ECONOMIC OFFENCES BY DR. ISH KUMAR, IPS IGP, CID 14/11/2005 1 - PowerPoint PPT Presentation

ECONOMIC OFFENCES BY DR. ISH KUMAR, IPS IGP, CID 14/11/2005 1

DEFINITION OF ECONOMIC CRIME 1. Unlawful activities which take place during the course of economic activities 2. Crime motivated by greed are normally committed by so called respectable citizens including public servants in the course of their business or official duties 3. An illegal act or series of illegal acts committed to obtain money or property, to avoid payment or loss of money or property. Hence the essential ingredient is a dishonest intention with the motive of wrongful gain or wrongful retention of money or property by himself or any other person. 2

IMPACT OF ECONOMIC CRIMES: 1. Ruining of country’s economy – Lack of funds with the Government for taking development programmes 2. Spread of black money 3. Use of dirty money for organized crime – threat to internal security and defence 4. Loss to innocent depositors/share holders A) A single white collar crime (Security scam in 1992) by Harshad Mehta – (7720 Crores) is more than the total property lost in all the property offences – Dacoities, robberies, thefts, burglaries etc., over a decade in the whole country. B) Indian Bank Scam, 1997 : 838 Crores C) Ketan Parekh Scam, 2001 : 1230 Crores 3

REASONS FOR INCREASING ECONOMIC CRIME: 1. Increase in economic activities 2. Economic Liberalisation (1991 onwards) 3. Greed 4. No fear of law 5. Lack of social stigma 6. Political nexus 4

REASONS FOR INCREASING ECONOMIC CRIME: (Contd..) 7. Lack of adequate cooperation among various Government agencies as well as from other countries 8. Availability of highly trained professional experts (Lawyers, C.As) to criminals 9. Banking secrecy laws 10.Ill equipped I.Os and over burdened courts 5

TYPES OF ECONOMIC OFFENCES 6

FRAUDS 1. Bank frauds 2. Import and Export frauds 3. Insurance frauds 4. Telecom frauds 5. Procurement frauds 6. Securities related frauds - Stamps security Telgi Case 7. Frauds by land Developers, housing societies 8. Frauds in Passports, Visas and other travel documents 9. Frauds in Chit funds Companies 7

FRAUDS (Contd..) 10. Deposit related (a) Cooperative banks (b) N.B.F.Cs 11. Misappropriations in Various Govt. schemes e.g., I. Housing schemes (a) Wrong beneficiaries (b) Substandard material (c) Substandard Construction (d) Contract not to L1 II. Power Projects – excess payments III. Poverty alleviation programmes etc. 8

FRAUDS (Contd..) 12. Vanishing Companies 13. Money Circulation Schemes 14. Multi Level Marketing 15. Job related - Fake job placements abroad � Above list is not exhaustive. 9

FORGERY 1. Fake educational certificates (tampered marks sheets, NCC) 2. Fake promotional G.Os 3. Forged registration documents etc. 10

CYBER CRIMES 1. Offences under I.T. Act i.e, Hacking etc. 2. Use of computers for committing economic crimes i) Electronic transfer of money ii) Credit Card frauds iii) ATM frauds 11

OTHER ECONOMIC OFFENCES 1. Counterfeit currency 2. Hawala and money laundering 3. Tax evasions 4. Foreign exchange violations 5. Adulteration of food and drugs 6. Hoarding and black marketing 7. Smuggling of gold, drugs, contraband, antiques, idols, endangered species, human organs etc. 12

GOVERNMENT AGENCIES INVOLVED IN CONTROLLING ECONOMIC OFFENCES 1. C.B.I. 2. State Police, Vigilance (V & E) & ACB 3. Customs and Central Excise 4. D.R.I. (Directorate of Revenue Intelligence) 5. Income Tax Department 6. R.B.I. 7. SEBI 8. R.O.C. 13

GOVERNMENT AGENCIES INVOLVED IN CONTROLLING ECONOMIC OFFENCES (Contd..) 9. Central Economic Intelligence Bureau 10. D.G.F.T. (Directorate General of Foreign Trade) 11. Directorate of Enforcement 12. Directorate of Anti Evasion 13. C.V.C. and C.V.Os 14. B.S.F. 15. State Govt. Deptt. i.e, Commercial Taxes 14

OTHER GOVERNMENT AGENCIES - NEED FOR COOPERATION 1. Banks 2. Local revenue authorities 3. Courts 4. Excise Department 5. Insurance companies 6. Liquidators 7. Municipal authorities 8. Registrar offices 9. Departments of State Governments i.e., R.C.S. etc. 15

LAWS IN CONTROLLING ECONOMIC CRIME 1. IPC (Criminal misappropriation, criminal breach of trust, cheating, forgery, criminal conspiracy, counterfeit currency) 2. P.C. Act, 1988 - Criminal misconduct 3. Criminal Law Amendment Act, 1944, 1967 4. A.P. Prize Chits & Money Circulation Scheme (Banning) Act, 1978 5. A.P. Protection of Depositors of Financial Establishments Act, 1999 6. Information Technology Act, 2000 7. Copy Right Act 8. N.D.P.S. Act 16

