Abstract: The concept of “white-collar crime” introduced by Edwin Sutherland in 1939, has evolved significantly, with professional enablers playing an increasingly central role in facilitating these crimes. This analysis explores the historical development and current dynamics of professional enablers, focusing on their supply-demand relationship with white-collar criminals, including major corporations and individuals of high social standing. Professional enablers, ranging from auditors and legal advisors to consulting firms, have become crucial in sustaining and evolving this relationship by providing expertise that enables complex financial manipulations and regulatory evasion. High-profile cases in 21st century such as Enron, LuxLeaks, and the Panama Papers illustrate how these enablers have shifted from passive advisors to active collaborators, exploiting their skills to obscure illicit activities and challenge law enforcement efforts. This symbiotic relationship not only facilitates individual crimes but also undermines financial transparency, erodes public trust, and destabilizes economies. The analysis concludes with recommendations for international cooperation and regulatory reforms to address the evolving threat posed by professional enablers in white-collar crime.
White-collar crime was first introduced in Sutherland’s speech to the American Sociological Association in 1939. He defined white-collar crime referred to the violation of law committed by a person in upper socioeconomic class[1]. Today this criminality landscape has revealed a more complex with the actor of professional service providers. As a role of enablers, these actors can morph from neutral advisors into active collaborators in white-collar crimes. Consequently, white-collar crime has become transnational issue and entails more sophisticated schemes, causing enforcement challenges than ever before.
Through public media, there are various cases revealing how legitimate services have been abused or actively complicit in many crimes. In the prism of international finance crime, the paper will target to the dynamic relationship between professional enablers and persons with significant social prestige, authority, or respectability, as well as relationship between professional enablers and MNEs. That means the enablers in this paper do not cover those are members within or participated in organised crime group of sole criminal purpose.
Using most notable cases in 21st century, this paper will discuss the evolving level of involvement of professional enablers, common methods in white-collar cases. Subsequently, the research explores catastrophic consequences of their actions, and recommend improvements to address the challenges.
Social status in contemporary white-collar crime
Sutherland approached definition based on social status of offender, i.e., “a person of respectability and high social status” and emphasized the offence was conducted “in the course of his occupation”[2]. In this approach, crimes ‘not a part of the occupational procedures’, or crimes ‘caused by wealthy members of the underworld’ is out of white-collar crimes[3]. White-collar referred principally to business managers and executives[4]. Despite of various criticism on this concept until today[5], Sutherland’s concept was influential because it challenged the prevailing focus on lower-class ‘street crime’ and poverty as the root cause for crime by that time[6].
Today, business managers and executives working day-to-day job as employees may also engage in white-collar crime during their occupation, albeit with potentially less power or influence than their counterparts in Sutherland’s era. Therefore, this analysis will focus on white-collar crimes committed by those wielding significant political and financial power in today world who can abuse that power to escape arrest and conviction, as well as the criminal activities perpetrated by large corporations.
Defining the professional enabler in white-collar crime
At government level, professional enabler was first mentioned by UK’s NCA to highlight their complicit role of money laundering through shell companies and trusts[7]. Currently, UK’s ECP 2023–2026 explicitly defines professional enablers as individuals or organizations providing services that aid criminal activity, exhibiting deliberate, reckless, improper, dishonest, or negligent behaviours[8]. At international level, the term was first mentioned in 2021 by OECD referring individuals or entities use their professional expertise and perform a specific service that either actively or negligently facilitates the commission of crimes, including but not limited to financial crimes[9].
Generally, professional enablers are characterized by two key features: their enabling role is performed during the provision of services, regardless of the specific service, and they either actively enable or willingly turn a blind eye to crimes.
The concept of professional enabler shares several parallels with Sutherland’s notion of white-collar crime. Both terms target to a specific category of offender, not to any specific offense defined by statutes. Offenders within these concepts also can be either individual or entity, within their legitimate business, may commit wrongdoings either criminalized offenses or not, contingent upon the nature and seriousness of the behaviours within the relevant jurisdictions.
Furthermore, it is important to note a key distinction that while white-collar traditionally relied on their own financial and political power to influence the justice, whereas ‘professional enabler’ uses their professional knowledges, and high expertise for facilitating crimes. Thus, powerful individuals and professional enablers can form a supply-demand relationship, posing a growing challenge to combating white-collar crimes.
