Applying forensic accounting in Economic Offenses

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CA Mayur Joshi
CA Mayur Joshi
CA Mayur Joshi is a Forensic Accounting evangelist in India. He is the co-founder of Indiaforensic and is author of 7 books on forensic accounting, fraud investigations and money laundering.

Fraud and Corruption are the most common forms of economic offenses but that is not the end. Economic offense is a broader term and covers several other offenses.

Sometimes, the economic offense may encompass organized crimes having bearing on national security. Problems such as international terrorism, drug dealing, money laundering, IPR violations, etc continue to occupy the center stage as the global threats that are taking place. However, it is necessary to discuss the same in Indian parlance.

Economic Offenses in India

Generally, law enforcement agencies in India investigate economic offenses. However, in many states, there are separate divisions for investigations of economic crimes. These divisions employ specifically trained resources to investigate. Many of these law enforcement officers are also Certified Forensic Accounting Professionals.  

  1. Bank & Financial institutional economic offenses.
  2. Offenses in Co-operative Institutions.
  3. Financial crimes against the employees, vendors, and clients by the Finance companies.
  4. Economic offenses against borrowers by Private lenders.
  5. Cybercrimes with a financial angle such as jobs in lieu of money 

However, the Economic Offenses Wings of the police departments would investigate cases only above certain thresholds only. In the state of Maharashtra, offenses above Rs. 10 crore are investigated by specially trained teams of Police. The cases below this threshold are generally investigated by the decentralized local offices. 

Economic offenses in India create a black market or underground economy, to deal in tax-evaded goods or to deal in banned drugs. However, the punishments for economic offenses are very minimal. There are two common motives for committing economic offenses are:

  • To trade contraband
  • To avoid taxes or price control

What are Economic Offences?

Economic offenses are a very vast subject, it means any offense or crime that deals with fraud, forgery, cheating, or deceiving or counterfeiting of money or money equivalents. They are also known as “Financial Crimes”.

The independent category of crimes of Economic Offences is under Criminal Offences. They are known as white-collar crimes that are taking place nowadays. The money itself is traded in the black market. There are several reasons associated with it. The following are the reasons:

  • The government sets the local currency at some arbitrary level to another currency that doesn’t show its true market value
  • The citizens are very eager to own foreign currency, but Government puts restrictions on the illegal use of currency.
  • The government imposes a tax on the exchange of local currency with the other currencies
  • The currency is counterfeit.

What are the Characteristics of Economic Offences?

There is a certain noticeable characteristic of economic offenses that differentiates the same from other kinds of crimes. The following are the characteristics:

  • An economic offense needs to have the required conduct that is the constituent element of crime and also go through that if any wrongdoing is taking place before the commission or omission of the act.
  • An economic offense can be committed by keeping in mind the intention of causing some kind of material damage, material loss, etc.
  • Breach of trust, deception, or cheating forms a part of economic offenses.
  • There is no physical harm caused by the commission.
  •  The privileged or the upper-class section of society commits such types of economic offenses in India.

What are the types of Economic Offences?

The economic offenses are “non-violent” in nature. The executioner can put forth the major classification by distinguishing it from “violent crimes”. The understanding of economic offenses at the functional level is that these offenses concern money and matter of finance. Following are the different types of Economic Offences:

Tax Evasion

The illegal evasion of tax is done by individuals, trusts, etc. Misrepresentation of the true state of the affairs that are taking place due to evasion of tax for reducing their tax liability and includes dishonest tax reporting, by declaring less income, profits, or gains than the amount actually earned, etc. Misrepresentation also includes underreporting of income, inflating deductions, etc. It is an activity commonly associated with the informal economy. Unreported Income plays a major role in tax evasion.

Bank Frauds

These are the offenses that illegally obtain money, assets, and property owned. Bank fraud is regarded as a criminal offense. In this relation bank frauds are considered to be “white-collar crimes”. It also contributes a considerable percentage to white-collar crimes. They are increasing with the passage of time.

Money Laundering

In a number of legal systems, the term money laundering has become conflated with other forms of financial crimes. It’s the process of converting black money into white money. It is defined as an illegal process, and a lot of crimes are involved in it like drug trafficking, terrorist funding, etc.

Stock Market Manipulation

Market manipulation is defined as the creation of false, misleading prices of security by putting a nose in the day-to-day operation of the market. In India, there is a lot of stock manipulation that is taking place every day.  

Corporate Frauds

The activities undertaken by an individual or company are carried on in a dishonest or illegal way and are designed to provide an undue advantage to the perpetrating individual or company. CorporateFrauds are very difficult to prevent and catch. 


Corruption includes many activities like bribery, and embezzlement. Government or political corruption takes place when an officeholder acts in an official capacity to get personal gain. Corruption may facilitate criminal enterprises such as drug trafficking, money laundering, human trafficking, etc.

Who are the Economic Offenders and How do they commit crimes?

Economic offenders are considered important person as it is involved in economic offenses in India. They are considered as qualifying, experienced, and at the level of committing the crimes. Powerful personalities are regarded as vital persons in doing economic offenses. They can be considered as the person who are politically powerful, or who can rule the world.

Most of the economic offenders introduce themselves as trustworthy agents and few other offenders used the well-established name of their family members. The offenders can commit the offense in different ways by introducing new schemes in the market and forcing the people to invest in the company’s shares, and securities at large. Basically, money becomes an integral part of each and every citizen, they get fooled by taking up the new schemes.

What is the Impact of Economic Offenses on the Economy?

Economic offenses affect the nation at large in various ways. Moreover, it leads to uneven distribution of available resources, the creation of a parallel economy, high inflation, etc.

Corruption is the most common form of economic offense in India. The banks will later be in a situation where it is very difficult to recover the money from the offenders as they en-route their escape from the Nation and cause a financial and economic crisis.

Globally this offense affects the financial status of the country which may, later on, affects the Import and Export services of the Nation. When the import and export business will stop, it will affect the revenue as the revenue will not be generated for the government which will, in turn, make the nation poor. There would be a lot of impact on the loan, it will be impossible to repay the loan. Economic crimes cause significant damage to the economy. However, Multinational companies, as well as foreign companies, will have the least interest to establish a new branch in the poor nation. The nation will definitely not develop and it will have a great impact on globalization and modernization. In straightforward terms, the nation will become a “Living Dead Nation”.

What is the Future of Economic Offences in India?

Fraud has been and will remain an incurable problem. There are different types of frauds like asset misappropriation that have remained immobile, and others like hacking and theft of intellectual property are rising every day. It is interesting to note that the perception of vulnerability to corruption and bribery, accounting fraud, and asset misappropriation over the next two years is significantly lower than the current perception. Although companies have instituted several control measures to detect and deter fraud, they cannot afford to be complacent.  


Such offenses are undesirable economic and social consequences. As economic growth takes place, these offenses have a tendency to rise. The phenomenon of Economic Offences has not been seriously studied in India. Economic offenses need a different legal arrangement, especially in terms of the Laws relating to Procedures and Evidence. The rapid growth in economic offenses in India and the complexity of its investigation require a global response.

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