110TH INTERNATIONAL TRAINING COURSE
VISITING EXPERTS’ PAPERSECONOMIC CRIME IN INDIA
Shri L.C. Amarnathan
I. INTRODUCTION
Crimes in whatever form or category
they may fall in, impact mankind in
multifarious ways. They damage
democratic development, skew social
development, inhibit industrial
development and endanger economic
development. Overall crime is theantithesis of development and is strongly
pitted against it. Development is an innate
urge nurtured by nations. Economic
development, a pre-requisite fordevelopment of any other kind, anddevelopment is also intrinsically linked tomutual and international cooperation.
The United Nations Declaration and theProgramme of Action on the Establishmentof a New International Economic Order(1974) aims at the creation of better
conditions so that all peoples may attain adecent life. It then proceeds to define new
guiding principles for the future course ofcrime prevention and criminal justice inthe context of development needs and thegoals of an International Development
Strategy for the third U.N.Development
Decade. This would appear as a collective
global response towards development, thekey element being economic development.
Countries, without exception, have been
spurred into economic activities in the
recent decades, with the objective ofensuring improved quality of living fortheir citizens. The ‘haves’ sharing with the‘have nots’ through monetary and material
aids became a norm, serving mutualinterests equally. As if to add conviction to* Director General of Police, Sikkim Police
Headquarters , India.

the trite saying that ‘good and evil go
together’ is the emergence of new forms ofcrime, more sophisticated at exploiting
loopholes and opportunities. These arecharacterised as economic crimes,
growingly becoming the order of the day,robbing the masses of the assurances of theState.
The global march from the industrial age
to the economic age is confronted
principally by the growth of crime, that
impedes progress towards an egalitariansociety. The disruptive effects of crime,
particulary economic crime, that makes
mankind collective victims, can not becheckmated unless countries stand united.
The effective countermeasures against
economic crime need, therefore, to be on a
firm foundation of international
cooperation.
A. Globalization and Liberalization
From time immemorial, the driving force
behind every nation is to boost trade andbuild the economy. The dominant economic
trends of the current decade areglobalization and liberalization.
Globalization is being growingly recognized
as the present day compulsion for growth.
Liberalization has put countries world overon a fast track to grab the opportunities
that lie ahead to establish economic
competitiveness.
There is a revolutionary tide sweeping
the world as a consequence of the above.
Profound changes are taking place in theway businesses, small or large are being
done. Remarkable technologicaldevelopments, significantly the
information revolution and enticing

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RESOURCE MATERIAL SERIES No. 55
economic opportunities, have opened a newworld of commerce. Traditional paper
based procedures are fast being replacedby new standards such as Electronic Date
Interchange (EDI), Electronic FundTransfer (EFT), Electronic Commerce (EC)etc.
A Pandora’s box of opportunities toindulge in crime of a sophisticated kind
have also grown. With an openness of
economy coupled with the vacuum in law
and procedures, ‘economic crime’ was not
far behind. Even the traditionally known
forms of economic crimes such as cheating,fraud, larceny, embezzlement, criminal
misappropriation and criminal breach oftrust have taken serious proportions
involving enormous sums of money andaffecting scores of victims. Globally,nations seem to be driven to the realisationthat it is not possible to be at once
politically internationalist andeconomically isolationist.
B. Globalization of Crime
In recent times we are witness to a
growth of crimes not merely in quantity but
more so in quality. The threats posed bypresent day dimensions of crimes,
particularly their sophistication inpersonal and public security are mattersof serious concern. Crimes are presently
modeled on business ventures, operated insyndicate styles and with ‘profit’ as the
motive, practically emulating the current
economic development in this respect.
Organised crimes, as they are called, haveeven transcended borders to constitutetransnational organised crime.
In the above developments, crimes are
ignoring or overcoming borders. However,borders have established themselves as thebane of law enforcement. The criminals
thus operate as if they are in a borderlessworld, while the law enforcers are confined
to operate in a bordered world. If efforts

