3. Mitigating White Collar Crimes: A Governance Reform Agenda

In wake of increasingly globalised markets, competition and advancement in technologies, businesses are becoming more prone to frauds in the nature of white-collar crimes as occupational frauds due to avarice of those involved in the value chain of governance. The term ‘fraud’ has different connotations and ranges from deception to dishonesty and includes corruption and conspiracy to embezzle money forcing the Sovereigns to have adequate AML risk assessment framework in addition to existing legislative and regulatory framework to mitigate business risks of fraud. A 2018 global study by Association of Certified Fraud Examiners on occupational frauds evidences $7 billion losses with 89% through asset misappropriation schemes resulting in a median loss of $114,000 and financial fraud scheme though accounting for 10%, evidenced $800,000 as the median loss. This remains the tip of the iceberg with many of the victims tending to underplay existence of the fraud to curb the reputational risk. A typical risk mitigation strategy towards fraud prevention revolves around building up framework to assess the vulnerability of systems, processes and people to raise red flags for fraud detection, prevention, cessation and response system and building up adequate internal and external controls as part of enhanced governance ecosystem. The global jurisprudence around the white-collar crimes is evolving. The developed countries have brought in suite of legislations; the regulators of securities and financial markets along with accounting/auditing profession domestically and internationally is developing standards and guidelines for compliance and related capacity building. In India, the Companies Act, 2013 has provided more teeth for fraud prevention and control for an enhanced governance ecosystem. While there being no best fit approach, global developments around regulatory enforcement for fraud deterrence and control provide a scalable benchmark for Indian context.