating serious cases of economic
crime and spearheading efforts to plug theloopholes in existing laws, they have also
proposed enactment of new laws like FEMA
(Foreign Exchange Management Act) andthe anti-money laundering legislation.
Other Measures
Some of the other measures required forthe effective fight against the economic
crime are :(i) Steps to provide teeth for regulatorsand international standards ofpractice: Steps should be taken to
ensure that criminals are not able totake advantage of imperfectinvestigative co-operation, a lack ofharmonisation between domestic176

legislation, bank secrecy and absenceof regulations, etc. Confiscation
procedures should be swift andeffective with the result that theaccumulated proceeds from organised
crimes, and assets acquired
subsequently from them, are hard to
replace.
(ii) Steps for making domestic andinternational anti-money launderingsystems effective.
(iii) Steps for protecting the integrity of thefinancial system: This involves
measures to protect the transparency
and integrity of economic andfinancial systems. Criminal
penalties are often applied toreinforce the integrity ortransparency of the financial system,
while regulatory policies are used todetect or deter criminal activities.
(iv)Steps for motivating banks andfinancial institutions to co-operatewith law enforcement agencies.
(v) Steps for improved auditing practice:
Such auditing techniques can beapplied as a part of the organisational
control framework, where they form
part of activities described as internal
audit, inspection or monitoring.
(vi)Steps for strengthening corporate
g o v e r n a n c e : We a k n e s s e s l i k edominant chief executives with
unfettered powers, insufficient
checks and balances over executive
directors, no clear role for the boardof directors and for non-executive
directors, inadequate control overlevels of executive remuneration andinsufficient disclosure of what is
actually happening to the business,
are some of the areas which must be
addressed.

110TH INTERNATIONAL TRAINING COURSEPARTICIPANTS’ PAPERS(vii)Mobilisation of public opinion: Publicawareness of the dangers involved invarious facets of economic crime has
yet to be taken up by the media andpoliticians to a level where the public
starts taking an active interest, andis willing to accept reasonable
regulatory efforts required to tackle
this crime.
B. Steps for India
In India, the concept of economic crimeis still in its initial stages of being
understood and appreciated.
Understandably, there are several
difficulties in combating economic crime,
not the least of which is lack of awarenessin government circles, media, investigating
agencies and the general public about theextent and corrosive effect of economic
crime on Indian society and its institutions.
Violent crime makes headlines, consumes
media attention and raises public furore.
However, since the early 1990s, after theliberalisation of the economy and discoveryof serious financial scandals/scams in its
wake, which adversely affected a large
number of private investors, the subject
has started receiving serious attention
from the Government and Parliament.
Existing laws have been found to be
totally inadequate in dealing with economic
crime, as they target individuals and not
the criminal groups or criminal enterprises.
It is therefore imperative to enact special
laws covering each aspect of economic
crime, i.e, the criminal group itself and its
members or associates, as has been donein many countries. At the same time, there
is a need to deprive the criminal groups
and their co-conspirators of the ill-gotten
gains of their criminal enterprises by theenactment of effective confiscation laws.
Strengthening of Criminal Laws
(i) Substantive law: India does not havespecial laws to control/suppress
organised crime, including economic
crime. However, there has been amove in this direction. The
Government has brought before theParliament draft bills for economic
offences in the field of foreignexchange and money laundering(FEMA and Money Laundering
Prevention Bills) which are soon
expected to become law. Earlier,
SEBI (Securities Exchange Board ofIndia) legislation was passed in orderto regulate the securities market
after a famous securities scam. Thus,
the Indian Government andParliament is alive to the emerging
situation in the field of economic
crime and suggestions formodification of various laws alreadyin place are also being given carefulconsideration.
(ii) Procedural Law: It is in the field ofprocedural law that considerable
improvement is required in India.
Police are a ‘State Subject’ in India,
with the result that many cases
having inter-state ramifications getstalled in legal/jurisdictional
wrangles.
Under section 167 of the Code of
Criminal Procedure, the police are
required to file charge-sheets within
90 days from the date of arrest, failingwhich the accused is liable to be freed
on bail. This often results in chargesheets being filed on the basis of ‘halfbaked’ investigations.
Bail provisions in India are quite
liberal and “bail and not the jail” isthe rule pursuant to a Supreme Court
order. Legislatures should intervene
to make the bail provisions more
stringent. The provision for
anticipatory bail (section 438 CrPC)177

