• 2024-07-09

Sorainen heads of Corporate Crime Investigations and Compliance

Dr. iur Violeta Zeppa-Priedīte (Latvia)

Norman Aas (Estonia)

Darius Raulušaitis (Lithuania) 

With the association of the White Collar Crime team #agneta.rumpa; #krista.niklase; #janis.dobelnieks; #hannelora.voicisca; #paula.sutava; #kristers.petersons




One of the areas in which Sorainen assists clients is criminal law.

Historically, as Sorainen was established as a law firm for corporate clients, assistance in this area has been focused on “white-collar crime”, which is basically crime in the fields of economic crime, financial crime, tax, customs, corporate governance or corruption. 

The English-language term “white-collar crime” is often heard, both in movies and in lawyers' conversations, and it is also used in business life. However, often when meeting with clients and cooperation partners, we hear that their understanding of exactly what it is that we can assist with and in what situations is not complete.

Knowledgeable clients and cooperation partners: in our opinion, these are among the cornerstones of successful problem prevention. Prevention, in our view, is one of the most important tools to help avoid resource-intensive disputes before investigative institutions, prosecutor’s offices and courts.

In this article, Sorainen experts in the field of criminal law intend to provide an insight into the understanding of this concept, its historical evolution, and finally its existence in the practice of Sorainen’s criminal law attorneys-at-law. In this way, we hope to improve general knowledge about the supposedly well-known, but still often unclear concept of, “white-collar crimes”.

Historical understanding of “white-collar crime”

The English-language term “white-collar crime” refers to crimes in the fields of economic crime, financial crime, corporate governance and corruption committed for financial gain (Violeta Zeppa-Priedīte. ““White-collar” crimes”, 2020, Available at: https://itiesibas.lv/raksti/tiesvedibas/tiesvedibas/balto-apkaklisu-noziegumi/18117), which may take the form, for example, of obtaining money or goods and services, or avoiding the loss of money, goods and services (Sanction Scanner. White-Collar Crime. Available at: https://sanctionscanner.com/blog/white-collar-crime-are-all-white-collar-innocent-330). “White-collar crimes” are often characterised by features such as deceit, concealment or breach of trust (Violeta Zeppa-Priedīte. ““White-collar” crimes”, 2020, Available at: https://itiesibas.lv/raksti/tiesvedibas/tiesvedibas/balto-apkaklisu-noziegumi/18117), and these crimes also contribute to the so-called “shadow economy” at the national level (NJORD Law firm. “White-collar crime”, 2020, Available at: https://www.njordlaw.com/lv/balto-apkaklisu-noziegumi).

The term “white-collar crime” originated in the United States in the first half of the 20th century. To be more precise, it originated in 1939, when it was first publicly used by Edwin Hardin Sutherland, an American sociologist and one of the most influential criminologists of the 20th century, in a book he published on the subject. In the book E. H. Sutherland described these crimes as being attributable to persons of respectability and high social class, who commit these offences as a result of their profession or occupation (NJORD Law firm. “White-collar crime”, 2020, Available at: https://www.njordlaw.com/lv/balto-apkaklisu-noziegumi). The aim of E. H. Sutherland was to shift the focus from the illegal object (i.e. money) to the people responsible for committing the crime (Sanction Scanner. “The Historical and Legal Evolution Of White-Collar Crime”. Available at: https://sanctionscanner.com/blog/the-historical-and-legal-evolution-of-white-collar-crime-536).

After the concept of “white-collar crime” and the negative effects of the offences included in the concept were successfully identified, there was a need to combat them and reduce the harmful consequences that resulted. Therefore, in the second half of the 20th century – specifically in the 1970s and 1980s – national legislatures began to gradually adopt various legal acts with the aim of combating these criminal offences. For example, in the United States the Racketeer Influenced and Corrupt Organizations Act and Bank Secrecy Act were adopted, aimed at improving bank transparency (Sanction Scanner. “The Historical and Legal Evolution Of White-Collar Crime”. Available at: https://sanctionscanner.com/blog/the-historical-and-legal-evolution-of-white-collar-crime-536 ).

