Corporate Fraud and White-Collar Crimes: Legal Challenges and Preventive Mechanisms

Abstract

Corporate fraud and white-collar crimes, which do significant harm to financial institutions and cause a great deal of harm to stakeholders and investors, are becoming an increasingly significant concern for economies throughout the world. This article examines the challenges that arise when attempting to detect, investigate, and prosecute such crimes from a legal position, using India as an example. Current laws are subjected to a careful analysis in order to identify vulnerabilities that are often used by criminals. The Companies Act of 2013, the Prevention of Money Laundering Act (PMLA), and the Indian Penal Code (IPC) are all examples of regulations that fall within this category. The difficulty of preventing corporate fraud is exacerbated by a number of factors, including difficulties with law enforcement, complicated court processes, and a lack of coordination among regulatory authorities like SEBI, CBI, and SFIO. Additionally, the article dives into preventive methods, with a focus on enhancing corporate governance, ensuring transparency in financial reporting, and leveraging cutting-edge technologies such as forensic accounting and artificial intelligence to spot fraud in its early stages. The need of ethical leadership and corporate responsibility is emphasized in order to accomplish the goal of constructing a business environment that is resistant to fraudulent activity. In the last section of this paper, we provide some suggestions for change that may be implemented to improve the legal environment. Our goal is to ensure that businesses are held more responsible and that white-collar crimes are unable to undermine public trust in financial institutions.