RESOURCE MATERIAL SERIES No. 55
in grave crimes (i.e. punishable with
7 years or more) should be deleted.
Further, no ex-parte bail orders
should be passed by the judiciary ingrave crimes without hearing the
public prosecutor.
(iii)Evidentiary Law: The Indian police
are legally handicapped in collecting
foolproof evidence against criminals
due to certain archaic provisions ofevidentiary law. According to section
25 of the Evidence Act, a confession
made before a police officer is notadmissible in the court, resulting invaluable evidence gathered during
questioning of the accused persons
being lost. Such confessions areadmissible in most countries of theworld. Of course, the courts shouldlook for material corroboration ofsuch confessions.
There is no law in India which legallybinds an accused to give specimensof handwriting, photos, etc to thepolice, even under the orders of thecourt. The result is that valuableevidence is beyond the ambit of theinvestigating agency. A provision
should be incorporated in the
Criminal Procedure Code legallybinding the accused to give
handwriting samples etc, if requiredby the investigating agency.
Miscellaneous(i) Monitoring of Telephones andComputer Networks etc: Thesefacilities are freely used by gangs inorganising criminal activities.
Section 5 of the Indian Telegraph Act
1885 empowers the Central
Government or the State
Government to monitor telephones
and intercept calls for a period of 60days. However, the evidence thus
gathered is not admissible in the178

trial. In the USA, telephones can bemonitored by a law enforcement
agency under the order of the Federal
Court, and the evidence so gathered
can be used in the trial. The Indian
Telegraph Act and the proposed
Computer Law should haveprovisions to provide for admissibilityof evidence gathered by interceptionof telephonic conversation. Similarly,
evidence of computer print-outs oftelephone calls or fax messages sentor received on a particular telephone
terminal should be made admissible
as evidence.
(ii) Under-cover Agents/Decoys: Law
enforcement agencies use undercover agents in most countries togather information about thecriminal gangs, study their modus
operandi and evaluate their futureplans and strategies. This
information is used both forpreventive and investigative
purposes. In the USA, evidence
gathered by undercover agents is
admissible as evidence - whether it
is in the form of their oral testimony
or in recorded audio or video form.
Indian law does not permit the same.
It is suggested that the law should
be amended to provide foradmissibility of such evidence.
(iii) Witness Protection Programme: Incases of economic crime where
influential businessmen andpoliticians are involved, thewitnesses are reluctant to depose inopen court for fear of reprisal at thehands of criminal syndicates. The
cases of threat or criminal
intimidation of potential witnesses
are too many to be recounted. As thecourts use the evidence on record for
determining the guilt of the accused,
it is essential to protect the witnesses

110TH INTERNATIONAL TRAINING COURSEPARTICIPANTS’ PAPERS
from the wrath of the criminal gangs.
Hence, legal and physical protection
should be provided to crucial
witnesses in sensitive cases, so thatthey can depose fearlessly in court.
After the enactment of the Witness
Security Reform Act 1984, the USA
authorities secured convictions ofseveral notorious Mafia leaders. The
US Witness Protection Programmeessentially involves changing theidentity of the witness, relocation,
physical protection (if needed) andfinancial support until such time as
they become self-supporting, subject
to the condition that they depose
truthfully in court. It is extremely
necessary to provide protection towitnesses in India which, to begin
with, could cover cases ofInternational/National/State
importance involving criminal
syndicates.
(iv)Confiscation of Proceeds of Crime:
The main object of economic crime isthe acquisition of money/assets. It isthrough money-power that gangs
corrupt criminal justice agencies andpolitical leadership. A stage comeswhen gangs put a question mark on
the existence of the State. It has
already started happening in small
pockets of India. It is therefore,
essential to deprive the criminal
gangs of their ill-gotten wealththrough stringent legislative
measures. The laws relating toconfiscation of the proceeds of crime
are found in parts of several statutes.
Some of the important Acts relating
to this are as follows :(i) Sections 102 and 452 of CrPC;(ii) Sections 111 to 121 of the Customs
Act 1962;(iii) Section 68 of the Narcotic Drugs
and Psychotropic Substances Act

