Financial crime or economic crime is usually committed without using violence in the course of a perpetrator’s professional activities and affects the economic system and order of the country where the crime is committed. Depending on the scope and type of the crime, the effects may even be multinational. Indeed, economic crime is regulated with the intention of providing security for commercial and financial activities, protecting state income, and preventing other states from benefiting from the wealth that has been acquired within the country that has framed the regulations.
While referred to as “Financial Crime” in many texts, it has often been referred to as “Occupational Crime” under Anglo-Saxon Law. This suggests that there must be a link between professionals and financial crime. In other words, perpetrators must use and/or abuse their profession, title, or position while committing the crime. This differentiates economic crime from ordinary crimes such as theft and robbery, which also affect the economic order of a state and are committed for monetary gain.
Embezzlement, abuse of trust, forgery, counterfeiting, bribery, fraud, money laundering, usury, terrorist financing, tax offences, and violation of capital markets regulations are some of the most common types of financial crime.
Financial Crime Vs White-Collar Crime
White-collar workers are considered to be workers who earn higher salaries for their skilled work and who do not perform manual labor. Managers, directors, bankers, lawyers, and generally high-level employees who work in offices are typically considered to be white-collar workers.
White-collar crime is generally defined as fraudulent financial crime committed by people of high status, but not all crimes committed by white-collar workers are necessarily financial crimes. White-collar crime as a whole is a much broader category than financial crime. White-collar workers may commit crimes that are not financially motivated. Therefore, crime committed by white-collar workers for other gains such as promotion and reputation are not classified as financial crime, provided that the said crime does not have a major impact on the economic order.
Combating Financial Crime and the Financial Crimes Investigation Board
Turkey became a member of The Financial Action Task Force (“FATF”), which is an international organization aiming to provide collaboration between countries in combating financial crimes, money laundering and terrorist financing, on 25 September 1991. After Turkey became a member, it introduced national legislative and regulatory reforms in these areas and implemented numerous preventive measures such as customer due diligence, record keeping and suspicion transaction reporting. The measures set minimum standards for actions.
The FATF also requires each member state to establish a “Financial Intelligence Unit”, which is defined as a “central, national agency responsible for receiving, (and as permitted, requesting), analyzing and disseminating to the competent authorities, disclosures of financial information concerning suspected proceeds of crime and potential financing of terrorism, or required by national legislation or regulation, in order to combat money laundering and terrorism financing”.
For the abovementioned purposes, Turkey introduced the Financial Crimes Investigation Board (“MASAK”) in 1996. The main functions of MASAK are to conduct research and sectoral studies into developments in laundering the proceeds of crime, to develop and implement methods for preventing and exposing it, to gather, analyze and evaluate data, to carry out investigations and examinations, or to initiate investigation or examinations by other bodies, and to convey the information and results obtained to the relevant authorities.
If MASAK’s findings detect that laundering has occurred, it reports the case to the Public Prosecutor’s Office. MASAK also frequently issues reports about a suspect/defendant’s proceedings and assets at the Public Prosecutor’s Office and/or the court’s request.
Furthermore, provided that MASAK has issued a report, Article 128 of the Turkish Criminal Procedure Code enables the court or judge during an investigation or prosecution to seize a suspect/defendant’s items, such as immovables, vehicles, all kinds of accounts in banks and other financial institutions, securities, shares at firms where suspect/defendant is a shareholder, contents of rented safes and all other assets held by the suspect/defendant when there are strong grounds for suspicion.
This measure is applicable only to a certain category of offence, most of which are financial crimes, such as abuse of trust, fraud, counterfeiting money, usury, embezzlement, bribery, and fraudulent bankruptcy.
Penalties for Financial Crime
The terms of imprisonment for different types of financial crime vary. However, most financial crime is within the jurisdiction of the courts of aggravated crimes.
It should be remarked upon that most of the financial crime involves legal entities. According to Article 20 of the Turkish Criminal Code, criminal liability is personal, and penalties cannot be imposed upon legal entities. However, security measures prescribed by law in respect of such criminal offences are reserved. Indeed, most provisions regulating financial crime stipulate that security measures should be imposed upon a legal entity if it derives unjust benefits from a crime.
According to Article 60 of the Turkish Criminal Code, provided that it is proportional and separately stipulated by law, legal entities operating under license granted by a public institution will lose their licenses and anyone who benefited from a crime will be subject to provisions regarding confiscation.
Another important sanction against legal entities who are beneficiaries of financial crime is regulated in Article 43/A of the Law of Misdemeanors. Pursuantly, an administrative fine of between ten thousand and fifty million Turkish Liras will be imposed upon a legal entity if its body, representative, or any other person involved in the legal entity’s operations commit the following for the legal entity’s benefit:
- Fraud or aggravated fraud
- Corruption of tender
- Fraudulency in the execution of contractual obligations
- Laundering the proceeds of crime
- Embezzlement regulated under Article 160 of the Banking Law
- Smuggling offences regulated under Anti-Smuggling Law
- The offence regulated under the 5th Additional Article of Petroleum Market Law
- Terrorist financing regulated under Article 8 of Anti-Terrorism Law
- Offences of financing of terrorism defined in the Law on Prevention of Terrorist Financing No. 6415
It has been stated in the preamble of the law that while criminal liability is personal and cannot be attributed to legal entities, in order to discipline the activities of legal entities engaged in criminal activities and emphasize the responsibilities and duties of their executives, the legal entities can be issued with administrative fines.
Financial crime is nonviolent crime usually committed by perpetrators over the course of their duties or professional activities for monetary gain. Financial crimes affect the economic order of a state, limiting the money registered and taxed by it, and the proceeds are often used for illicit means that threaten the international community. Therefore, they are strictly regulated and monitored with both preventive measures and heavy sanctions.
Although criminal liability is personal and legal entities cannot be held responsible for crimes, the nature of financial crime generally involves the engagement of legal entities. Within this scope in order to combat financial crime and dissuade potential perpetrators, these crimes result in long-term prison sentences for real persons and heavy fines for legal entities who are the beneficiaries of such crimes.
Kemal Altuğ Özgün