The relationship between white-collar criminals and professionals in service-based industries is a key factor in distinguishing them from frauds committed by ‘internal professionals’ (legal counsel, accountant, executives etc.) who are employees of legitimate business, and the employee may facilitate some illicit business activities of their company. For instance, a bank might illegally write off debt and mislead investors by a joint-participation of high level executives, legal counsels, and accountants working together to complete this financial fraud. These internal wrongdoings, already explored by Sutherland in traditional white-collar crime, therefore fall outside this paper’s focus.
Evolving role of professional enablers in facilitating white-collar crime
This section explores how professional enablers’ methods have evolved to facilitate transnational white-collar crimes. Notably, these roles vary in culpability. Initially, they might be negligent or wilfully blind to red flags, but their involvement can escalate to proactive complicity[10].
a. Violating professional rules: from negligent to actively complicit role
Financial manipulation has been examined by Sutherland as white-collar crimes caused by big corporation. However, unlike typical cases where corporations themselves engage in financial manipulation, with Arthur Andersen’s pivotal role as a professional enabler in the Enron’s fraud, brought new dimensions to this corporate crime.
In this case, the potential threat to auditor’s independence and objectivity arose when Arthur Andersen also provided other consulting services to Enron – its audit client. Specifically, the lucrative fees from non-audit service also created a conflict of interest that could compromise the quality of audit service. Andersen was earning more fees from providing non-audit services, such as consulting, than audit works provided to Enron[11]. This created a financial incentive for Andersen to maintain those lucrative non-audit relationships. The desire to protect the non-audit revenue stream could have influenced Andersen’s objectivity and independence as the auditor.
In particular, the audit firm approved pervasive misstatements in Enron’s financial reports consecutively from 1993 to 1996. This breach of auditing rules was to accommodate Enron’s ‘aggressive’ desires to maximise profit[12]. Enron even put pressure to Andersen’s highest level of management to remove some Andersen’s accountants from Enron work because the accountants went against client’s desire in manipulating accounting rules[13]. Subsequently, after the financial problems with Enron’s was exposed, lead partner of the audit engagement team directed his staffs to destroy evidence that might be used against the audit firm[14]. These actions clearly reflected their culpability in Enron’s fraud. Consequently, high executives of Enron faced criminal charges for securities fraud, insider trading, conspiracy, and other charges, while Andersen firm and related audit partners faced civil money penalty and administrative sanctions for guilty of obstruction of justice, violating SEC rule and improper professional conduct[15].
b. Grey areas of wrongdoings and culpability: challenging law enforcement
World Bank highlighted secrecy jurisdictions held 43% of global assets and 47% of FDI in 2015 despite various OECD/G20 efforts for improving financial transparency[16]. Their low corporate income tax, more lenient regulations are also exploited for illicit financial flows[17]. Key actors in this malpractice involve professional enablers and their wealthy clients such as big MNEs, high figures, famous stars, politicians, world leaders.
- MNEs engaged in aggressive tax avoidance with the support of consulting firms.
- LuxLeaks in 2014 exposed how Luxembourg had been endorsing aggressive cross-border tax avoidance by multinational corporations on an industrial scale, in this mechanism, prominent consulting firms (such as PwC, Deloitte, KPMG, EY) on behalf on their corporate clients, presented proposals for corporate structures and transactions designed to create tax savings using Luxembourg subsidiaries and then get written approval by the local authority. In this situation, these consulting firms were more than a neutral advisor, but proactive ‘architecture’ of this tactic of transfer pricing, profit shifting scheme that enabled Pepsi, IKEA, FedEx and 340 other international companies to save billions of dollars in taxes, with some paying as little as 1% or less in taxes[18].
- Social elites used offshore structures to obscure assets and money laundering with support of ‘intermediaries’ service providers.
- Panama Paper’ in 2016 and ‘Pandora Papers’ in 2021 have unmasked how high social status persons (world leaders, politicians, public officials etc) concealed their wealth in offshore structures facilitated by professional services, such as: legal, accounting, notary, banking etc[19]. Similar to LuxLeak, professionals’ complicit role was not just innocuous advisor, but acting as client’s personnel in role of nominated directors or secretaries to maintain and further obfuscate beneficial owners of offshore structures[20]. Mossack Fonseca, a Panamanian law firm, exemplified this pattern. Legitimate shell companies[21] were established as a front to conceal illicit investments or dirty asset originated from crimes of social elites: sport corruption, bribery, money laundering, tax evasion, terrorism financing, environmental crime etc[22]. This scheme was also deployed by Baker McKenzie, a reputable US law firm. Pandora documents provide details about the movement of hundreds of millions of dollars from offshore havens in the Caribbean and Europe into South Dakota in the US[23].
