Is Financial Crime a 'Crime', Proper so Called? A Study of the Legislative Developments in Sanctioning 'White Collar Crime' and an Assessment of What the Future Holds for Financial Fraud

Abstract

“We do see market abuse - of which insider dealing is the highest profile aspect …[as] a financial crime - it may not attract the immediate moral outrage of a violent crime against a person but it is, in our view, and the view of the UK government, a serious white collar crime with potential sentences of up to 7 years imprisonment … We have not yet used our power to prosecute insider dealing as a criminal offence and we recognise that effective deterrence involves ensuring both that people fear being caught [and] they fear the consequences of being caught … but we also see the risk of criminal convictions and custodial penalties playing a real part in that.” Margaret Cole, Director of Enforcement, FSA addressing the American Bar Association (October 4, 2007). This study seeks to provide an analysis of, the current legislative, institutional and regulatory structure in the United Kingdom (UK) for punishing those who are regarded to commit ‘financial crime’,1 and more broadly what is commonly referred to as ‘white collar crime.’ This paper will therefore focus on the approaches taken to define ‘financial crime’ in the English law context, including the legal attempts over the years to criminalise ‘white collar crime.’ It will also highlight the difficulty that authorities have faced in pinning down financial crimes over the years. Further, the study will also delve into the institutional framework that has been devised to combat ‘financial crime’ over the years. These include: the Crown Prosecution Service, the Serious Fraud Office, other statutory regulatory bodies such as the Financial Services Authority (FSA) and the Department of Trade and Industry which has since been renamed the Department of Business, Enterprise and Regulatory Reform (BERR). This commentary will demonstrate the challenges that these institutions have gone through in a bid to address financial crime and that the Government has prioritised addressing the problem of financial crime; hence the multiple legislative and institutional responses directed at alleviating the problem. The study will also examine the legislative framework that has been directed at fighting white collar crime and pinpoint the challenges in the development of the criminal law and sanctions dealing with white collar crimes. It alludes to the diverse approaches advocated by various scholars over the years to address white collar criminality. This study will analyse what impact the new Fraud Act 2006 may have on the fight against white collar crime in the UK. The paper is primarily focussed on the UK jurisdiction and may in certain instances examine the European and US practices regarding financial crime.