70

towards economic development and growthcompel countries to stop recognizing
borders and start cooperating, it is a major
question as to why there is reservation orresistance to the same in the effort tocurtail crime.
Cosmopolitanism has led to theemergence of criminal networks. This
would call for the development of a law
enforcers network capable of countering
the commissions of criminal networks.
Many relevant question will arise; should
not economic liberalization anddevelopment be matched by theliberalization and development of criminal
justice system? Should not the emergenceof criminal networks be countered by theestablishment of a law enforcess network?
Does it not call for law enforcement
cooperation that emulates economic
cooperation?
C. Crime Prevention
The United Nations commemorated
their golden jubilee in October 1995. Whatfigured prominently on the agenda was theurgent need for international cooperation
against crime. The serious global concernsof the late 20th Century are economic
crimes and organised crimes, thetransnational kind in particular.
In the present day global trends, if
criminal development outpaces economic
development it would be a disquietingdevelopment because of its deleterious anddestabilising effects. The rule of law andpublic security are as essential for
democratic development as they are for
economic development. Governments aregoverned by priorities. The compulsionsof economic growth may have given
precedence for economic development overdemocratic development. In this context,
issues of contention and conflict may also
arise. Are globalization and liberalization
aiding and contributing to growth and110TH INTERNATIONAL TRAINING COURSE
VISITING EXPERTS’ PAPERS
sophistication in new crimes? Should thepriority be shifted towards crime control
with strict regulations and stringent laws?
However, a base approach can not be
advocated, nor will it ever be acceptable.
For analogy, if there are bank hold ups, canwe stop banking? In the conflict between
the administrators of economic
development and criminal justice, theoverarching question concerns
identification of a balance between the twin
exigencies of economic development anddemocratic development. Both areessential for the establishment of a new
economic order and improved quality ofliving.

explanatory.

A response to resolve the conflicts could
be crime prevention as a policy, withstrategies and plan of actions. Also,
possibly to conceive the appointment of
Crime Prevention Managers whose
singular task would be to prevent crime.

B. Definition

II. ECONOMIC CRIME
Barter, a trade by direct exchange ofgoods, as was prevalent even at the
beginning of the millenium, would perhaps
appear as the safest economic practice.
With a monetary system consisting ofmoney currency, money value, exchange
value, market determined goods/products
value etc., controlling the present economic
practices in relation to trade in diverse
forms, the idea of going back to barter
system would be a utopian one.
A. Crime Classification
Over the decades, a few broadclassifications of crimes have come into
general usage. One set distinguishes themas ‘crimes against life’, ‘crimes against
body’, ‘crimes against property’, ‘whitecollar crimes’ and ‘others’. Prevalently in
use is the set that classifies them as ‘violent
crimes’, ‘property crimes’, ‘economic crimes’
and others. These terms are self-

The U.N.Crime Survey adopts a directclassification of crimes by type, undereleven (11) heads. The Interpol crime
survey adopts a direct classification ofcrimes by the type under ten (10) heads,
but using slightly different terminology.
Though not differing much in generalclassification, some degree of difference inthe usage of terminologies continues toexist in the approaches of countries. It
would be suffice to mention that similarity
helps foster appreciation and further
generate conviction to cooperate andcoordinate efforts to curb crimes.

“Economic crimes are a manifestation of criminal
acts done either solely or in an organised mannerwith or without associates or groups with an intent
to earn wealth through illegal means, and carryout illicit activities violating the laws of the land,
other regulatory statutory provisions governing the
economic activities of the Government and its
administration” (Crime in India, NCRB, Govt. ofIndia).

Once popularly known as ‘white collar
crime’ by virtue of the fact that it can be
indulged in by a person of responsibility(holding an office) in the course ofoccupation, these forms of crime were
known to cover cheating, fraud, larceny
criminal misappropriation, embezzlement,
criminal breach of trust and to some extent
forgery, corruption and counterfeiting.
Considering the profound economicchanges and directions, these forms ofcrime have taken a hydra-headed
transformation as economic crimes,
encompassing many more new generation
crimes from misappropriation to money
laundering; from simple fraud to floating
fictitious firms; from breach of trust to bankmanipulations. Thus in form and content,
crime would appear to be dynamic andever-changing.

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RESOURCE MATERIAL SERIES No. 55
When it comes to defining ‘economic
crime’ there appears to be agreement thati t c a n n o t b e d e f i n e d p r e c i s e l y,comprehensively and wholly acceptably.
There are as many definitions as there arecountries, with each one correct inthemselves and based on the perceptions
as well as experiences in dealing with these
forms of crimes already manifested andmanifesting. The sheer diversity of suchcrime makes us appreciate that it can be
defined infinitely. This would only go toproject the scope and extent to which
economic crimes have become all pervasive
universally.

