30 Aug 2022


White Collar Crime and the Concept of Money Laundering

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In this paper, I will discuss and clarify the concept of white-collar crime, what it was traditionally perceived to be and what it has eventually become with the advent of computers, the information superhighway called the Internet and the rapid advancement of technology. The term white-collar crime has various meanings among different disciplines, and generally, the term’s meaning does not always justify the label “white-collar crime.” Such ambiguity has led to confusion most of the times and disagreements among large audiences who have a different meaning of the term. Consequently, it is of utmost importance to consider the different perspectives of meaning when discussing white-collar crimes. Looking at the definitions, they concentrate on two meanings. One has a bearing on the characteristics of the offender, such as a high social status while the other concentrates on the characteristics of the crime (Cliff, & Desilets, 2014).

The term white-collar crime first came to be in 1939 by a renowned scholar and sociologist Edwin Sutherland when in a speech given to the American Sociological Society he defined the term as crimes committed by a respectable person and one of a high social status while performing works of his occupation (Braithwaite, 2006). This definition was in essence offender based and served to give people a way to label offences committed by the upper-class people who had ample resources and were respectable within the society. In another definition by Herbert Edelhertz in 1970, he states clearly that white-collar crime is “an illegal act or series of illegal acts committed by nonphysical means and by concealment or guile, to obtain money or property, to avoid the payment or loss of money or property, or to obtain business or personal advantage.” (Cliff, & Desilets, 2014). This definition is evidently crime-based and ignores the characteristics of the perpetrator. Nowadays, security bodies such as the Federal Bureau of Investigation use a very similar kind of definition like this.

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The FBI’s Criminal Justice Services Division operationalized a Uniformed Crime Report (UCR) indicating white-collar offences that ranged from fraud and forgery to counterfeiting and embezzlement. In the report, some of the outlined scopes of white-collar crime included financial crimes, non-physical or abstract criminal activities, crimes against corporations, criminal activities committed by the rich, professional or corporate malfeasance and anything above the law, in which the average police officer could not handle. This report clearly indicates the unification of both definitions of white-collar crimes. Many people agree that the lack of direct violence to the victim is key in the definition and overall understanding of white-collar crimes. Also in understanding the act, there is a consensus that a white-collar crime has to be caused by an opportunity to commit an offence that is brought about by the offenders’ societal status and their respect in the community.

In the art of white-collar crime, deception is arguably the most fundamental trait of these perpetrations. This often happens in a con whereby the victim misinterprets the perpetrator's abilities, accomplishments and financial resources until ultimately the victim believes the false promise or claim. To understand white-collar crime better, let us look at the concepts of money laundering, its significance and impact. Money laundering is broad in extent and variations. The layman’s understanding of money laundering is that it is related to the washing or drying of currency notes to produce new notes that are fake but look like the original. Although this is correct, it represents an insignificant part of the $1.5 trillion industry according to statistics by the International Monetary Fund IMF (Thony, 2000). These statistics indicate a large conglomerate that spans the world over and most probably has a substantial part in the world economy, as we know it.

The actual definition of money laundering is the process of channeling large amounts of money obtained through various ways to give it a false appearance of having a legitimate source (Kumar, 2012). This whole process and its subsequent acts are defined as money laundering. In simple terms, it is the conversion of illegal ‘black’ money into legal ‘white’ cash. When done successfully, such an act enables the control of proceeds originating from criminal activities and ultimately hides the source of income for criminal enterprises and individuals. Money laundering creates the right atmosphere to facilitate the ambitions of terrorist organizations, organized crime, tax evaders, inside dealers, and many other kinds of people who have ill-gotten gains. Such criminal enterprises seek to obtain money and power through illegal activities and then attempt to blend inside legitimate societies consequently distorting the fundamental basis of the socio-economic fabric.

