Corporate Financial Crime: A Guide to Regulation and Enforcement in India

The Indian business landscape is subject to a complex web of regulations aimed at preventing corporate financial crime. In this article, we provide a high-level overview of key areas of concern and the respective regulatory bodies in India.

Areas of Concern

Corporate Fraud

• Intentional or disingenuous acts to deceive or defraud
• Accounting irregularities, misrepresentations, and embezzlement

Regulatory Agencies

• Securities and Exchange Board of India (SEBI)
• Central Bureau of Investigation (CBI)

Insider Trading and Market Abuse

• Use of material, non-public information for personal gain
• Penalties include fines, imprisonment, and disgorgement of ill-gotten gains

Money Laundering and Terrorist Financing

• Prevention of Money Laundering Act, 2002 (PMLA)
• Unlawful Activities (Prevention) Act, 1967 (UAPA)
• Provisions for investigation, attachment, and confiscation of proceeds of crime

Financial Record Keeping and Due Diligence

• Companies must maintain accurate financial records
• Appropriate due diligence required to prevent corporate crime

Offenses and Penalties

Corporate Liability

• Direct evidence of wrongdoing
• Imputing criminal intent to the company based on directors/employees’ actions

Cartels and Immunity and Leniency Programs

• Agreements among competitors to limit competition are illegal
• Leniency to first cartel members that confess and cooperate in investigations

Cross-border Cooperation

• Mutual Legal Assistance Treaties (MLATs)
• Double Tax Avoidance Agreements (DTAs)

Protection for Whistleblowers

• The Whistleblowers Protection Act, 2011
• Confidentiality, non-retaliation, and protection from legal action

Managing Exposure to Corporate Crime and Corruption

• Implement robust compliance programs
• Undergo regular audits
• Cooperate with regulatory agencies

For further information, refer to the relevant regulatory bodies and government websites.