Some of the major impacts on thenational economy that may be caused by
the economic crimes, are:As far as criminality is concerned these
economic offences, while bearing similarity
to traditional offences, constitute a
separate class by virtue of their scale anddimension; modus operandi; and in making
individuals/state/society as collective
victims of financial loss.

• Increase in inflationary pressure• Uneven distribution of resources andcreation of elitism• Marginalisation of tax base
• Generation of abundant black money• Creation of parallel economy• Undermining of developmental
works/efforts• Becomes a breading ground forcorruption• Illicit businesses thrive affecting licit
business• Resources of financial and commercial
institutions are diverted and distorted• Weakens morale and commitment of
citizens• Poor/weakest continue to be at risk
• Countries economic equilibrium is at
stake

Summarising, “an evil (criminal) intent
is evident in economic crime - an intent togain wrongfully by the perpetrators andcause loss wrongfully to the perpetrated”.
Wi t h g e n e r a l a c c e p t a n c e o n t h i sfundamental, the call of tomorrow may be
a comprehensive “economic offences code”,
distinct from penal codes, to effectively
counter economic crimes.

A significant corollary to the above is thediversion and investment of the illicit
money (black money) acquired bycommitting such crimes into furthering
crimes and the hegemony of the criminal
syndicates rule. The threats to public
security and eventually national security,
would appear imminent as an ultimate
consequence.

C. Impact on National Economy
Economic crimes cause significant
damage to the general economy of thecountry, adversely affecting the growth anddevelopment of the nation. Internationally
it erodes confidence in the financial
credibility and stability of the nation, thus
weakening its global competitiveness andf u r t h e r, b e c o m i n g u n a t t r a c t i v e t oinvestments from within as well as outside.
Where there is a high incidence level of
economic crime, the government andbureaucracy are also viewed as being
corrupt and weak.

D. Problem of Definition
Controlling and effectively dealing withcrimes, even the ordinary kind, pose somechallenges. Some of the major ones are:

72

(i)

A legal definition and precise
conception of economic crime is yet
to come into acceptance.
(ii) In a large number of cases, these
forms of crime are viewed not as‘criminal’ but as ‘civil’ in nature,
falling somewhere between ‘crime’and ‘tort’.
(iii) Often mens rea, criminal intent or110TH INTERNATIONAL TRAINING COURSE
VISITING EXPERTS’ PAPERS
malafides may prove to be difficult
to establish, and they can beeffectively hidden by claiming
carelessness, procedural infirmities,
lack of supervision, pretention of notknowing the consequence, transfer
or distribution of culpability anddiluted liability.
(iv) While individual liability for a crimeis the accepted principle, collective
liability and/or vicarious liability is
yet to be strongly encoded instatutes and law. These constitutethe grey areas of law.
(v) There is application of the rigid
judicial doctrine of evidence beyond
all reasonable doubt. Adverse
presumption of conduct of theaccused and shifting of the onus of
proof is yet to become acceptable asa relaxation of the doctrine.
(vi) There is a tendency to treat these
forms of crime as ‘fine only’ offences,whereas the calculated manner inwhich these crimes are schemed,organised and committed strongly
call for prison terms in addition tofines and forfeitures.
(vii) Generally public awareness islacking for want of legal education,with the result they get preyed on
are to their gullibility. They also
continue to get trapped despite
lessons learnt, in their craze to getrich quick.
(viii)No less important are a score oforganisational issues such as
information sharing, availability of
trained manpower, collective drive,
coordination of efforts, trust
between law enforcement agencies
etc.
(ix) There are innumerable regulations
in government, with areas ofincompatibility. This coupled withcompartmentalisation of various
regulatory and enforcement
measures lends to easy exploitationand commission of economic crimes.
(x) By the very nature of such crimes,
economic crimes surface long after
the actual period of commission andevidence (oral/documentary/circumstantial) is hard to come by.
F u r t h e r, w h a t i s r e p o r t e dconstitutes the tip of the iceberg,leaving scores of others unexposed
and not dealt with.
E. Cost of Crime
A precise and universally acceptable
method of computing the costs of crime is
yet to emerge. Society pays substantial
costs, both directly and indirectly, as aresult of crimes and in confronting them.
The operation of the criminal justicesystem and crime prevention efforts direct
cost is itself quite substantial. The U.N
Survey (1990) revealed that highly
developed countries expend on an average
2% to 3% of their budgets on crime control
and the administration of justice. The
same in developing counties showed a highpercentage ranging from 9% to 14% of thenational budgets. The 3rd U.N. Crime
Survey revealed that developed countries
enlist the services of 225 police officers forevery 1,00,000 population for crime control,
and about 20 per 1,00,000 to staff prisons.
The developing countries maintain morethan 500 police officers and more than 50
prison staff per 100,000 population.
Victims face colossal losses in both direct
and indirect terms. While precise costs areavailable for property of various kinds,
there are no yardsticks to compute theindirect costs. Even in respect to theformer, constituting the direct kind, it isoften alleged that property lost isundervalued and correspondingly theproperties recovered are overvalued.
Since 1990 the U.N. has carried out anovel ‘Victimisation Survey’ to indicate thegrowth of crime and the indirect costs as a73