To understand the concepts of money laundering, we look at Robinson’s ideology of the term. According to him, money laundering has that term because it clearly describes the activity that it stands for. It is the illegal cycling of money through transactions for it to come to the other end as being clean. In other terms, the money enters the system as ‘dirty’ and through a series of illegal transactions and dealings, and comes out as being ‘clean’ or legitimate and thereby getting its laundering nomenclature. It is classified as a white-collar crime due to its sophisticated nature and the people involved who are most often high in the societal ladder. All of the traditional criminal activities and white-collar crimes such as tax evasion, embezzlement, computer fraud, insider trading, and bribery among others require money laundering for them to flourish. Therefore, since money laundering is at the pinnacle of all types of crime, it is, in essence, the most perverse of all and the most perpetrated white-collar crime.

The primal nature of all criminal organizations is profit making. Without profits, all of these organizations would go out of business. Also in their sinister motives is the need to exploit opportunities of crime on a large scale and systematic manner. In doing this, the organization inclined to criminal activities generates large amounts of cash; consequently, these organizations utilize money laundering to accomplish three tasks. These tasks include expunging the connection created between the money and the crime, erasing the connection between the money and the new owner and finally yet importantly is to ensure the protection of the money from potential seizure by the proper authorities (Thony, 2000). Through money laundering, these tasks are accomplished in phases that constitute the overall process of the crime.

The first phase in money laundering is that of introducing the ill-gotten cash to the banking or financial system. This phase is quite risky and involves people of high echelons in the financial industry. In addition to its risky nature is the fact that there is a heightened attention to movements of cash by law enforcement. Additionally, bank officials often report suspicious transactions. This is why criminals use insiders in these banking institutions to enable them to deposit their cash without suspicious eyes prying into their dealings. The second phase involves using a series of financial operations to mislead investigators so that they cannot trace the money already placed in the financial system. This trick is also done to give the cash a false appearance of legal origin. In this phase, money launders often use offshore accounts and other dubious mechanisms to evade the law. This phase involves numerous transactions between the launders’ banks and financial havens, followed by false invoices, loans and other methods of financial trickery (Ferwerda, 2017).

The final phase is done once the funds appear to have a legitimate origin. What is left is reintroducing the money to an economy that is legitimate. To do this, money launders set up massive investments in terms of assets, real estates, and share companies and so on. They invest in economic entities such as bonds and spend the cash on the consumption of goods and luxury items. In most of these criminal organizations, the philosophy is that of getting money to spend it. Subsequently, this is what they do and what they are basically good at doing. Insofar as the above processes give a picture of what money laundering is, the entire actual process is quite complex depending on factors that affect its strategies and the criminal organization involved. These factors range in so many forms some being the quantity of assets, structure and organizational level and more particular is the financial experts involved in the development and implementation of the money laundering schemes (Thony, 2000).

Money laundering presents the economy with negative effects. It is a serious threat to national economies and all governments involved. Infiltration and the subsequent saturation of dirty money in legitimate financial sectors constitute unwarranted political and economic instability. These economic crimes affect national economies bringing with them dire consequences because the potential victims of this crime outweigh all the victims of other crimes. Governments lose revenue and therefore it affects sectors of development, which in turn sends ripple effects to the well-being of its citizens. In addition to the economy slump, there is impairment of the development and overall sustainability of financial institutions. Eventually, these institutions weaken due to corrupt administration and officials. What follows next is the eventual loss of customer trust, which is essential for the growth of any viable financial institution.


Braithwaite, J. (2006). White Collar Crime. Annual Review Of Sociology, 11, 1-25.

Cliff, G., & Desilets, C. (2014). White Collar Crime: What It Is and Where It's Going. Notre Dame Journal Of Law, Ethics & Public Policy, 28(2), 481-495.

Thony, J. (2000). Money Laundering and Terrorism Financing: An Overview (1st ed.). Retrieved from https://www.imf.org/external/np/leg/sem/2002/cdmfl/eng/thony.pdf 

Ferwerda, J. (2017). The Economics of Crime and Money Laundering: Does Anti-Money Laundering Policy Reduce Crime? (pp. 4-6). Utrecht: Tjalling C. Koopmans Research Institute.

Kumar, V. (2012). Money Laundering: Concept, Significance and its Impact. European Journal Of Business And Management, 4(2), 113-119.

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