06 Jun Media Representation of White-Collar Crime
Media representation of white-collar crime is unbalanced. The sensationalisation of crime does not regularly extend to white-collar offences, it is rare for unexemplary cases to be deemed noteworthy, even if they might have long-lasting societal impacts in comparison to other singular offences. Because of this, white-collar offenders more regularly escape serious punishment or sanctions. This essay will discuss white-collar crime and its present criminological understanding through the dissection of the 2018 case of the Australian Transaction Reports and Analysis Centre (AUSTRAC) penalising the Commonwealth Bank of Australia (CBA) for breaching anti-money laundering laws. By reviewing empirical data of how the media covers these types of crime, this essay will establish that there exists a biased attitude towards coverage of more emotive types of offences. Secondly, this essay will review the AUSTRAC v. CBA case and discuss the scope, costs, and larger impact of the damage done by these events. Finally, by using criminological perspective, in particular Rational Choice Theory, this essay will define the workings of the case and examine contemporary policing practices and how they can be titivated to better target and deter present-day white-collar crime.
Contemporary understanding of white-collar crime
Before we seek the best way to discourage white-collar crime, we need to explore how the criminological understanding of this type of deviance has evolved. Sutherland (1940) originally conceived white-collar crimes as offences that are orchestrated by professional or salaried offenders. Since then, the accepted understanding has diversified and expanded rather than become more concise and precise. This is underpinned by a weakness of empirical data surrounding patterns of white-collar offending and associated trends (Simpson, 2011). Sutherland’s original description excludes deviance that occurs outside of an organisational occupational role, but that might otherwise be included in modern white-collar classifications such as e-commerce funds diversion, credit card fraud or other banking funds transgressions. Simpson (2013) discusses the dilemma of understanding white-collar crime stems from its duality of being the most consequential form of crime while also being the least explained.
As Benson, Madensen, and Eck (2009) raised, arguing over the semantics regarding white-collar crime definitions ties the field down, and that by focusing on identifying the structures of these crimes, an appropriate definitional solution will present itself. As such, while a singularly accepted definition still eludes criminologists as a whole, it is commonly accepted that white-collar crime, as a basic explanation, involves acts of deviance that provide a benefit while appearing to be genuine or justifiable occurrences in a professional setting (Benson & Simpson, 2014). And this is the lens that the ill-fated banking misconduct conducted by the CBA will be viewed through throughout this essay.
Media coverage and the reality of white-collar crime
Accurate representation and presentation of facts surrounding white-collar crime and its impacts on society are both important and hard to come by. Levi (2001) shows that white-collar crime is underrepresented in media reporting, and when it is delineated, it is the cases with flamboyant characteristics which make it to mainstream publication. Barlow, Barlow, and Chiricos (1995) show in their content analysis of media articles that the representation of white-collar crime in media is itself a victim of capitalistic ideology. Traditional media outlets tend to eschew publication of white-collar crime events that involve possible instances of damage to business prospects or reputations for fear of potential libel and other ancillary risks (Levi, 2006). Couple these restrictions to representation with a 2008 media study showing that the few cases of white-collar crime that do breach the surface of media publication have their seriousness downplayed across multiple printings (Levi, 2008), and you have a situation where the reality of white-collar crime is not being accurately portrayed to mainstream society.
However, while vexing, there is an exception to this agenda of representation. When a case exhibits the qualities of infotainment which are sought after by media outlets, it can surpass these artificial limitations. Esitti and Isik (2004) outline infotainment as news that increasingly focuses on scandals, celebrity, and sensation driven content due to the proliferation of communication technologies that process and broadcast consumable media. These qualities increase a story’s interest and appeal to modern media audiences and are therefore given additional highlighting, news resources and coverage. Thussu (2007) explains that with the rise of a 24/7 news cycle, rating appeal has increased governance in what news media networks show. This new ambivalence for factual accuracy creates openings for interconnected media network empires to mask ideological agendas with soft news stories (Thussu, 2007). Because of this, public opinion can be swayed or mitigated entirely to the point of irrelevance allowing for the benefit of private interests through the uneven attention white-collar crime receives.
Summary of AUSTRAC v CBA
An example of this benefit through ambivalence can be seen in the AUSTRAC v CBA case. In 2018, AUSTRAC agreed to resolve court proceedings with the CBA regarding grievous breaches of counter-terrorism financing and anti-money laundering laws. This agreement resulted in a $700 million fine; the largest civil penalty issued to date against a corporation in Australian history (AUSTRAC, 2014). This disciplinary action came about after a lengthy investigation into the CBA’s egregious disregard for regulatory and legal compliance. CBA’s flouting of these laws was extensive, with 53,506 violations of mandatory reporting on transactions totalling $625 million, as well as ignoring the transactional monitoring on 778,370 banking accounts, including escalated suspicious activity reports. Even after specific money laundering concerns were raised to its management, it declined to mitigate or manage its risk (AUSTRAC, 2014). This can be viewed as a massive institutional failing regarding risk management and the implementation of proper financial controls.