1985;(iv)The Criminal Law (Amendment)
Ordinance 1944;(v) Foreign Exchange Regulation Act
1973; and(vi)Smugglers & Foreign Exchange
Manipulations (Forfeiture of
Property) Act 1976.
Notwithstanding the existence of theaforesaid legal provisions, it is a wellknown fact that organised criminal
gangs have acquired huge assets.
The annual turnover of the Dawood
Ibrahim Gang is estimated to beabout Rs.2000 Crores a year. Several
Bombay smugglers have invested
hundreds of crores in real estate andother front businesses. This clearlyshows the inadequacy of the current
laws. Hence, consolidation andstrengthening of laws regarding
seizure/confiscation of proceeds ofcrime is essential. It must, however,be added that the provisions in the
Narcotics and Psychotropic
Substances Act 1985 are quite
stringent, but this Act is applicable
only to drug related money and not
to the money amassed through othercrimes.
(v) I m m u n i t y f r o m C r i m i n a l
Prosecution: As per section 306 of the
CrPC, on the request of a police officer
or a public prosecutor, the court may
tender pardon to an accused at theinvestigation or trial stage, subject tothe condition of them making full andtrue disclosure of facts andcircumstances concerning an offence.
This provision is applicable inoffences punishable withimprisonment of seven years or more.
The witnesses are not overly keen toturn approvers (State Witnesses), as
they have to remain in jail till theconclusion of trial. As the trials take179

RESOURCE MATERIAL SERIES No. 55
years, there is little incentive forthem to accept immunity from theState. As the evidence in conspiracy
cases is rather weak, approver
testimony helps in securingconvictions. It is suggested that thelaw should be amended to the effectthat the approver will be released onbail soon after the conclusion of their
testimony in court. This may
encourage some accused to turnapprovers.
(vi)Presumptions against the Accused:
An accused is presumed to beinnocent until proved guilty. The
entire burden is cast on theprosecution to prove the guilt of theaccused beyond reasonable doubt.
Silence of the accused in a given
crime situation, or his/her presenceat the scene of a crime at or about
the time of the crime’s commission,
is not presumed to be a circumstanceagainst which they must explain.
This casts an unfair andunreasonable burden on theprosecution.
The Prevention of Corruption Act
1988 (Section 20) provides for asituation where “if it is proved thatan accused person has accepted or
obtained or has agreed to accept or
obtain for himself or for any otherperson any gratification..... it shall be
presumed unless the contrary is
proved that he accepted or
obtained..... gratification or valuable
thing as a motive or reward.....”. Suchprovisions should also be included inother preventive and regulatory
economic legislations.
(vii)Need for Special Courts: Punishment
should visit the crime within areasonable time if it is to have any
deterrence value. The Anglo-Saxon

180

legal system prevalent in India,
although seemingly fair and equitous
jurisprudence, in practice [due tointerminable delays], has tended to
be ineffective, unfair, pro-rich andpro-influential. About 770,000
criminal cases are pending trial forover 8 years. This does not include
cases pending in the High Courts on
appeal/revision, all over the country.
The average time of trial taken ingrave offences in India is much higher
when compared to countries like
Japan, where the average time taken
is only about 3 months. Few anticorruption cases in CBI have been
pending trial for the last 20 years.
More often than not, the accused
public servant retires from service
and sometimes even dies before thetrial is completed. This has resulted
in a situation where the investigating
agencies get demoralised. It is,therefore, essential that more special
courts are set up to try important
cases of economic crime.
(viii) Setting up of National Level Coordinating Body: India has a federal
structure in which the States haveexclusive jurisdiction to investigate
and prosecute criminal cases. The
CBI comes into the picture very
sparingly in cases of national
importance. The police forces in theStates gather intelligence. The police
forces/concerned departments in theStates are supposed to gather
intelligence about criminal activities
within their jurisdiction. Generally
this is not shared by these agencies
with other States or the Central
Agencies. This insular attitude isequally true of the Central
Investigative/enforcement agencies.
It would, be advisable to setup anational level co-ordinating bodyoutside of the gamut of present

110TH INTERNATIONAL TRAINING COURSEPARTICIPANTS’ PAPERS
enforcement agencies. The mainfunction of this body should becoordination between the police
forces of the different States and theCentral Investigation Agencies in thefield of economic crime.

which transact huge amounts of businessare linked to each other via networks. Morethan a hundred million electronic messages
are transfered daily on the world’s network.
Banking networks transfer trillions ofdollars daily on computer networks.