Compared to the Enron case, accountability of enablers and white-collar criminals identified through major leaks was more complexing. This complexity was partly for the nature of secrecy jurisdictions within this intricate scheme. In the LuxLeaks case, Luxembourg authorities defended their ‘competitive’ tax system, arguing it was neither unfair nor unethical[24]. Even more concerning was their decision to prosecute PwC’s whistle blowers, seemingly prioritizing a culture of secrecy[25]. This lack of transparency is further amplified in jurisdictions like Panama. Here, information about beneficial ownership is often unavailable, and online searches for company details may yield errors or incomplete information[26]. Notably, Panama authorities failed to prove that Mossack Fonseca handled or tried to hide illicit funds, leading to the release of the firm’s founders[27]. Until now, their criminal trial has not yet been finalized[28].
Catastrophic consequences of profession enabler to the economy
Certain professional services, including financial institutions, real estate agents, legal, accounting, trust, and company service providers, play a crucial role in implementing anti-money laundering measures established by international standards. When these professionals act as enablers of crime, they heighten the risk of illicit financial flows entering the financial system, potentially fuelling a broader range of criminal activities beyond the specific white-collar crimes they were initially intended to assist or conceal. This, in turn, erodes trust in financial institutions, discourages legitimate investment, and disrupts fair competition. Ultimately, these consequences stifle economic growth and damage a nation’s financial stability.
As an example, the UK, lauded for its transparency and highly regulated environment, particularly in anti-money laundering measures, has faced a paradoxical situation for years. Russian oligarchs have been widely reported to commonly purchase high-end London real estate to launder illicit funds and bolster their social standing[29]. This practice has recently come under renewed scrutiny following international sanctions imposed by the EU, US, and other major economies, leading to London being dubbed the ‘dirty money capital of the world’[30]. These real estate purchases involved complex transactions using shell companies with opaque ownership structures, facilitated by law firms, intermediaries, financial services providers, and offshore agents. Additionally, wealthy elites from kleptocratic states like Russia also leverage PR agents to help with reputation management[31] and even engaged law firm to silence journalist exposing their wrongdoings[32].
Years of inaction by the UK government have damaged its reputation for financial transparency. The country’s CPI Index ranking has fallen nine places in just two years[33]. This eroded image discourages legitimate investment in a country perceived as a haven for dirty money. This can ultimately negate country’s effort to achieve sustainable development goal[34].
Closing remark and recommendation
Moving forward, tax havens likely still persists even in a diminished role[35], but innovative financial technologies like DeFi and digital assets could emerge as alternative channels for illicit activities. Services providers in those areas can exploit pseudonymous, fast, and largely unregulated transactions in digital sphere to facilitate future white-collar crime[36]. Therefore, it underscores the need for comprehensive assessment into key root causes and advocating for improvements.
First, it is crucial to have uniform approach, and shared commitment across jurisdictions in countering the risk of professional enablers. Indeed, identification of professional enablers and the application of preventive measures is currently lacking uniformity at international level. In particular, professional enabler is identified inconsistently in various UN’s binding instruments[37]. OECD also remains entirely soft and advisory towards threat of professional enablers, and only a limited members dedicate actions in tackling professional enablers[38]. Transnational white-collar crime demands coordinated action by governments, therefore UN-led initiative related to professional enablers is needed for a better strategy.
Second, under the international standard of AML/CTF, a broad range of financial and certain non-financial professional services are entrusted as ‘gatekeeper’ role to the finance system. Specifically, these services conduct CDD, including UBO, and submit suspicious reports to their respective regulators if identifying red flags. However, this FATF’s framework lacks clear measures to address situations where regulated services themselves facilitate illicit financial flows. Therefore, in response to the issue, we need a shift in focus regarding the regulation and oversight of professional enablers. More caution should be taken in relying solely on this gatekeeping duties and liabilities[39]. Besides, it is also necessary to promote corporate ethics standards and strengthen rules of professional conducts with close coordination among authorities, professional societies and industry representatives.
