White-collar crimes are going down. According to data from Trac Reports, white-collar crimes are down by 24.4% in 2021 compared to 2016. In the first nine months, there were only 3.545 new white-collar crimes in 2021.
While white-collar crimes are declining, they are still serious offenses that can hurt the economy. This article will help you understand what white-collar crimes are, why they matter, and how they affect the economy.
What Are White-Collar Crimes?
White-collar crimes are non-violent crimes committed by people of high social status. They are often committed by business owners and executives with a lot of power, wealth, and prestige associated with their careers.
White-collar criminals can be knowledgeable individuals. According to a global study on occupational fraud, around 49% of white-collar criminals hold a University while 15% hold a post-graduate degree.
They use their education and intelligence to commit illegal activities, such as:
- Insider trading
- Money laundering
How White-Collar Crimes Impact a Company’s Growth
One of the most critical factors that impact a company’s growth is its reputation. The main reason behind this is that consumers expect companies to be honest and ethical. However, white-collar crimes can negatively affect the company’s brand and reputation.
The bad reputation can lead to decreased sales and increased costs related to damage control, such as legal fees, hiring PR firms, and implementing new policies like background checks for employees who handle sensitive information.
Moreover, the money lost to fraud also triggers cash flow problems. Data shows that companies can lose an average of 5% of their revenue to white-collar crimes. Thus, businesses might not be left with enough budget and how to reduce their spending on essential things like marketing and development.
How White-Collar Crimes Impact a Nation’s Economy
The impact of white-collar crimes on a nation’s economy is complicated and multi-faceted. It is all connected with a company’s revenue. Businesses contribute a huge amount to the nation’s GDP. Data shows that the business sector contributes as much as 72% of the GDP.
It is evident that if companies keep losing money to white-collar fraud, they might not be able to contribute effectively to the nation’s GDP. Moreover, if white-collar crimes are severe and lead to a complete shutdown of the business, they can also lead to job loss, further impacting the economy.
Considering all the factors, white-collar crimes can lead to annual losses of between $426 billion and $1.7 trillion. Such huge numbers can affect the nation’s economy on a large scale.
How to Prevent White-Collar Crimes
To prevent white-collar crimes, companies should:
- Conduct thorough background checks. Companies should make their background checks more thorough, especially in states with high crime rates, such as Oregon. The state had over 900,000 distinct cases in 2020. Moreover, the state recently experienced an unemployment fraud worth $24 million. Hence, in such states, it is best to seek professional assistance. Professional Oregon background checks service providers can offer end-to-end help performing the checks thoroughly. Thus, they can take all the burden off you and ensure you hire the right and trusted candidates.
- Hire the right people. White-collar criminals are often skilled at manipulating others into helping them commit crimes, so hiring people with questionable character is risky. But hiring based on skills alone doesn’t guarantee that you won’t end up with someone who commits fraud on the job.
- Develop a firm ethics policy. An ethics policy can help you identify and prevent fraud in your organization. It should be clearly communicated to all employees and include steps for reporting suspected illegal or unethical behavior.
Types of White-Collar Crimes
White-collar crimes are a catchall term for financial fraud, including embezzlement, fraud, corruption, and money laundering. They differ from other types of crime in that they’re often committed by people of high social status who have access to resources.
White-collar crimes can be complex for law enforcement officials to detect because they aren’t usually violent and don’t involve stolen physical property. Instead, white-collar criminals operate under the cover of legitimate businesses or cover their tracks through shell companies and offshore accounts.
In addition to making it harder for investigators to crack down on these offenses and thus limiting their ability to protect businesses, white-collar offenders tend not to make headlines like some other notorious criminals do.
Some of the common types of white-collar crimes are:
- Insider trading
- Money laundering
- Individual tax violations
- Securities and commodities fraud
- Mortgage and financial institution fraud
- Intellectual property theft
Steps to Take When White-Collar Crimes Occur At Your Business
The sad thing about white-collar crimes is that around 90% go unreported. However, that should not be the case. Here’s what you should do if there’s a white-collar crime in your office:
- Report the crime.
- Have a plan in place.
- Train your employees to look for white-collar crimes, including fraud and embezzlement.
- Keep your staff informed about what is going on at work, but don’t get too detailed with information that might make them uncomfortable sharing it with others if they believe someone on their team has committed a crime or may commit one in the future.
- Have a clear white-collar activity policy that applies equally to all employees regardless of rank within the organization or department structure.
- Monitor staff behavior. Don’t wait for something terrible to happen before taking steps toward protecting yourself from potential harm from such activities.
White-Collar Crimes Are on the Rise
White-collar crimes were once considered minor offenses that were not taken seriously by law enforcement agencies because they were believed to have no impact on society. However, researchers have realized that these types of offenses can cause severe damage to the economy if left unchecked.
While the number of crimes is declining, their impact is rising significantly. Today’s average cost of a white-collar crime is much higher than it used to be. With the increase in costs, the effect on the nation’s economy, too, is growing. Hence, there is a need to bring down both numbers and the cost of white-collar crimes.
White-collar crimes are on the rise and affecting the economy. These crimes can be committed by anyone with access to technology who knows how to use it maliciously and is motivated by greed.