Economic Offence &

Financial Crimes

CHARACTERISTICS

An Economic Offence is an act where crime related to

property is committed without use of force

As per SC Economic offence are biggest threat to financial

health of the country, the economy of the country is at stake

The motive behind an Economic Offence is to acquire

material advantage or to avoid a material loss by the

perpetrator of the offence or his associate.

Alternatively the motive is to inflict a material loss on a third

party with full knowledge of likelihood of such loss.

Sr

No. Economic Crimes Acts of Legislation Enforcement Authorities

1 Tax Evasion Income Tax Act Central Board of Direct taxes

2 Illicit Trafficking in

Contraband Goods

(Smuggling)

Customs Act 1962

COFEPOSA 1974

Collector of Customs

3 Evasion of Excise Duty Central Excise & Salt Act 1944 Police / CBI

4 Central Object Theft Antiquity & Art Treasures Act

1972

Police / CBI

5 Money Laundering Foreign Exchange Regulations Act

1973

Directorate of Enforcement

6 Foreign Contribution

Manipulations

Foreign Contribution

(Regulation Act 1976)

Police / CBI

7 Land Hijacking / Real

Estate / Fraud

IPC Police / CBI

8 Trade in Human Parts Transplantation of Human Organs Police / CBI

9 Illicit Drug Trafficking Narcotics Drugs & Psychotropic

Substances Act & NDPS Act 1988

NCB 2 Police / CBI

SPECIALIZED AGENCIES

Sr

No. Economic Crimes Acts of Legislation Enforcement Authorities

10 Fraudulent

Bankruptcy

Banking Regulation Act 1949 CBI

11 Corruption & Bribery

Of Public Servants

Prevention of Corruption Act

1988

State / Anti Corruption –

Bureaux / Vigilance

Bureaux/CBI

12 Bank Fraud IPC Police / CBI

13 Insurance Fraud IPC Police / CBI

14 Racketeering in

Employment

IPC Police / CBI

15 Illegal Foreign Trade Import & Export (Control) Act

1947.

Directorate General of Foreign

Trade / CBI

16 Racketing in False

Documents

Passport Act 1920 /IPC Police / CBI

SPECIALIZED AGENCIES

TYPES OF FRAUDS

• Banking frauds

• Housing frauds

• General Cheating

• Stamps frauds and Counterfeit currency

• Cyber crime

• MLM

• Investment related crime

ECONOMIC OFFENCES - TYPES

BANKING

• Frauds in Loans & Advances, Letter of Credit, Bill discounting,

Cheque Discounting, Cash Credit, Bank Guarantee

• Misappropriation of cash in remittance, withdrawal of cash

from Deposit Accounts through forged instruments

• Fraudulent encashment of negotiable instruments

• Multiple housing loans from different Banks or financial

institutions on the same property, etc.

• Credit & Debit Card Frauds, e- commerce frauds

ECONOMIC OFFENCES - TYPES

HOUSING

• Giving less carpet area, not complying with provisions of all

amenities as agreed upon by Builders and other such

violations of Maharashtra Ownership of Flats Act

• Illegally constructing and selling of buildings by Builders

• Not complying with the formalities related to the Conveyance

of the land on which building is constructed by Builders

• Frauds related to MHADA property, SRA Frauds

• Frauds in Transferable Development Rights (TDR)

• In addition to this all frauds related to transactions in landed/

immovable properties

ECONOMIC OFFENCES - TYPES

GENERAL CHEATING

• Frauds in Import & Export, DEPB (Duty Exemption Pass Book)

License, Will, Power of Attorney, etc.

• Obtaining delivery of goods and fraudulent non payment of

the same,

• Investment frauds; inviting investments by offering higher

rates of interest and then defrauding,

• Sale of Motor vehicles obtained on rent.

• Frauds in respect of Non Banking Govt. Financial Institutes

ECONOMIC OFFENCES - TYPES

STAMPS FRAUDS & COUNTERFEIT CURRENCY

• Counterfeiting of stamps, Stamp Papers and Franking

• Counterfeit Currency notes.

• Frauds by Govt. License Stamp Vendors and other violations

of Bombay Stamps Act, etc.

ECONOMIC OFFENCES - TYPES

INVESTMENT / DEPOSIT FRAUDS

• Offering people to invest in various schemes against which

money earning returns are declared and then dupe investors

in repayment of principal as well as interest.

• Introducing multilevel marketing schemes, which initially

work but, after some period, become non- viable and

investors are duped

• Introduction of non workable multilevel marketing schemes

• Frauds under money circulation schemes, chit funds, etc.

Online Economic Offences

Nigerian Scam ( 419 scam )

ATM card Frauds

Internet Lottery scam

Phishing

Vishing-

SMS’s, Phone Calls.

E-shopping scam

Matrimonial scam

Online Ponzy Schemes

Speak Asia Ltd.

Q-net

Ponzi Scheme

A Ponzi scheme usually offers abnormally high short-term returns in

order to entice new investors. The high returns that a Ponzi scheme

advertises (and pays) require an ever-increasing flow of money from

investors in order to keep the scheme going.

The system is doomed to collapse because there are

little or no underlying earnings from the money

received by the promoter.

The scheme is named after Charles Ponzi, who

became notorious for using the technique after

emigrating from Italy to the United States in 1903.

Pyramid scheme

A pyramid scheme • Non-sustainable business model

exchange of money primarily for enrolling other people into the scheme.

• take advantage of confusion between genuine businesses and complicated but convincing moneymaking scams.

• The individual makes only one payment, but promised to somehow receive exponential benefits from other people as a reward.

• A common example might be an offer that, for a fee, allows the victim to sell the same offer to other people. Each sale includes a fee to the original seller.

The flaw is that there is no end benefit; the money simply travels up the chain,

and only the original member earn.

Role of Finance Professionals

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