Criminal Activity in the Financial Sector

Abstract

The financial services sector is an important part of many economies. In the United Kingdom it assumes a huge contribution to the economy, accounting for 7.9% of UK GDP in 2012, 11.6% of tax receipts and employing over a million people, with a further 967,000 in professional services linked to this sector. Some of the key parts of the financial services sector include insurance, pensions, personal banking services and commercial banking services. In the United Kingdom, financial services also have a significant global dimension, attracting substantial foreign investment and in 2011 generating a trade surplus of £47 billion (The City UK, 2013). There are a wide range of criminal activities which occur in the financial services sector. They range from a robber holding up a bank with a gun, cyber criminals seeking to hack into bank computers to steal funds, to complex frauds perpetrated by the financial services sector against their own customers. Fraud alone is estimated to cost the financial services sector over £5 billion in 2012 (National Fraud Authority, 2013). The response to deal with this crime is also more complex. There are the traditional criminal justice agencies dealing with the ubiquitous volume crimes, but there is also a substantial private sector employed by the financial services organizations to protect it from crime, and there are also a number of regulators dealing with what many would regard as crimes but are not treated as such. For these reasons the financial services sector makes such an interesting case study to explore. This chapter will begin by arguing some deviant behaviours in the financial services sector which could be treated as crimes that seldom are and are frequently referred to as ‘grey crimes’. Sutherland (1949) was one of the first researchers to note the different way ‘white-collar’ crimes are dealt with in comparison to volume crimes. In this chapter, criminal behaviours in the financial services sector will be broadly grouped under the following key headings.