RESOURCE MATERIAL SERIES No. 55
result of these; largely in terms of the levelof general insecurity of the citizenry. Basedon empirical data and on an interviewbased approach, a cross-section of theurban population of 50 countries
principally, the first round of study showedthat more than half the urban populationworldwide have been victimized by a crimeat least once during the period 1990-1994.
It profiled regions of high crime rates as
Africa, Latin America on the one hand andCanada, Australia and the USA on theother, as well as regions of relatively low
crime rates in Asia, Europe, west Asia andArab Countries.
Citizens not usually perceived as victims
do also pay for crime. The cost of the same
being indirect can not be easily estimatedand quantified. For example, witnesses
spend hours and days in investigation andtrials. Consumers pay higher prices,
without knowing that they do, in crimes
related to business or economic crime. Car
owners and real estate owners pay higher
insurance premium than what they would
have otherwise paid. Take into account the
manhours lost through leave on mourningand obsequies. Tax evasion by theunscruprulous brings on higher taxationof honest tax payers. Ultimately everyone,
every citizen of every country, is short on
the goal of improved quality of living.
Crime discourages investments andinhibits economic growth. Low income
slums and ghettos of countries intransition, when plagued by crimes, bear
the brunt when capital is diverted to moreproductive environments. The ability ofcrime to distort economic activities is moremanifest in the emergence of organised
crimes of a transnational nature. The
criminal syndicates are a force to reckonin the world economy and determine eventhe destiny of developing nations. The‘Economist’ in an article (1995) points outthat “where the main purpose of74

investment (illegal) is to launder drugmoney, the effect is often to crowd out legal
business”.
F. Classification
Though ‘economic crime’, being nonviolent in nature with often organised orcollective perpetrators, could be precisely
set as a major classification distinctively
from ‘violent crime’ and ‘property crime’,its minor classification based on nature andform could generate a healthy debate. The
popular understanding of ‘economic crime’at the functional level is that these offences
concern money and matters of finance. The
traditional classification of ‘white collaredcrime’ covers cheating, fraud orlarceny;misappropriation or
embezzlement;beach of trust andcounterfeiting principally involving money.
To attempt a sub-classification of
economic crime purely on a criteria that itconcerns money and matters of finance will
be contestable, as it would exclude some
important types already characterised as
economic crime. Correspondingly, there
may arise logical questions as to traditional
offences where gain, in terms of money andvalue figures, may be included under
economic crimes. These are all matters toconsider before a sub-classification is
attempted. Largely the following forms ofcrimes have been characterised as
constituting economic crimes or offences:(i) Tax evasion(ii) Excise/Custom duty evasion(iii) Smuggling in contraband goods(iv) Bank frauds/Scams(v) Corporate frauds(vi) Stock market manipulations/Scams(vii) Insurance frauds(viii) Foreign Exchange violations(Hawala)(ix) Money laundering(x) Drug trafficking(xi) Real estate dealings (Benami)