(ix)Setting up of Economic Offences
Wings in Various State Police Forces:
Some State Police Forces in India
have separate Economic Offences
Wings. All State police forces haveseparate Vigilance/Anti-Corruption
Directorates. However, political willis needed to make these strong andeffective; lacking at the moment.

The computer revolution has a darker
side. Most of the computer applications arelikely targets for traditional crimes
including theft, fraud, vandalism, extortionand espionage. They are also susceptible
to new threats specific to computers andnetworks, such as computer viruses.

(x) Common Data Base for Enforcement
Agencies: At the moment no
mechanism or institutionalarrangement exists for the collectionof data regarding economic crime
either at the Central or State Level.
This hampers investigative efforts
and perspective planning. It issuggested that on the pattern of
FINCEN of the USA, a common
database should be built up andstored in computers in India, whichshould also be accessible to all
enforcement agencies through a
network of computers. The National
Crime Records Bureau can take up
this job.
XIII. COMPUTER CRIME
Information technology today
constitutes an integral part of daily life. In
India, as in the rest of the world, computers
have become an integral part of the fastdeveloping society. Already computers arebeing used in banking, manufacturing,
health-care, defence, insurance, scientificresearch, strategic policy making, law
enforcement etc, apart from their routine
use as office-automation and decisionsupport tools. Increasingly computers

Though computerisation in India started
25 years ago, the use of computers,
particularly in the service sector, is still
very low as compared to world standards.
The density of personal computers in the
country is only 1.8 per thousand persons,as against the world average of 25 per
thousand persons. Only 40 per cent of thecomputers are connected on LAN. There
are quite a few large databases like railway
reservation systems, airline reservation
systems, the district information system of
National Informatic Centre (NIC) etc,
which are more of closed user groups innature, with no outside and interconnectivity.
Due to low-level computer use, thesubject of computer related crime did not
gain much importance in India.
Nevertheless, as per the statistics gatheredby the National Crime Records Bureau, 45
cases of computer crime have been reported
so far. Most of the cases pertain tounauthorised copy of programmes/
software, and there are 15 cases mostly
relating to alteration of data in the banking
accounts maintained on computers.
However, this may be just the tip of theiceberg. Difficulty of detection, evidence
gathering and lack of knowledge on thepart of investigative agencies in computer
data processing are the main reasons for181

RESOURCE MATERIAL SERIES No. 55
the low number of solved computer crime
cases.
The situation in regard to the use ofcomputers in India is changing fast, and it
is expected that the usage of computers in
the country will reach 10 per thousand
persons by the turn of the century. The
Internet users in the country are also
expected to increase from the present levelof 80 thousand to about two hundred
thousand. The concept of Internet andintranet is growing. Data processing andits component will be used as a tool in many
areas such as tax administration, stock
market and capital investment.
Computer crime can be defined as crime
against an organisation or individual inwhich the perpetrator of the crime uses a
computer for whole or part of the crime.
Computer crime can be broadly divided into
computer fraud and computer abuse.
Computer fraud is any defalcation or
embezzlement accomplished by tamperingwith computer programmes, data files,
operations, equipment or media, resulting
in losses sustained by the organisation orindividual whose computer system was
manipulated. Computer abuse is the
improper use of computer resource
provided by an organisation to theindividual who misuses it.
XIX. CLASSIFICATION OFCOMPUTER CRIMESClassification of computer related crime
as defined by OECD and expanded by theCouncil of Europe as :(i) Computer-related Fraud: The input,
alteration, erasure or suppression ofcomputer data or computer
programs, or other interference withthe course of data processing that
influences the result of dataprocessing, thereby causing economic