It is worth mentioning here, so that there is no accidental confusion of terms and understandings, that “white-collar crime” can be contrasted with so-called “blue-collar crime”. “Blue-collar crime” is crime most often committed by individuals or groups from lower socioeconomic classes (Shriney, M. “Blue-Collar crimes: types, causes and penalties”, 2022. Available at: https://blog.ipleaders.in/blue-collar-crimes-types-causes-and-penalties/), and usually committed out of immediate desirability or necessity (Hepler, R. “Blue-Collar Crime | Definition, Causes & Examples”, 2023, Available at: https://study.com/learn/lesson/blue-collar-crime-statistics-examples.html). If “white-collar crimes” are usually committed without the use of violence, then “blue-collar crimes” may involve violence. Some examples of “blue-collar crimes” include murder, sexual assault, and armed theft. However, there are crimes that, although classified as “blue-collar crimes”, are committed without the use of violence. These could be, for example, forced prostitution, illegal gambling, etc. (Notre Dame College Online. “White-Collar vs. Blue-Collar Crime”, 2019, Available at: https://online.notredamecollege.edu/white-collar-vs-blue-collar-crime/).

With “blue-collar crimes” it is usually easier to identify and find the person responsible for committing the crime. On the other hand, with “white-collar crimes”, it is much more difficult to determine who is the guilty person, because unlike “blue-collar” crimes, which are often carried out using various items of a criminal nature,  internet browsers, accounting programmes are used, which makes it much more difficult to detect the crime and determine its extent (Notre Dame College Online. “White-Collar vs. Blue-Collar Crime”, 2019, Available at: https://online.notredamecollege.edu/white-collar-vs-blue-collar-crime/).  In cases of “white-collar crime” (e.g. in cases of corruption), there is often no direct victim to contact the police, which makes them even more difficult to detect.

Also, “blue-collar” crime is characterised as a crime committed within a single country, meaning that this crime only relates to one jurisdiction, while in the case of “white-collar crime” there may be several jurisdictions involved. Therefore, “white-collar crimes” are much more complicated than “blue-collar crimes”. (Notre Dame College Online. “White-Collar vs. Blue-Collar Crime”, 2019, Available at: https://online.notredamecollege.edu/white-collar-vs-blue-collar-crime/).

Understanding of “white-collar crime” in contemporary legal practice

As mentioned, white-collar crime does not usually involve violence. These are crimes often related to various types of money laundering – obtaining, avoiding payment, obtaining advantages or other forms of fraud. The crime itself does not have to be of a financial nature; it could be, for example, the misuse of confidential information, but its purpose is mostly related to some financial or power-related gain (Corporate Finance Institute. White-Collar Crimes. Available at: https://corporatefinanceinstitute.com/resources/esg/white-collar-crime/).

The most typical crimes in this category include:

- corruption – possible both at the level of private companies and state administration, illegal activity where an official or employee uses their influence or the advantages resulting from their position to violate the powers allocated to them for personal gain

- tax evasion – using various schemes to reduce one’s tax burden or avoid paying taxes entirely by providing false information, diverting income to offshore territories or illegal use of tax incentives

- money laundering - the process of hiding or disguising the source of illegal gains in order to mislead as to the legal nature of the money’s origin. This can take the form of conclusion of fictitious transactions, hiding financial transactions or creating a “chain of businesses”. (Federal Bureau of Investigation. White-Collar Crime. Available at: https://www.fbi.gov/investigate/white-collar-crime).

- competition law infringements – using illegal methods to obtain or share commercial information with the aim of secretly negotiating more favourable terms or taking actions harmful to competitors 

- embezzlement of public funds – falsification of information in order to embezzle state support within the framework of various tenders or state-funded projects – especially common with EU-funded projects (European Commision. EU anti-fraud measures. Available at: https://commission.europa.eu/strategy-and-policy/eu-budget/how-it-works/annual-lifecycle/implementation/anti-fraud-measures_en ).