110TH INTERNATIONAL TRAINING COURSE
VISITING EXPERTS’ PAPERS(xii) Industrial espionage(xiii) Intellectual Property Rights
violations(xiv) Credit Card crimes(xv) C o r r u p t i o n ( P o l i t i c a l / G o v t /Corporate)(xvi) Counterfeiting (Currency/Bonds/
Shares)(xvii)Floating fictitious firms(xviii)Floating Non-Banking Financial
Corporations (NBFC)(xix) Collection of protection money(Extortion)(xx) Frauds relating to government
subsidy(xxi) Abuse of Foreign Aid programmes
Considerations may arise whether‘organised crime’, including ‘transnational
crime’, should figure as the ‘genus’ and theabove forms as ‘species’, particularly whenthe main motive of these crimes is ‘profit’.
It still leaves from consideration a few moretypes of crime such as ‘theft of culturalobjects’, ‘Real Estate frauds/land hijacking’,‘Trade in human body parts’, ‘Racketeeringin employment’, ‘Racketeering in
passports’, ‘Illegal migration’, ‘Computerrelated crimes’ including software piracy.
It would be a constructive exercise toattempt ‘major’ and ‘minor’ classificationsof economic crime by harmonizing views.
One such attempt is a classification by thenature of crime and by form of punishment.
In a broad way, the former can be
subclassified as:(i) C r i m e s i n v o l v i n g g o v e r n m e n tfinances (eg. tax evasion, duty
evasion, subsidy frauds etc.)(ii) Crimes involving individuals’
finances (eg. cheating,misappropriation, breach of trust
etc.)(iii) C r i m e s r e l a t e d t o c o r p o r a t emanagement (eg. commissions asbribes, illegal gratification, floating

fake firms, copyright violations etc.)(iv)Crimes affecting national economy(eg. foreign exchange manipulations,stock market manipulations,counterfeiting currency etc.)
The latter can be sub-classified as:(a) Crimes punishable by penal codes(b) Crimes punishable by special laws
III. INDIAN SCENARIO
A. Institutional Support
A sound institutional arrangement
exists in India to collect, collate and analyse
reported crime statistics, to support
effective decision making and regularly
review policy formulation. The National
Crime Records Bureau is such an
institutional arrangement set up under the
Ministry of Home Affairs (interior) on thestrength of the National Police Commission(1979). A strong organisational structure
exist at the: district level (province), theDistrict Crime Records Bureau; the Statelevel (regional), the State Crime Records
Bureau; again networked at the national
level, the National Crime Records Bureau,
to collect information on crimes andcriminals.
The common objective, “to act as aclearing house of information on crimes andcriminals”, has greatly enabled effective,
efficient and economic law enforcement.
The statistical information for analysis isa by-product and is published as “Crime inIndia” for public dissemination covering
more than 55 million crimes, thus making
the criminal justice system accountable.
The report covers all the criminal cases
reported under a score of laws and by all
enforcement agencies set up to deal withordinary, as well as sophisticated, crimes.
A major technological upgrade is
responsible for attaining this capability,
establishing a fully computerised “Crime75

RESOURCE MATERIAL SERIES No. 55
Criminal Information System”. A captive
sat.com based network styled “Polnet”, an
exclusive law enforcement computer
network that offers voice, data and imagetransfer facilities, is the next step ofupgrade to be taken up.

A major step was recently initiated by
setting up a Commission for
Administration of Law to take up legal
reforms holistically. In the first reportsubmitted only recently, the Commission
has observed the following:

In addition to the key steps ofinstitutional networks and technology
upgrade, a major unifying step is theuniformity of procedures, forms andreporting systems. This has become thefocal issue for achieving “standardisationin policing” as a vision for the future.

(i) List of Central (federal) Acts-morethan 2500(ii) List of Central Acts to be scrapped1300(iii) List of laws to be changed-60(iv)List of laws to receive regular review115

B. Economic Crime Statistics
The ‘Crime in India’ publishes annually
the reported crimes and also profiles thepercentage of detection, number of accused
persons charged, the result of trial etc. Itfeatures the list of criminal laws thatdemand effective enforcement by law
enforcement agencies. The bulk of reported
crimes constitute those falling under the
relevant sections of the Indian Penal Codenamely cheating, fraud or larceny;
misappropriation or embezzlement;
criminal breach of trust, counterfeiting,and narcotic drugs cases.

As anachronistic laws abound, they
advocate recourse to ‘sunset’ provisions in
all laws, which compel review atpredetermined periods for decision as
whether to continue, amend or scrap suchlaws.

