What are Different Types of Financial Crimes?

Financial crimes, sometimes referred to as “white collar” crimes, are nonviolent criminal acts that involve the theft or misuse of money. Financial crimes are sometimes considered less important than other types of crimes because there is no violence used, but they can actually have vast impacts on personal finance and even entire financial markets. There are many different types of financial crimes, including counterfeiting, securities fraud, embezzlement, anti-trust activities, and many other categories.

Counterfeiting can be a seriously detrimental crime as it corrupts the monetary system. Counterfeiting involves the use of fake money, such as falsely manufactured bills and coins. This crime can also include the alteration of real money to resemble more valuable versions, such as altering a $10 US Dollar (USD) bill to look like a $100 USD bill. On a large scale, counterfeiting can disrupt the flow of inflation and deflation by falsely adding more money into a controlled system.

Securities fraud is a broad area of financial crime that involves the illegal manipulation of the financial market. Financial crimes that fall into this category include insider trading, preferential rates, and misrepresentation of value. Insider trading occurs when a person with non-publicly disclosed information about a stock or investment uses the information to buy or sell shares with an entity that does not have access to the same information. Preferential rates and misrepresentation both involve artificially inflating or deflating the value of stocks in order to manipulate the market, such as by sending out an email or posting a blog with false or misleading information about a planned takeover.

Embezzlement occurs when a person entrusted with funds for safekeeping, such as an estate trustee or financial manager, uses the funds without authorization. Embezzlement can often occur between trusted friends or even relatives, but also occurs on a simple business front as well. Scrupulous examination of financial records by the estate or fund owner can help reveal signs of embezzlement, such as missing funds, duplicated checks, or accounting errors.

In regions with a free market economy, anti-trust financial crimes pose a serious systematic risk. Anti-trust activities involve the restraint of trade through the monopolization of an industry or by measures such as price fixing. One of the most famous anti-trust cases in history is the 1911 US Supreme Court decision against Standard Oil, an oil production company started by John Rockefeller that controlled almost the entire US oil market at the height of its power. Under the 1890 Sherman Act, Standard Oil was found guilty of conspiring to create a monopoly, and broken up into more than 30 separate companies.