However, this list of white-collar crimes is not exhaustive and may include many different types of crimes, such as sanctions violations, customs crimes, providing false information, unfair commercial practices, corporate embezzlement, and others (Sorainen. Risk management, corporate crime investigation and defence. Available at: https://www.sorainen.com/lv/service/stridu-risinasana-un-risku-vadiba/risku-vadiba-korporativo-noziegumu-izmeklesana-un-aizstaviba/ ).

Nowadays, a very common trend is to use information technology to commit cybercrimes, such as to commit data and identity theft, use cryptocurrency for money laundering, and demand ransoms for data seized. Modern technology makes it much easier to commit white-collar crimes (Corporate Finance Institute. White-Collar Crimes. Available at: https://corporatefinanceinstitute.com/resources/esg/white-collar-crime/).

What are the big foreign and international law firms doing with regard to the field of white-collar crime?

Business law offices are probably not the first place you would think to look for help with relation to criminal cases. And yet, receiving assistance with this field, especially in cases related to “white-collar crime”, is also not uncommon at large international business law firms. Historically, these types of cases were mostly handled by smaller criminal law offices that specialised in criminal cases. Leading business law firms, by contrast, either deliberately avoided these types of cases.. However, over time, big business law firms began to specialise more and more in these white-collar crimes (https://arizonalawreview.org/pdf/53-4/53arizlrev1221.pdf). One of the main reasons for this shift could be changes in the market. According to Eurojust, the number of white-collar cases is increasing every year (https://www.eurojust.europa.eu/ar2020/7-casework-crime-type/71-statistics-crime-type). What’s more, this trend is unsurprising considering the advantages that business law firms have, especially in solving complex or large-scale cases.

Today, a large number of large business law firms already have established white-collar crime practice groups. According to Chambers and Partners, a leading independent legal services research firm, leading large business law firms such as Debevoise & Plimpton, Gibson, Dunn & Crutcher, Allen & Overy, and Clifford Chance have practice groups of this kind (https://chambers.com/legal-rankings/corporate-investigations-anti-corruption-global-multi-jurisdictional-2:2790:21180:1).

International business law firms most often provide assistance in cases of white-collar crime related to corruption in the private and public sector, fraud, money laundering, embezzlement, tax evasion, and criminal offences in insolvency proceedings (See, for example, https://www.kinstellar.com/expertise/services/white-collar-crime and https://www.swlegal.com/en/expertise/pasector-detail/white-collar-crime-and-compliance/). Companies, financial institutions and company management are mostly represented in the cases mentioned above. It doesn't matter if the company or its executives are themselves under government investigation or the victims of one of these crimes. In addition to legal assistance in already initiated criminal proceedings or administrative violation proceedings, international business law firms also conduct company internal investigations in areas such as anti-money laundering, anti-bribery and sanctions violations (https://www.swlegal.com/en/expertise/pasector-detail/white-collar-crime-and-compliance/ ).

Considering the degree of complexity of these cases, as well as the fact that solving these cases requires knowledge of the specific sector, large business law firms cite as one of their strengths the ability to build teams of experts who have the specific skills and experience to help clients solve a given problem as efficiently as possible (https://www.cliffordchance.com/expertise/services/litigation_dispute_resolution/regulatory_investigations_and_financial_crime.html). Recent international trends show that white-collar crime using artificial intelligence, automated systems or cryptocurrencies could become a more pressing problem, and that the number of crimes related to cyber-attacks could increase (https://feedzai.com/blog/fraud-and-financial-crime-trends-to-watch-in-2024/). Namely, the solution of the specific problem requires the knowledge of specific sectors (such as finance or information technology) that go beyond traditional criminal law. In these situations, business law firms can have an advantage over small law firms in assisting in any type of criminal case. Larger law firms have a better ability to assemble teams of lawyers with varying competencies, as well as to make use of special forensic software that is unavailable to smaller law firms.