C. Law Enforcement Agencies
Besides strengthening laws where there
are perceived loopholes, regular upgradeof laws, by enacting ‘special laws’ to deal
with emerging crimes, have received close
attention. Institutionalised arrangements
ensure that a close degree of monitoring is
exercised. A few of the recent legal
initiatives are:(i) Foreign Exchange Management Bill(ii) Money Laundering (Prevention) Bill(iii)Security Exchange Board of India
Act(iv) Depositories Ordinance(v) Computer Crimes (Prevention) Bill(draft)(vi) Information Technology Bill (draft)76

D. Estimates and Guestimates: Costof Economic Crime
The fall out or consequences of economic
crime, are colossal. At the high end arearguments that the illegitimate economy
generated by various forms of crime
virtually matches the size of the legitimate
economy of the country. Economic crime,
being a high reward and low risk activity,
is also construed as an area of expansion,much like the national economy. The
existence of ‘black money’, principally incash form, is known to exist in practicallyevery country. Drug crimes have added a
new dimension by bringing into existence‘dirty money’. While black money isobtained by avoiding taxes/duties,
including circumvention of regulations,dirty money is obtained completely byillegal means.
A recent survey estimated that nearlyRo 46,000 crores ($460 million) proved to
be bad loans given by banks, with little orno scope for recovery. If this represents theaccounted for input of loss to the national

110TH INTERNATIONAL TRAINING COURSE
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economy, it is possible to guestimate thetrue, staggering size of the illegitimate
economy. The National Institute of Public
Finance and Policy estimated in 1985 a
black economy of Ro 405 billion. Tax
evasion is stated to be anywhere close to70%.
There should be well formulated effort
in the days to come to estimate, as
accurately as possible, the damage in termsof money as a result of the commission of
economic crimes. This, in other words,
would be a step to estimate the cost of crime
itself. The obvious benefit would be acompulsion for proper policy formation,
regulations for plugging loopholes coupledwith effective enforcement measures.
Needless to add, the strategy of thecriminal justice system should not only beto establish that ‘crime does not pay’ but
also to assert that ‘crime will entail
recovery of illegitimate money’.
IV. THE COUNTERMEASURES
A. Introduction
It is difficult to make anything foolproof.
Further, law enforcement becomescomplicated when on the one side, crimes
are growing in sophistication and on theother, individual rights recognition is
growing in stringency. In the present day
reality, the criminal justice system can atbest make things difficult, and aim in theprocess to achieve crime prevention. If ourexperiences are any lesson, a successful
example of crime prevention exists incounterfeit proofing currency and travel
documents. By its very nature economic
crimes call for counterfeit proofing
measures.
Though some battles have been won, thewar waged against economic crimes willcontinue to be a relentless one; with every
modus operandi adopted by criminals
countered by successful strategies by law

enforcement agencies. It would not be aconvincing argument to maintain or expectthat the traditional law enforcers, namely
the police or the anti-corruption agencies,
alone are to come to grips with thedevelopment of economic crime. The
growing complexity and diversity of
economic operations would neccessitate amultiplicity of enforcement agencies, butwith a high degree of coordination. This is
expected to be achieved only by sensitizing
all the enforcement agencies adequately.
B. The Progress
What was viewed essentially as anational malady, with duty and tax evasion
constituting black money, assumed global
dimensions with the coming into
circulation of ‘dirty money’ as aconsequence of drug money or laundered
money. The U.N Drug Convention (Vienna
1998) focused attention on this problem.
The constructive development is theconstitution of the Financial Action Task
Force (FATF) to conceive policy measuresthat inhibit and detect money laundering
attempts. A recent attempt is the
preparation for a UN declaration on
Organized Transnational Crime (Warsaw
1998). It would be a matter of interest to
study the forty (40) recommendations givenby the FATF which zeroes in on the banking
operations that contribute in a major way
in the perpetration of money laundering.
The principal recommendations are:(i) Limit bank secrecy laws(ii) Adopt ‘know the customer policy’(iii)Compel banks to report suspecttransactions(iv) Regulate non-banking business(v) Introduce measures for asset
forfeiture(vi) Treat money laundering as an
offence and as extraditable
Progressively, attempts have been madein few counties to consider largely legal

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RESOURCE MATERIAL SERIES No. 55
reforms involving measures to amend andupgrade existing laws, and introduce
special laws to deal with emerging formsof sophisticated crimes. Principal among
them are laws to deal with money
laundering; enabling asset forfeiture;
regulating bank transactions, operation ofnon-banking financial corporations; andregulating operations of stock markets.
Institutional support for enforcement, fineand imprisonment as penalty, andmeasures for expeditions trial, are otherconcrete steps that have been initiated.