182

or possessory loss of property of
another person, with the intent ofprocuring an unlawful economic gain
for themself or for another person(alternative draft : with the intent tounlawfully deprive that person of
their property).
(ii) Computer Forgery: The input,
alteration, erasure or suppression ofcomputer data or computer
programs, or other interference withthe course of data processing in amanner or under such conditions
which would, according to nationallaw, constitute an offence of forgery
if it had been committed with respect
to a traditional object of such an
offence.
(iii) D a m a g e t o C o m p u t e r D a t a o rComputer Programs: The erasure,damaging, deterioration or
suppression of computer data orcomputer programs without right.
(iv)Computer Sabotage: The input,
alteration, erasure or suppression ofcomputer data or computer
programs, or interference withcomputer systems, with the intent tohinder the functioning of a computeror a telecommunications system.
(v) Unauthorised Access: The accesswithout right to a computer systemor network by infringing security
measures.
(vi)Unauthorised Interception: Theinterception, made without right andby technical means, ofcommunications to, from and within
a computer system or network.
(vii)Unauthorised Reproduction of aProtected Computer Program: The
reproduction, distribution or110TH INTERNATIONAL TRAINING COURSEPARTICIPANTS’ PAPERS
communication to the public without
right, of a computer program which
is protected by law.
(viii) Unauthorised Reproduction of a
Topography: The reproduction
without right of a topography,
protected by law, of a semiconductor
product, or the commercial
exploitation or the importation forthat purpose without right, of a
topography or of a semiconductor
product manufactured by using the
topography.
Optional List(i) Alteration of Computer Data or
Computer Programs: The alterationof computer data or computer
programs without right.
(ii) Computer Espionage: The acquisition
by improper means or the disclosure,transfer or use of a trade orcommercial secret without right or
any other legal justification, withintent either to cause economic loss
to the person entitled to the secret or
to obtain an unlawful economic
advantage for oneself or a third
person.
(iii) Unauthorised Use of a Computer: The
use of a computer system or network
without right, that is either :(i) made with the intent to cause loss
to the person entitled to use thesystem, or harm to the system or
its functioning; or(ii) causes loss to the person entitled
to use the system or harm to thesystem or its functioning.
(iv)Unauthorised use of a Protected
Computer Program: The use without
right of a computer program which
is protected by law and which has

been reproduced without right, with
the intent either to procure an
unlawful economic gain for oneself orfor another person, or to cause harmto the holder of the right.
XV. COMMON TARGETS OFCOMPUTER CRIME
The most common targets of computer
crime are :• Military and intelligence computers
may be targeted by enemies.
• Business houses may be targeted bytheir competitors.
• Banks and other financial
institutions may be targeted byprofessional white collar criminals.
• Any organisation of government orservice industry may be the target of
terrorists.
• Any commercial, industrial or trading
company may be the target of
employees or ex-employees ofcompetitors.
• Universities, scientific organisations,research institutions may be thetarget of students, industrial or
business houses and other antisocial
elements.
Finally, any computer user may be thetarget of crackers/hackers who do it
sometimes for intellectual challenge, forrevenge, for gain or even for fun.
XVI. PROBABLE PENETRATIONPOINTS
In computer crimes, hardware, software,data or communications are vulnerable.
Below, some common data security
loopholes are specified:••••

Erroneous or falsified input data.
Misuse by an unauthorised end user.
Uncontrolled system access.
Ineffective security practices.

183

RESOURCE MATERIAL SERIES No. 55• Procedural errors within thecomputer EDP Cell.
• Programme errors.
• Flaws in the operating system.
• Failure of communication system.
• Lack of job definition for employees.
XVII. PREVENTION OFCOMPUTER CRIMESPreventive measures should be taken bycomputer users to make it difficult forpossible criminals to penetrate the system.
There should also be a set of detection tools
to identify instances where preventative
tools cannot safeguard the system. Firstof all, threats which are expensive andcritical should be prevented, they are :(i) Large loss threats having potential
to cause great financial distress to theorganisation.
(ii) Threats which could stop or disrupt
the effectiveness of the organisationfor extended periods.
(iii)High visibility threats which could
cause serious damage to the imageof the organisation.
(iv)Habit forming threats which maylead the criminal from smaller to highlevel crimes, if not prevented at theinitial stages.
XVIII. COUNTER-MEASURES FORPREVENTION OF COMPUTERCRIMECounter-measures should be aimed atattacking the various steps which are
generally involved in the commission ofcomputer crimes i.e. planning, execution,
concealment and conversion stages ofcomputer crime. Some of the steps are :(i) Identify the potential perpetrator andpenetration point(s).
(ii) Determine the magnitude of the risks
for each type of threat.
(iii)Identify the most probable threats.