LAWS IN CONTROLLING ECONOMIC CRIME (Contd…) 9. I.T. Act (Income Tax Act) 10. Sales Tax Act 11. Customs Act 12. Import, Export Control Act, 1947 13. Conservation of Foreign Exchange of Prevention of Smuggling Act, 1977 14. FERA & FEMA 15. RBI Act 16. Companies Act 17. Essential Commodities Act 18. Prevention of Food Adulteration Act etc. 17

Economic Offences & Enforcement Agencies Sl Economic Crimes Acts of Legislation Enforcement No Authorities 1 Corruption and Prevention of Corruption Anti Corruption / Bribery of Public Act, 1988 Vigilance Bureaux / Servants CBI 2 Bank Frauds IPC Police / CBI 3 Insurance Frauds IPC Police / CBI 4 Company Frauds Companies Act, 1956 / IPC Police / CBI / MRTP Act, 1968 5 Racketing in false Passport Act, 1920 / IPC Police / CBI Travel Documents 6 Credit Cards Fraud IPC Police / CBI 7 Racketeering in IPC Police / CBI Employment 8 Stock Market IPC Police / CBI Manipulation 18

Economic Offences & Enforcement Agencies (Contd..) Sl Economic Crimes Acts of Legislation Enforcement No Authorities 9 Computer Crime/ Copy Right Act, 1957 / IT Act Police / CBI Software Piracy/ 2000 Cyber Law 10 Theft of Intellectual Copy Right Act, 1957 Police / CBI Property (Amendments 1984 & 1994) 11 Cultural Object’s Antiquity and Art Treasures Police / CBI Theft Act, 1972 12 Trade in Human Transplantation of Human Police / CBI body parts Organs Act 1954 13 Real Estate Frauds IPC Police / CBI 14 Illicit Drug Narcotic Drugs and NCB / Police /CBI Trafficking Psychotropic Substances Act 1985 & NDPS Act 1988 19

Economic Offences & Enforcement Agencies (Contd..) Sl Economic Crimes Acts of Legislation Enforcement No Authorities 15 Money Laundering Foreign Exchange Directorate of Regulations Act 1973 Enforcement 16 Tax Evasion Income Tax Act Central Board of Direct Taxes 17 Illicit Trafficking in Custom Act 1962 Collectors of Customs contraband goods COFEPOSA, 1974 (Smuggling) 18 Evasion of Excise Central Excise and Salt Collectors and Central Duty Act, 1973 Excise 19 Illegal Foreign Import & Export Directorate General of Trade (Control) Act, 1947 Foreign Trade/ CBI 20

Economic Offences in India & AP Sl Type of Offence 2003 2004 Highest in No 2004 1 Cheating 47478 50164 Raj= 8333 AP=7581 AP=7928 UP=2377 2 Criminal Breach 13432 12897 AP=1099 AP=898 of Trust 3 Counterfeiting 2055 1912 Bihar=439 AP=318 AP=175 (Highest) 4 Cyber Crime (IT • 496 Delhi=163 AP=101 & IPC) AP=221 (Highest) Crime Clock 2004 -1 Cheating every 10 minutes 1 Criminal Breach of Trust every 41 21 Minutes 1 Counterfeiting every 4.5 hours

Inter State Comparison for Criminal Breach of Trust and Cheating (in 2003) � No. of Reported Cases Where the Loss of Property > 1 crore Criminal Breach of Trust Cheating State/UT Worth Rs. Worth Rs. 1-10 10-25 25- 50 TOTAL 1-10 10-25 25- 50 TOTAL Crore Core Crore Crore Core Crore Andhra Pradesh 4 2 3 9 0 0 0 0 Karnataka 6 0 0 6 24 0 0 24 Maharashtra 23 3 1 27 4 2 0 6 Tamil Nadu 1 0 0 1 1 0 0 1 Delhi 5 0 0 5 26 0 0 26 Gujarat 3 1 1 5 10 0 0 10 TOTAL 42 6 5 53 65 2 0 67 22

Comparative Statement of Economic Offences in A.P. Reported Crime � Head 2003 2004 2005 (upto Sep) Non Banking financial 186 119 151 companies Stock Market / Shares etc. 9 11 3 Commercial Banks (Public & 23 34 20 Private sector) Prize Chits & Money Circulation 187 185 89 Schemes Investment schèmes (Plantation 38 386 13 schemes etc.) 23

Comparative Statement of Economic Offences in A.P. (Contd..) Reported Crime � Head 2003 2004 2005 (upto Sep) Cheating by an Individual / Group 2351 2978 2648 Counterfeit / Fake Currency / 223 154 129 Documents/ Notes/Coins Passports 10 93 173 Marks Sheets / Degree 110 421 291 Certificates/Other General Securities Urban Co-Operative Banks 12 12 5 Co-op Societies/Institutions 60 38 16 24

Comparative Statement of Economic Offences in A.P. (Contd..) Reported Crime � Head 2003 2004 2005 (upto Sep) Land Scams/Housing Societies/ 366 553 467 Individual/Groups Employment Scams / Job Rackets 239 251 208 Misappropriation/Govt. Funds/Pvt. 127 190 109 Institutions Cyber Crimes 4 Nil Nil Criminal Breach of Trust 659 119 534 25 TOTAL 5118 6816 5914