Sorainen news in the field of white-collar crime  

Finally, we would like to give a brief insight into Sorainen criminal law attorneys’ experience of assisting clients in situations where they have come under the attention of law enforcement authorities in connection with potential or actual white-collar crime or have been the victim of such a crime.

Violeta Zeppa-Priedīte mentions that, firstly, among the most typical cases that tend to end up on the desks of the Sorainen Latvia White-Collar Crime team is money laundering.

In the business environment, the topic of money laundering is typically and often related to the assumptions of law enforcement authorities that financial means and property of illegal origin are being used in the operation of companies, having been injected into the business in various ways, hiding their true origin.

Money laundering is a topic that has been particularly relevant in Latvia for several years. 

In general, these cases are characterised by the peculiarity that they are related to violations of the law on the original origin of property and finances, such as tax evasion, corruption, violations against the natural environment, fraud, or commercial bribery. Thus, providing assistance to clients is a task for both criminal lawyers and experts in the fields of tax and customs, finance and banking, and environmental and commercial law. 

The involvement of various experts in these cases is of particular importance, as we often provide assistance to clients with complex businesses located in different jurisdictions. Such businesses, although natural by modern commercial standards, are often incomprehensible to third parties and therefore suspicious.

Money laundering is often associated with suspected tax fraud. In this context, we have encountered a limited understanding of the content and application in practice of the principle of the prohibition of ne bis in idem or double punishment.

Secondly, violations in the area of sanctions must be mentioned.

Criminal liability for violations of sanctions has been provided for in the Criminal Law for several decades. It has gained practical importance since the start of Russian hostilities in Ukraine.

Sanctions violation can take different forms. In our practice, these cases are characterised by the export or import to and from the European Union of goods which, in the opinion of law enforcement officers, are not allowed. Accordingly, the subject of disagreement is specific goods, including metal products, items used in construction or petroleum products, and their compliance with the status of goods subject to sanctions.

Thirdly must be mentioned criminal offences in the service of state institutions. 

It should also be mentioned here that help sometimes has to be provided in somewhat atypical bribery situations. A special challenge for our experts is when they need to assist clients in situations related to international bribery.

Norman Aas, adds that, in addition, one frequently occurring instance of white-collar crime relates to situations where the company’s management or senior employees abuse their position and harm the company’s interests, e.g. by acting in a conflict of interest or by embezzling the companies’ property. In the case of such crimes, the main difficulty is detection, as well as the calculation and recovery of damages.

Darius Raulušaitis mentions that the most common corporate crimes in Lithuania are related to the misuse of company assets, improper accounting, and tax evasion. 

The Lithuanian Criminal Code provides criminal liability for misappropriation or embezzlement of company assets, fraudulent or negligent accounting, and provision of inaccurate data on income, profit or assets. Those most frequently held liable for these offences are company directors or other persons in a managerial position who are entitled to dispose of the company’s assets in accordance with the law and the company’s internal regulations.   

Probably the most common method of misappropriation or embezzlement of corporate assets is by simulating the acquisition of various goods or services. Often, this is done through the use of companies registered in offshore zones, or companies set up specifically to simulate the sale of goods or services. A relatively common form of tax evasion is failing to complete accounting for part of a company's income and not declaring it to the tax authorities. If in this way more than EUR 20,000 of tax is evaded, it is considered a crime, while if the sum exceeds EUR 45,000, it is considered a serious crime. The company’s director and/or accountant may also be liable to criminal prosecution for negligent or fraudulent accounting if this results in a failure to establish the company’s activities, and the amount or structure of its assets, equity or liabilities. Moreover, the article of the Criminal Code imposing liability for negligent accounting almost always results in incrimination, as are the articles of the Criminal Code imposing liability for the misappropriation or embezzlement of a company’s assets or tax evasion. 

It must be acknowledged that it is often challenging to distinguish between criminal and administrative liability when dealing with legal infringements in a company’s activities. An instance of tax evasion or accounting failure could be either deemed a crime or an administrative offence. Therefore, having a good legal defence in such cases is very important.