184(iv)Select the method of prevention i.e.
internal controls, audit, security force
and surveillance.
Internal Controls
These include access control,
accountability, audit trails, error message
follow-up, anticipation controls, data
validation, output controls etc.
Audit
Auditing includes promoting a strong
audit image, performing surprise audits,
adopting audit procedures for electronic
data process, designing systems with builtin-audit-jacks, risk analysis, studies andperiodical reviews.
Security ForceThis would secure the physical safety ofthe personnel and equipment, and thesafety of the data. Some of the safetymeasures would include posting of dogs,
security of the visible area, installation ofcameras, censors, TV monitors, warning
signs and use of security software having
password protection, access control, virus
check, copyright protection etc.
SurveillanceSome methods for the most effective useof first-line supervisors to foster anticomputer crime environments include
detecting and reprimanding employees forminor policy violations, detecting breachesof control functions or security procedures,
creating an environment for which
computer crime is difficult to perform, andcounselling the staff on matters like
integrity, loyalty and conscientiousness.
XIX. THE LAW RELATING TOCOMPUTER CRIMESInterpol has identified the following as
offences or crimes which can be classified
as computer-related crimes :110TH INTERNATIONAL TRAINING COURSEPARTICIPANTS’ PAPERS(i) Unauthorised access or interception
and theft of data (hacking, theft ofdata, interception of data, time theft
and others).
(ii) Alteration of computer data (logic
bombs, Trojan horse, virus, worms
and others).
(iii) Computer-related fraud (automatic
teller machines and cash dispensers,
credit cards, computer forgery,gaming machines, input/output/
programme manipulations, means of
payment, point of sale, telephonephreaking and others).
(iv) U n a u t h o r i s e d r e p r o d u c t i o n(computer games, other software,semi-conductor topography etc).
(v) Computer sabotage (hardware,
software, etc).
(vi)Counterfeiting using computers.
(vii)Computer pornography.
(viii)Other computer-related crime(bulletin board systems, theft of trade
secrets, indictable material, etc).
XX. THE LEGAL PROVISIONS
Laws, criminal justice systems andinternational co-operation have not kept
pace with technological changes. Only a
few countries in Western Europe and theOrganisation for Economic Co-operation
and Development (OECD) have draftedlaws to address the problem. However,none of the countries have resolved alllegal, enforcement and preventive issues
arising out of technological change.
Computer crime is a new form of transnational crime and its effective treatment
requires concerted international cooperation.
Some of the important international
efforts in the direction of computer crime
legislation and its prevention have been :(i) 12th Conference of Directors of
Criminological Research Institutes

within Council of Europe (1976) andthe formation of select Committee ofCouncil of Europe on Economic
Crime.
(ii) Study by Organisation for European
Co-operation and Development in1983 and the publishing of analysisof legal policy in 1986 forinternational application andharmonisation of criminal laws in thefield of computer crimes.
(iii) Study by the Council of Europe
wherein procedural issues such as
international search and seizure of
databanks and international cooperation in the investigation andprosecution of computer crimes were
examined.
(iv)International Chamber of Commerce
published documents in July, 1988
describing international businessview on computer-related crime andcriminal law.
(v) OECD developed a set of guidelines
for security of information systems in
1992.
(vi)The issue of prevention of computer
related crime was discussed in areport entitled “Proposals forConcerted International Action
Against Forms of Crime Identified in
the Milan Plan of Action” preparedby the United Nations in 1987. In its
13th Plenary meeting, the UN
Congress adopted the resolution
calling upon the member States tointensify their efforts to combat
computer crimes by adopting a seriesof measures.
(vii)In 1994, the United Nations also
prepared a manual on the prevention
and control of computer-related crime
which presented an international
review of the criminal policy.
(viii)Many of the countries, largely
industrialised and some which are
moving towards industrialisation,
have in the past ten years reviewed

