Economic Crimes in India: Money, Crime, and the City: The Growing Challenge of Economic Crimes in Indian Tier II Cities and How to Address It

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Former Uttar Pradesh top cop Vikram Singh is unequivocal when he argues that the best police minds should be deployed to eliminate economic offenders. Tracking down a bandit in the backcountry should only be a side job for the police, he says. Today’s dacoits are urban and sophisticated and operate from chic buildings in an urban setting, using a network of front companies and tech savvy agents.

“There is a saying, sau sunar ki ek luhar ki (one big hit equals one hundred weak hits). Criminals have discovered that a great economic crime can give them money that hundreds of thefts and dacoities cannot, ”says Singh, who was chief executive of the state police in 2007-09, when economic crimes were seen as a feature of large metros.

In recent years, he adds, the unrest has quickly spread beyond the grid from Mumbai, Delhi and Kolkata to some of the smaller cities. Data recently released by the National Crime Records Bureau (NCRB) supports this argument. While Delhi and Mumbai register the highest number of economic crimes in 2020, it is Jaipur, Lucknow and Patna – in that order – that exceed the economic crime rate, which means recorded crimes per 1 lakh of people in the country. during the calendar year. Jaipur recorded 104 economic crimes per lakh of inhabitants; Lucknow 76 and Patna 49. Jaipur, Lucknow and Patna have led the crime rate charts since 2018. In 2017, instead of Patna, Bengaluru was in the top three, alongside Jaipur and Lucknow.

In its three-volume report, the NCRB published a data set on economic crime for 19 mega-cities, each with a population of 2 million and more.

In 2020, cities like Coimbatore, Chennai, Surat, Pune, Kanpur, Ahmedabad, Indore and Kolkata performed better than the national city average of 23 economic crimes per lakh of inhabitants. Meanwhile, those hovering around the national city average are Nagpur (20), Mumbai (21), Kochi (22), Ghaziabad (24), Bengaluru (24) and Delhi (27).

If you look at the overall crime rate for 2020 – which takes into account all recognizable crimes under the Indian Penal Code – Delhi is the crime capital, followed by Chennai and Ahmedabad. Delhi is an example of a city that does comparatively better on the economic crime parameter, even though it scores appallingly across law and order. Chennai also has one of the lowest economic crime rates.

Economic offenses include breach of trust, forgery, criminal misappropriation of property, forgery, cheating and fraud.

In the case of Jaipur, Lucknow and Patna, most of the offenses are related to counterfeiting, cheating and fraud. In Lucknow, a significant number of cases – 543 or 25% of the total – are classified as criminal breach of trust, violating Articles 406 to 409 of the CPI. In the NCRB report, cybercrimes, even those with an economic angle, are presented as separate entities.

In terms of cybercrime rates, India’s IT capital, Bengaluru, is unsurprisingly the worst city, with 104 cybercrimes per lakh of population. Lucknow (50), Hyderabad (33) and Ghaziabad (32) recorded rates well above the city’s national average of 16, clearly a cause for concern. The total number of cyber cases in the 19 major cities in 2020 was 18,657, a marginal increase of 0.8% from 2019.

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ET spoke with two former Enforcement Directorate (ED) officers, both accountants before becoming IPS officers, to understand the labyrinth of complex financial frauds in India, their spread to non- subways and how the government should develop a strategy to track them down.

Yogesh Gupta, who worked at ED as a special director and is now an additional DGP rank officer in Kerala, says economic crimes have become a more serious threat than conventional crimes. According to his estimate, the complexity and enormity of economic crimes lie in bank frauds, with large-scale crimes mainly surfacing in major metros. “To contain economic crimes, the state police must call in experts from inside and outside the force. To solve complex, multi-layered financial frauds, investigative agencies need to hire more chartered accountants and financial analysts, ”he said, adding that if a city registers more cases, it shouldn’t. be penalized but encouraged. NCRB data is based on 26,970 economic crime cases recorded in 2020, down 20% from 2019.

Deepak Kedia, who was ED’s additional director in 2016-2018, says the total amount involved in economic crimes is as important a metric as the volume of crimes in a city. “There are cities where the number of crimes is high but the money involved is tiny. In India, most crimes involving larger amounts are investigated by agencies such as CBI, ED, DRI (Directorate of Tax Intelligence), the Department of Income Taxes and the “Economic Offenses Wings” states, he says. .

In the NCRB data, with the exception of property seizure incidents, the value of most crimes is not recorded, making it difficult to rank cities on the basis of the value of economic crimes.

The question is, why has the same set of cities, Jaipur, Lucknow and Patna surpassed the economic crime rate in the past three years? Jaipur Police Commissioner Anand Kumar Srivastava said, “Compared to cities in other states, Jaipur’s economic crime rate is high because FIR registration is easy in Rajasthan. If someone approaches a police station, they can easily register an FIR. He adds that the bulk of these cases are linked to extortion, cheating and disputes between business partners.

Srivastava also says Jaipur City Police are now facing more and more cyber fraud. “We have started to hire cyber experts from the private sector to combat this threat,” he says.

Avinash Mohanty, Co-Commissioner of Police (Crime) in Hyderabad, says the crime rate is often proportional to the volume of financial transactions in a city. “The volume of financial transactions in Hyderabad is significant. In addition, the aspiration to earn more money is high in the city, ”he says. In 2020, Hyderabad was ranked fourth in economic crimes and third in cybercrime. “We often send our teams to other parts of the country to arrest the culprits. When it comes to cybercrime, our arrest rate is one of the highest in the country, ”says Mohanty. It highlights how the city’s cyber police team arrested a number of people, including Chinese nationals, in the recent instant loan app scam in which around 30 illegal mobile apps were deployed. by a gang organized to disburse loans at very high interest rates.

Bike Bot is another recent economic scam that originated in UP’s Noida. He is said to have perpetrators deceiving nearly 250,000 people of around 3,500 crore rupees into falsely providing them with large monthly returns for an investment in motorcycle taxis. Subimal Bhattacharjee, a Delhi-based consultant on computer issues, says criminal syndicates have become more active recently. “Many economic crimes are now contracted out to criminal syndicates specializing in hacking and phishing. There are also cases where young people get involved in these snowshoes, ”he says.

For an economic crime investigative body, the first task is to trace the funds and recover as many assets as possible, primarily by foreclosing on properties. This is where technical expertise comes in handy. Investigators begin the exercise by examining the balance sheets of the companies involved, then move back and forth to detect the recoverable amount. Some detectives engaged in deciphering complex economic frauds believe the GoI should make arrangements to bring in brilliant crooks to contain would-be crooks and help investigate sensitive financial cases. They argue that if surrendered Maoists can be inducted into police battalions for anti-Maoist operations, what is wrong with employing a smart young fraudster to solve a bigger case like Nirav Modi’s or by Vijay Mallya?

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