[1] Sutherland E, Geis G and Goff C, ‘The problem of white collar crime’, White Collar Crime (Yale University Press 1983) 7 <http://www.jstor.org/stable/j.ctt1cc2khv.5> accessed 1 April 2024.
[2] ibid.
[3] ibid.
[4] Sutherland E, Geis G and Goff C, ‘Notes’, White Collar Crime (Yale University Press 1983) 265 <http://www.jstor.org/stable/j.ctt1cc2khv.21> accessed 1 April 2024.
[5] Gilbert Geis, The Roots and Variant Definitions of the Concept of “White-Collar Crime” (Shanna R Van Slyke, Michael L Benson and Francis T Cullen eds, Oxford University Press 2016) <https://academic.oup.com/edited-volume/28134/chapter/212326176> accessed 3 April 2024.
[6] Sutherland, Geis and Goff (n 1) 7.
[7] UK’s National Crime Agency, ‘National Strategic Assessment of Serious and Organised Crime 2014’ <https://www.nationalcrimeagency.gov.uk/who-we-are/publications/384-national-strategic-assessment-of-serious-and-organised-crime-2014/file> accessed 3 April 2024.
[8] HM Government, ‘Economic Crime Plan 2 2023-2026’ <https://assets.publishing.service.gov.uk/media/642561b02fa8480013ec0f97/6.8300_HO_Economic_Crime_Plan_2_v6_Web.pdf> accessed 3 April 2024.
[9] OECD, ‘Ending the Shell Game: Cracking down on the Professionals Who Enable Tax and White Collar Crimes’ (OECD Publishing 2021) <https://www.oecd.org/tax/crime/ending-the-shell-game-cracking-down-on-the-professionals-who-enable-tax-and-white-collar-crimes.pdf> accessed 3 April 2024.
[10] FATF, ‘Money Laundering and Terrorist Financing Vulnerabilities of Legal Professionals’ (FATF/OECD 2013) 5.
[11]The US Securities and Exchange Commission, ‘Administrative Proceeding File No. 3-10513’ <https://www.sec.gov/litigation/admin/34-44444>. ‘(…)between 1991 and 1997, Andersen billed Waste Management corporate headquarters approximately $7.5 million in audit fees.14 Over this seven-year period, while Andersen’s corporate audit fees remained capped, Andersen also billed Waste Management corporate headquarters $11.8 million in other fees, much of which related to tax, attest work unrelated to financial statement audits or reviews, regulatory issues, and consulting services.’
[12] Stephan Landsman, ‘Death of an Accountant: The Jury Convicts Arthur Andersen of Obstruction of Justice’ (2003) 78 Chicago-Kent Law Review 1203, 1210.
[13] Landsman (n 12).
[14] ibid 1215–1216.
[15] The US Securities and Exchange Commission, ‘Litigation Release No. 17039’ <https://www.sec.gov/litigation/litreleases/lr-17039> accessed 10 April 2024.
[16] Gulnaz Sharafutdinova and Michael Lokshin, ‘Hide and Protect: A Role of Global Financial Secrecy in Shaping Domestic Institutions’ 6 <https://documents1.worldbank.org/curated/en/512681596468706087/pdf/Hide-and-Protect-A-Role-of-Global-Financial-Secrecy-in-Shaping-Domestic-Institutions.pdf> accessed 10 April 2024.
[17] ibid 9.
[18] Leslie Wayne and others, ‘Leaked Documents Expose Global Companies’ Secret Tax Deals in Luxembourg’ ICIJ (5 November 2014) <https://www.icij.org/investigations/luxembourg-leaks/leaked-documents-expose-global-companies-secret-tax-deals-luxembourg/> accessed 10 April 2024.
[19] Siladitya Ray, ‘Pandora Papers: Major World Leaders—King Abdullah II, Tony Blair, Andrej Babis—Accused Of Secretive Offshore Financial Dealings’ Forbes (4 October 2021) <https://www.forbes.com/sites/siladityaray/2021/10/04/pandora-papers-several-major-world-leaders-accused-of-hiding-massive-wealth-in-offshore-accounts/?sh=2a2c0a3e3872> accessed 10 April 2024.
[20] Willem Groen, ‘Role of Advisors and Intermediaries in the Schemes Revealed in the Panama Papers’ (PANA Committee – European Parliament, 2 May 2017) 5 <https://www.europarl.europa.eu/cmsdata/117711/3%20-%2002%20%20Presentation_AdvisorsIntermediaries_20170427_rev.pdf> accessed 10 April 2024.