185

RESOURCE MATERIAL SERIES No. 55
their respective domestic criminal
laws from the point of view ofadaptation, further development andsupplementation so as to prevent
computer-related crime. A number ofcountries have already introduced
more or less extensive amendmentsby adding new statutes in theirsubstantive criminal law. These are
USA, Austria, Denmark, France,
Germany, Greece, Finland, Italy,
Turkey, Sweden, Switzerland,
Australia, Canada and Japan.
Countries like Spain, Portugal, UK,
Malaysia and Singapore have madeisolated efforts by enacting new laws
to prevent computer-related crimes.
There is yet no specific law in India todeal with computer crimes. The various
cases reported are dealt with under the
existing laws/offences like Copyright Act,theft, trespass, fraud, forgery, etc.
However, the Government of India is awaveof the issue and it is expected that soon a
specific law for prevention and prosecutionof computer crimes will be passed, basedon the guidelines and classificationsuggested by OECD.
It is proposed that an information
security agency will be set up at thenational level to play the role of ‘cyber-cop’
to take care of computer-related crime. The
cyber-cop provisions will take care of acts
such as hacking through Internet, anddevise ways of maintaining data privacy.
According to the action plan on the subject
drawn by the Government of India, anational policy on information security,
privacy and data protection for thehandling of computerised data shall beframed by the Government of India within
six months. It is also proposed that anational computerised records security
department shall be created within threemonths for enforcing security
requirements.

186

XXI. CONCLUSION
With the explosion in the field of
information technology, certain common
features are bound to be foundinternationaly in the field of economic andcomputer crime. As of necessity, nations
should unite in countermeasures against
these crimes. After the Cold War, there has
been a fair amount of integration world
wide in the spheres of banking, trade andcommerce.
Despite our best efforts, domestic crime
is likely to spill over into the international
arena. Hence the need for international
cooperation in suppressing it in the formof expeditious extradition of fugitive
criminals, deportation of undesirable
aliens, mutual legal assistance ininvestigations and prosecutions, and the
speedy execution of Red Corner Notices
i s s u e d b y I n t e r p o l . F u r t h e r, t h e
International Community must put theirheads together to harmonise extradition,
deportation, dual criminality andconfiscation laws to make the global society
and its financial systems sound and stable.

110TH INTERNATIONAL TRAINING COURSEPARTICIPANTS’ PAPERS
ANNEXURE A
Various Economic Offences
Economic Crimes
Tax Evasion
Illicit Trafficking inContraband
Goods (Smuggling)
Evasion of Excise Duty
Cultural Objects Theft
Money Laundering

Legislation
Income Tax Act
Customs Act, 1962
COFEPOSA, 1974

Enforcement Authorities
CBDT
Collectors of Customs

Central Excise andSalt Act, 1944
Antiquity and Art
Treasures Act, 1972
Foreign Exchange
Regulation Act, 1973
Foreign Exchange
Regulation Act, 1976
IPC

Collectors ofCentral Excise
Police/CBI
Directorate of
Enforcement
Police/CBI

Foreign Contribution
Manipulations
Land Hijacking
Police/CBI/Real Estate Fraud
Trade in Human Body Parts Transplantation of Human Police/CBIOrgans Act, 1994
Illicit Drug Trafficking
Narcotic Drugs and
NCB/Police/CBI& PIT NDPS Act, 1988
Psychotropic
Substances Act 1985
Fraudulent Bankruptcy
Banking Regulation Act,
CBI
1949
Corruption and Bribery ofPrevention of Corruption State Vigilance Bureaux/
Public ServantsAct, 1988
CBI
Bank Frauds
IPC
Police/CBIInsurance Frauds
IPC
Police/CBIRacketeering in
IPC
Police/CBIEmployment
Illegal Foreign Trade
Import & Export (Control) Directorate General ofAct, 1947
Foreign Trade/CBIRacketeering in False
Passport Act, 1920/IPC
Police/CBITravel Documents
Credit Cards Fraud
IPC
Police/CBITerrorist Activities
Terrorist and Disruptive
Police/CBIActivities (Prevention) Act,
1987
Illicit Trafficking in Arms
Arms Act, 1959
Police/CBIIllicit Trafficking in
Explosives Act, 1884 &Police/CBIExplosives
Explosive Substance Act,
1908
Theft of Intellectual
Copyright Act, 1957
Police/CBIProperty(Amendments 1984 & 1994)
Computer Crime/Software
Copy Right Act, 1957
Police/CBIPiracyStock Manipulations
IPC
Police/CBICompany
Companies Act, 1956
Civil in Nature
Frauds (Contraband)
MRTP Act, 1968
187