A lot can be gleaned from the timeline of CBA’s public responses. Initially, the CBA said it expected a penalty would not exceed $18 million (Commonwealth Bank of Australia, 2017), and that the only way for AUSTRAC to issue pecuniary penalties was for it to initiate court proceedings – an attempt to imply that this was all standard behaviour. It further claimed that these compliance breaches related only to its initial failings regarding its automatic deposits, however, the settled penalty summarised above outlines how much more involved CBA’s failings were. At every opportunity, CBA implored viewers of its actions to downplay its potential white-collar criminality, to the extent that after the ground-breaking penalty was imposed, it declared to shareholders this was a business expense to appear on its end of year report (Commonwealth Bank, 2018). Up until the final penalty was issued, these combined actions help shape a media narrative that was just business as usual, which gave media outlets leeway in not further publicising or chasing the story.
Potential Impacts & Future Implications
This lack of critical attention combined with media agencies refusing to hold white-collar offenders to the same accountability standards as other criminals are dangerous considering the larger impacts of these crimes. Money laundering undermines the integrity of the Australian banking financial system and impacts the community’s safety. Seymour (2008) highlights how criminal enterprises will constantly probe financial networks for methods to introduce their proceeds of crime into legitimate financial systems. When this happens, it can enable the transfer of sizeable amounts of economic power from citizens, markets, and governments to criminals and criminal ventures. This can have drastic negative socioeconomic impacts as this economic power provides resources and opportunities for criminals to assert corrupting influences on differing aspects of society (McDowell & Novis, 2001).
McDowell and Novis (2001) further explore the micro and macroeconomic impact, including the economic undermining of the business sector using semi-legitimate fronts, which can use illicit funds to subsidize business practices and jeopardize legitimate business in that industry through pushing services and products to untenable levels. Similar impacts happen across economic levels including revenue losses and, damage to international business interests through economic instability and reputation losses, currency manipulation, and interest rate damages due to the flux of large amounts of financial transactions and hoarding of cash reserves. This type of behaviour creates heavy social impacts as well. Once the money is laundered, it presents a much more inviting case for the argument that potential reward for deviant behaviour outweighs the risks involved. With increased criminal activity and expanded deviant behaviour, it puts a further strain on social institutions, including police resources. These types of long-lasting impacts show why these types of laws were passed in the first place.
Explaining the Case Through Criminological Perspective
White-collar crime and this instance of CBA breaching anti-money laundering and counter-terrorism financing laws can best be explained through Rational Choice Theory (RCT). RCT seeks to explain the circumstances behind offenders choosing to commit deviant acts by attributing these decisions to a balance of benefits vs cost. Paternoster and Simpson (2008) established that white-collar criminals weigh up the future profitability, immediate returns, and size of the business in their choice to offend and balance these outcomes against their perceived ideas of what legal sanctions they might receive. Regarding the behaviour of the CBA, it is clear from their announcements that they anticipated the penalty for their actions would be minor. And while they might have underestimated the pecuniary value of their sanction, they did calculate correctly that there would be no serious or criminal charges for their flouting of anti-money laundering & counter-terrorism finance laws. Indeed, despite the gravity of the future impact these types of actions have on the economy and criminal business in general, it’s alarming that there are no personable penalties issues. In this case, when explained by RCT, the choice to offend is clear as accountability for their deviant actions is outweighed by the potential profit garnered from these actions.
Addressing White-Collar Crime in the Future
To correctly address white-collar crime, the choice between risk vs reward needs to be better balanced to deter potential offenders from choosing deviant behaviour. One possible solution is to decentralise the investigation and pre-emption of enforcement by empowering independent or semi-independent actors to be involved in reporting and stopping money-laundering and other market abuse crimes. Much like how the General Data Protection Regulation (GDPR) empowers individuals in companies through the positions of Data Protection Officers (DPO) to enforce the regulations regarding data privacy (European Union, 2018), a similar method can be established for financial institutions to push back against white-collar crimes. Engdahl and Larsson (2016) explore such a movement currently successfully happening in Sweden, where individuals are incentivized to report white-collar crimes, and how this has a beneficial impact on policing resources and helps curtail these offences.
A second way to address white-collar crime going forward would be to reevaluate the way information and documentation are shared with reporting and policing institutions. Kempa (2010) identifies that there exists an ideological and cultural divide between legal institutions and market actors, which sets their actions apart and inhibits the way information is effectively shared and inhibits policing. To overcome this divide, materials and training should be made available or mandated to better explain to private market actors the impacts that their potential misdeeds may have on the wider economy and their fellow citizens. Additionally, the information from these transactional sources should be automated to be securely shared to reporting institutions to bypass any possible interference from individuals who might be less than forthcoming with their incriminating evidence.
In summary, media representation of white-collar crime is unbalanced. While media and policymakers often focus on violent or sensationalised crimes, white-collar crime can have an exceptional impact on a far larger scale and needs to be addressed and seriously represented in the media. Because of this one-sided representation, white-collar offenders regularly receive less than fair penalties and sentences which allow future offenders to continually choose to commit criminal acts. This type of behaviour is explained by Rational Choice Theory and shown through the case of AUSTRAC v CBA for breaches of money-laundering and counter-terrorism financing laws. This essay concludes that to better combat white-collar crime, greater and more streamlined sharing of information needs to take place, as well as the decentralisation of policing these acts to empower individuals through incentivization to report and hold their intuitions accountable. Through this, it’s possible media representation of white-collar crime will improve.