[21] This is a company that exists in name only, with no staff or office.
[22] Fergus Shiel, ‘About the Pandora Papers’ ICIJ (3 October 2021) <https://www.icij.org/investigations/pandora-papers/about-pandora-papers-investigation/> accessed 10 April 2024.
[23] Sydney Freedberg, Agustin Armendariz and Jesús Escudero, ‘How America’s Biggest Law Firm Drives Global Wealth into Tax Havens’ (4 October 2021) <https://www.icij.org/investigations/pandora-papers/baker-mckenzie-global-law-firm-offshore-tax-dodging/> accessed 10 April 2024.
[24] Wayne and others (n 18).
[25] Fergus Shiel, ‘European Court Reverses Course to Rule in Favor of LuxLeaks Whistleblower’ ICIJ (15 February 2023) <https://www.icij.org/investigations/luxembourg-leaks/european-court-reverses-course-to-rule-in-favor-of-luxleaks-whistleblower/> accessed 10 April 2024.
[26] Emilia Struck and Cecile Gallego, ‘Beyond Panama: Unlocking the World’s Secrecy Jurisdictions’ ICIJ (9 May 2016) <https://www.icij.org/investigations/panama-papers/20160509-beyond-panama-secrecy-jurisdictions/> accessed 10 April 2024.
[27] Will Fitzgibbon, ‘Panama Papers FAQ: All You Need to Know About The 2016 Investigation’ ICIJ (21 August 2019) <https://www.icij.org/investigations/panama-papers/panama-papers-faq-all-you-need-to-know-about-the-2016-investigation/> accessed 10 April 2024.
[28] The Associated Press, ‘“Panama Papers” Trial Starts. 27 People Charged in the Worldwide Money Laundering Case’ (Panama, 9 April 2024) <https://apnews.com/article/panama-papers-trial-money-laundering-ff16769071b2535ad3678c8099ad0e9e> accessed 10 April 2024.
[29] How London Became the Dirty Money Capital of the World (Directed by Daniel Garrahan, Youtube 2022) <https://www.youtube.com/watch?v=gyk12Wf_TeQ> accessed 10 April 2024.
[30] ibid.
[31] John Heathershaw and others, ‘The UK’s Kleptocracy Problem – How Servicing Post-Soviet Elites Weakens the Rule of Law’ (Chatham House 2021) <https://www.chathamhouse.org/2021/12/uks-kleptocracy-problem/05-reputation-laundering-and-political-influencing> accessed 10 April 2024.
[32] How London Became the Dirty Money Capital of the World (n 28).
[33] Transparency International UK, ‘UK PLUNGES TO LOWEST-EVER POSITION IN CORRUPTION PERCEPTIONS INDEX’ Transparency International UK (31 January 2023) <https://www.transparency.org.uk/cpi-2023-uk-s-score-hits-all-time-low-time-action-corruption-now> accessed 10 April 2023.
[34] UN, ‘Transforming Our World: The 2030 Agenda for Sustainable Development’ (UN 2015) UN’s Resolution <https://sdgs.un.org/2030agenda> accessed 10 April 2024.
[35] Jonathan Watson, ‘The Panama Papers: A Tipping Point for Reform’ (2016) 47 IBA Global Insight <https://www.westlaw.com/Document/I7a2332b8772911e698dc8b09b4f043e0/View/FullText.html?transitionType=Default&contextData=(sc.Default)&VR=3.0&RS=cblt1.0> accessed 10 April 2024.
[36] Kate Brown, ‘“I Will Not Run or Hide”: Billionaire Art Collector Yusaku Maezawa, Famous for Buying Basquiats, Responds to Tax-Evasion Accusations’ Artnet (28 May 2020) <https://news.artnet.com/art-world/yusaku-maezawas-spacex-tax-bureau-1872882> accessed 10 April 2024.
[37] For example: Art. 14.1a of the UN Convention against corruption generally recommends member states to institute a supervisory regime for ‘banks and non-bank financial institutions that provide formal or informal services for transmission of money or value’; or Art. 18.1b of the International Convention for the Suppression of the Financing of Terrorism focuses exclusively on financial institution and their involvement in financing terrorist organisations.
[38] ibid 41.
[39] Juan José Ganuza and Fernando Gomez, ‘Should We Trust the Gatekeepers?’ (2007) 27 International Review of Law and Economics 96.
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