Financial Crime World

Financial Crime Definition in United States Takes Center Stage as Corporate Accountability Rises

Introduction

The United States has been at the forefront of cracking down on corporate malfeasance, with a plethora of laws and regulations aimed at preventing financial crimes. At the heart of this effort is a clear definition of what constitutes financial crime.

Types of Financial Crimes in the US

  • Corporate Fraud: Any intentional act or omission by a company’s officer, director, employee, or agent that results in material misstatements or omissions in financial statements.
    • Examples: Enron and WorldCom accounting scandals
  • Bribery and Corruption: Using bribery to secure business deals with foreign officials (Foreign Corrupt Practices Act)
  • Insider Trading: Using confidential information to trade securities (Securities Exchange Act of 1934)
  • Money Laundering: Concealing illicit funds through complex financial transactions
  • Terrorist Financing: Transactions or activities that support terrorist activities

Prevention and Compliance

To prevent financial crimes, companies must:

  • Maintain accurate records
  • Conduct thorough investigations into potential partners or clients
  • Understand regulations and potential consequences

Regulatory Bodies

The US Department of Justice (DOJ) and Securities and Exchange Commission (SEC) are the primary regulators responsible for investigating and enforcing financial crime laws.

Consequences of Financial Crimes

Individuals found guilty of financial crimes may face:

  • Fines
  • Penalties
  • Jail time

Companies may also reach settlement with regulatory authorities in exchange for leniency or immunity from prosecution.