The emerging concept of sunset laws isborne out of years of long experience.
Under this principle, laws are enacted fora specified period (say 10 years) to meetthe challenges of a new form of crime. At
the due time, a review of the law becomes
a compulsory measure either to extend or
to allow its continuance, or it becomesanachronistic at the time of review.
Considering the proliferation of laws, newenactments should necessarily containsunset provisions to keep the list at an
optimal level.

In India, a number of special laws havebeen enacted to deal with various forms of
economic crimes. The existing legal
provisions in the following legislation for
asset forfeiture are being increasingly andeffectively used with a growing degree ofsuccess:

C. Recommendations
1. Conceptual
In battling economic crimes there has
been an overwhelming introduction ofregulations and enactments of new laws.
Regulations and laws are good, provided
they are regularly monitored andeffectively enforced.

(i) C r i m i n a l L a w A m e n d m e n t
Ordinance (1944)(ii) Customs Act (1964)(iii)Code of Criminal Procedure (1973)(iv)Foreign Exchange Regulation Act(1973)(v) Smugglers and Foreign Exchange
Manipulates (forfeiture of property)
Act (1976)(vi)Narcotic Drugs and Psychotropic
Subtances Act (1985)
The mere conception of new laws can not
be deemed as a panacea for legal ails.
Proliferation of laws many prove over a
period of time counter-productive for very
many reasons. One school of thought holds
that we should stop making new ineffective
laws and seek means to render effective theexisting laws. Effective enforcement
becomes relevant in this context. However,a blend of both, or a balance by enacting
laws on a needs based manner (coupledwith effective enforcement) is advocated.

78(i) Counterfeit Proofing
It has been elaborated that ‘crime
prevention’ holds a lot of promises, if proper
strategies are devised. If counterfeit
proofing measures have proved effective toprevent counterfeiting of currencies andtravel documents, similar approaches/measures in economic operations may
result in prevention of economic crimes.
Illustratively:(i) Shares can be counterfeit-proofed toprevent use of forged shares fortransactions.
(ii) The Depository System can be
adopted where shares are held in
trust by the depository and theirtrading be done notionally, without
physical exchange/transaction inshares.
(iii) Floating of fictitious firms in thename of non-existing persons can be
frustrated by obtaining photographsof the constituent members, byverifying their addresses, by110TH INTERNATIONAL TRAINING COURSE
VISITING EXPERTS’ PAPERS
subjecting the cases to physicalinspections.
(iv)Operation of Non-Banking Financial
Institutions can be subject to tighter
regulations, regular monitoring, theirmembers made accountable, and bysimply generating public awarenesscampaigns.
(v) Unauthorised taking of deposits canalso be made a cognizable offence.
(vi)Operation of bank account can be
subject to regulations such as keeping
photographs of account holders,
restricting the limit of monetarytransactions on a single day etc.
Many more innovative steps can beconceived and regularly monitored after
implementation.
(ii) Crime Prevention Officers
The time-tested approach to deal withcrime has at best proved to be a post
mortem step. Typically, a law enforcement
officer comes into role after the commissionof a crime, to set the law into motion or
investigate. Economic crimes are
distinctively different from ordinary crime.
The crime that gets committed remains
shrouded in secrecy and surfaces
incidentally when a situation has gone outof control.
This situation is unlikely to improve
unless there are meaningful measures,such as by appointing Crime Prevention
Officers whose sole task would be as
watchdogs to monitor developments day to
day and report suspicious transactions. If
there exists a concept of a vigilance officer
in government departments, it has topermeate widely and role redefinition is
also needed.
2. Legal(i) Redefining Economic Crime
It is difficult to deal with sophisticatedcrime by relying on the traditional sectionsof the law. A glaring disparity in economic
crime is the existence of collective
involvement in crime as in corporations
and other institutions, as against theconventional concept of an individual’s
involvement in the crime. Legally, this
aspect needs to be addressed.
Most importantly, existence of mens rea
or criminal intent is difficult to prove inthis form of crime; having to pass the
judicial doctrine when it comes to trial. A
recognized concept in defining the
culpability of an individual can be:
1. Misconduct, as in departmental
discipline.
2. Criminal misconduct, as in corrupt
practices
3. Criminal conduct, as in a crime.
A path breaking measure could be toconceive acts involving economic crimes as
either ‘financial misconduct’ or as ‘criminal
misconduct’, to give the same a new
dimension and meaning. The next
progression, linked to the same, would be
innovative punishments for such offencesthat involve recovery of the illgotten money.
(ii) Economic Offences CodeEconomic offences are even now dealt by
the relevant provisions of the Penal Code.
This has resulted in an anachronistic
status wherein sophisticated crimes aretreated as conventional crimes, namely
cheating, fraud or larceny;
misappropriation or embezzlement; andbeach of trust. This carries many pitfills.
The newer forms of economic crimes canbe countered effectively by evolving a newand comprehensive ‘Economic Offences
Code’. The Code should also contains
institutional arrangements and proceduresfor its enforcement. The Code may modify
investigation procedures, methods/
standards of proof, as well as system of

