There their money. White-collar crime is mostly made up

There is a lot of categories of crimes in the world.
Crimes not only can be categorized just by violence mainly but they can be in
terms of frauds, money laundering, tax evasion or any other means for financial
gains. In general, this is known as white-collar crime. In the year of 1949,
Sutherland states that White collar crime is usually committed by professionals
who are highly respectable in their own field and abuses their powers for
financial gains. In addition, the amount of money involved in white-collar
crimes is multiple times greater than all the crimes which are regarded as
criminal crimes. (Sutherland, 1949) If an individual is a convict of a
white-collar crime, they may face jail sentence and costly fines. Government
can also pursue and take legal actions against corporations who are involved in
the white-collar crime. Example of a white-collar crime is Bernie Madoff
fraudulent scheme. He conned $65 billion out of his investors and was not
discovered for decades. Eventually he was caught and sentenced to 150 years in
prison (Yang, 2016). White-collar crime can affect and place heavy influence in
the society. For example, corporations without proper management and
supervision may not be able to detect such crimes. This will result in the
continuation of the crime for a long period of time. Huge loss in the sum of
money would occur and even leading to liquidation. As for normal ordinary
individuals, they might be persuaded as clients to invest money and promised to
have higher returns. However, the criminals are just having intentions to
commit fraud and cheat their money.

White-collar
crime is mostly made up of frauds. There are many different types of frauds.
Such examples are corporate frauds, financial statement frauds, securities
fraud, embezzlement of company assets or money laundering. Money laundering is
one of the common frauds that is committed by individual or an organisation. It
refers to the illegal or dirty money that is put through many different
transactions in order to be undetected and result in clean and legal money. There
is a model known as The Fraud Triangle which was derived from Donald Cressey’s
theory. Donald Cressey (1973) theory states that individuals who are trusted by
their clients violates the trust when they face financial difficulties knowing
that their financial issues can be rectify confidentially. Individuals would
have intentions to deceive clients by using the entrusted funds or property of
the client for their own purpose. The Fraud Triangle is used to show us the
motivation or the reason behind the commit of white-collar crime. The Fraud
Triangle consist of three components which leads to person committing
white-collar crime. Firstly, pressure can be one significant reason which leads
to unlawful behaviour and criminal acts. Pressure can be created by anything
related to the individual. Such examples are like family and financial issues,
debts, addiction of drug abuse and gambling. Greed is also a form of pressure
as well. For instance, an individual can feel that he is not appreciated by his
own organisation when he receives lesser pay than what he’s worth. Secondly,
Opportunity is another point which results in the commit of a white-collar
crime. It defines a circumstance whereby there is a high chance of not getting
caught red-handedly. Companies with mediocre supervision as well as the abuse
of power and position will create more opportunities for an individual to
commit as employees might think their actions won’t be discovered. Out of all
the three parts, opportunity is the part organisations have the most influence
over it. With an effective management, there would be procedures and controls
that prevents employees from committing frauds as well as discovering illegal
activities if arise. Lastly, Rationalization is another component that plays a
huge role in most frauds. It refers to the mindset of an individual who thinks
it is justifiable to commit frauds or such acts for reasons. For example,
individuals believe committing frauds for financial gain to save a family
member or loved one might be reasonable or an individual who is unsatisfied of
his job, believes that he is underpaid and felt that something is owed towards
them. An example of the fraud triangle leading to the case study of Barings
Bank. Nick Leeson designation was an assistant director as well as a general
manager in Barings Futures Singapore. He hid his losses and unauthorised trades
in a secret account numbered 88888. It was a desperate attempt by Nick Leeson
to gamble in order to recoup his loss. However, he has suffered a loss a total
of $1.4 billion and fled. Eventually he was caught (Kong, 2009). With the help
of Fraud Triangle, it shows that Nick Leeson has plenty of motivation in order
to commit the white-collar crime. Firstly, it was a bad management by Barings
Bank by letting him to take up two designations which eliminates internal
checks as Nick Leeson personally oversees it and can avoid being checked on.
Secondly, as Nick Leeson has placed all errors in error account 88888 to make
sure it was not discovered. This shows there was poor internal control in the
organisation (Clair, 2015). As Nick Leeson has already suffered loss of money,
he felt pressure to recoup the losses. This leads to his rationalization of
”borrowing” the money to recoup back the losses and return it back to the organisation.
Despite prevention is better than detection, indications of fraud may be
crucial to anyone. Some of the indications of a fraud are, organisation having
several bank accounts which can lead to many movements of illegal money which
might be hard to detect or a junior worker who is working in a big firm but
spending lots of money on luxury products like expensive cars or houses. Other
indications such as missing documents, excessive purchases of goods,
inventories shortage can also be tell-tale signs of a fraud.

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Ethical
theories play a part in decision-making of an individual. Individuals would use
these theories as a guidance before making their decisions. There are four
large components. The components are Deontology, Utilitarianism, Rights and
Virtues. Deontology is a non-consequential theory. It does not depend on the
outcome to determine whether a decision is morally right or wrong. Individuals should
act based on duty and actions should be based on right intention. Individuals
who stick to deontology theory will make stable decisions as they are based on
individual’s duties. An example of deontology would be a doctor who came to
found out that a drunk driver got into an accident and killed his family.
However, the driver is still alive but he requires immediate operation. As a
doctor, if he makes his decisions based on Deontology, he should perform his
duties as a doctor and operate on the drunk driver despite killing his family.
As a doctor, his intentions are to save lives. He should put away his personal
feelings and be professional and carry out his duty. Utilitarianism is a moral
theory that focuses on the results or consequences of our actions. Intentions
of the actions are immaterial in this theory. An example of the theory is that
a man’s child is severely sick. Doctor has diagnosed the child and said that he
would only recover by this pill which cost a huge sum of money. However, the
man does not have that much money. If he acts based on Utilitarianism, he acts
on his personal feelings and he would do whatever it takes to save his child.
This might lead to an action in breaking of the law such as stealing of the
drug     just to save his child. Effective
corporate governance is to ensure good internal management and control so as to
enable activities to be accomplished without any mistakes or frauds in it.
Whistle blowing is one of the control to ensure the monitoring of activities of
an organisation. It refers to the intention to declare a malpractice within an
organisation to external and internal bodies. This can help strengthen the
internal control in an organisation and to detect frauds as well as to prevent
it from getting worse. Some other controls to refrain frauds or methods to
achieve effective corporate governance are Independence of Board, Roles of
Auditors and Audit Committee as well as Shareholder Activism in order to
promote an ethical and transparent framework in the organisation.

To
sum up, ethnics, governance and control is not able to completely prevent
financial crimes. This may be due to bribing or corruption of highly
respectable professionals for their own financial gain or advantage. However,
with ethnics, governance and control, it is possible to minimise the chances of
financial crimes as well as to detect those crimes before it gets worse. To
show one of the advantages of this controls, a case study of HSBC was shown
that the bank is laundering money for terrorists (Dykes, 2013). It was the
former anti-money laundering officer, Everett Stern, who found these huge
activities of fraud and reported it to outside bodies to inform them about the
funding for the terrorist organisation as well as other suspicious entities.
This is known as whistle blowing. Without such controls, organisation would not
be able to detect such frauds and frauds might get so immense which results in
a negative impact for the organisation or worse, liquidation.