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trial. There can be scope for regulated,negotiated settlements. Sentencing can bemade innovative and imaginative,
including confiscation of property,
deprivation of privileges etc. The Code may
have to be constructed to convey a message
to all that economic liberalization should
not mean freedom to exploit.
(iii) Independent CJSThe political system has to bearpressures from various corners and theelected bodies’ judgements in relation to thenational economy is often influenced byvarious considerations. A reasonably
independent criminal justice system, withchecks and balance measures, would be
more capable of dealing with the crimes
effectively in the overall interests of thenation. This is a measure that is muchwanted when political parties sustenanceis dependent on contributions of theundisclosed kind.
3. Organizational
A sound infrastructure is essential as acountermeasure to deal with economic
crime, more so because of their organizedmanner of operation. Some of the issues
concerning organization have been
indicated as passing remarks in thepreceding paragraphs.
The coming into operation of a numberof independent law enforcing agencies is
neccessitated by the sheer complexity of
governmental functions and the inabilityof one organization to emerge as anomnipotent enforcement agency. Whileaccent will be on strictly monitoring theregulations with an aim of crime
prevention, the independent departmental
enforcement agencies can play a fruitfulrole as crime prevention managers; while
the criminal acts that gets noticed can be
dealt with by law enforcement authorities,
namely the police.

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Some of the factors that would be
resulted oriented are:(i) Organized/standardized collection of
information and close monitoring of
the same(ii) Setting up of common database witha view to exchange information(iii) E s t a b l i s h m e n t o f p r o p e r
infrastructure to discharge crime
prevention responsibilities(iv) I n f o r m a l m e a s u r e s , s u c h a s
personnel exchange and coordination,at the operational level(v) A g r e e m e n t f o r a t r a n s p a r e n t
information sharing mechanism(vi)Networking of all agencies throughinnovative technological solutions(vii)Hosting the set up with officers ofproven integrity(viii)Incentives to effective enforcement ofcrime prevention, detection andrecovery measures(i) Technical Cooperation and Assistance
A measure to enable and vitalize
collective efforts can not be achieved
without technical cooperation within the
country or among countries. There is needfor specialized organizations to combat
these sophisticated crimes. This would callfor training of personnel, regular exchange
programmes and a means to constructively
share experience as a confidence building
measure.
(ii) Mutual Cooperation
Economic crimes, particularly the money
laundering kind, transcend national
borders. The effect of such crimes are also
felt not only in one’s own country, but also
in other countries. Traditionally, the placeof occurrence of a crime is highly relevantfrom the viewpoint of jurisdiction. The
enforcement of law is by its natureterritorial, for no State allows other States,
as a general rule, to exercise powers ofgovernment within it. National borders are110TH INTERNATIONAL TRAINING COURSE
VISITING EXPERTS’ PAPERS
regarded, thus, as inviolable. Mutual
cooperation has become the only available
means to overcome these borders. The
available practical solutions are:(i) Bi-lateral/multi-lateral treaties(ii) Mutual legal assistance treaties(iii)Extradition(iv) Neutral trial venues
V. CONCLUSION
In the words of Oscar Wilde, a “thief isan artist, and a policeman is, at best, acritic”. If this carries conviction, law
enforcers are required to remain
convincingly ahead in the race between thelaw breakers and law enforcers. If
countries are to cooperate for economic
development, there seems to be no valid
reason not to cooperate in curbing crime.
The foregoing would substantiate thatinternational cooperation is built and restson the pivotal props of:(i) Legal reforms/harmonization oflegislation(ii) Institutional growth/professional
skills(iii) Technical cooperation/assistance(iv)Mutual cooperation/assistance
Ultimately, trust could be the trumphcard.

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