Rapid economic growth and technological progress in recent years, has led to an upsurge in economic crimes; the first largescale securities scam, perpetrated by Harshad Mehta, took place in 1992 ~ just after the economic liberalisation of 1991. The number and value of frauds has increased exponentially thereafter. According to the Reserve Bank of India, Indian banks reported a loss of Rs.4.69 lakh crore, on account of 65,017 frauds committed between 1 June 2014 and 31 March, 2023, that is 20 frauds a day. The humongous amount of money lost to bank frauds easily exceeds the amount involved in theft and dacoity in the last hundred years. With time the periodicity and value of frauds has increased exponentially; 13,530 banking frauds ~ more than 37 frauds every day ~ were reported in FY 2022-23 alone, out of which almost half were in the digital payment ~ card/internet ~ category. The other half were committed by gentlemen like Vijay Mallya, who took loans from banks without any intention of repayment. Bank frauds are only the tip of the iceberg. Armed with smartphones and laptops and a knowledge of loopholes of the system, the twenty-first century criminal makes his living by preying on the gullible in cyberspace. There are Ponzi schemes and chit funds offering unprecedented returns, spurious websites resembling real ones that disappear with people’s money, and there are people who steal other peoples’ identities and drain their savings; the types of fraud and the ingenuity of fraudsters is truly mind-boggling. Traditionalists pigeonhole all economic crimes as ‘white-collar crimes,’ which is a misnomer, because most cybercriminals are little-educated, unemployed youth of mofussil towns like Jamtara and Mewat. Economic crimes have proliferated because financial market supervisors have shifted their emphasis from control to regulation ~ with a concomitant change in processes. The earlier elaborate processes resulted in a huge wastage of time but lessened the probability of fraud significantly. Tedious work that required filling-in lengthy forms and standing in long queues, like filing a return of income or transferring funds, can now be done on the internet from the comfort of home/office. But the flip side is that new systems are taking time to stabilise and lack of computing skills puts actual users at the mercy of computersavvy youngsters ~ who may not necessarily be scrupulous. The 163-year-old Indian Penal Code could not tackle the challenge of modern, sophisticated financial crime, resulting in the enactment of much stricter laws, like the Prevention of Money Laundering Act (PMLA). These Acts go far beyond traditional jurisprudence by criminalising civil offences and by doing away with the requirement of proving mens rea (criminal intent) by the prosecuting agency ~ a fundamental requirement in criminal law, which is so basic in proving criminality that a famous American judge, Justice Holmes had observed “even a dog knows the difference between being stumbled over and being kicked.” It was fondly hoped that such draconian laws would deter economic offenders, but in actuality while small fry operating from remote areas are seldom caught due to lack of resources and effort required, the law often descends with all its might on inconvenient people. So much so that opposition parties, who felt that that they were solely and unfairly being targeted, filed a writ in Supreme Court to restrain the operations of the Enforcement Directorate. In this context, statistics for September 2023, appearing on the website of the Enforcement Directorate (ED) make interesting reading: The ED had filed 1,142 prosecution complaints under the Prevention of Money Laundering Act; 25 cases had been decided, of which 24 had resulted in conviction. According to ED, this meant a conviction rate of 96 per cent, which others calculated at 2 per cent. This single statistic highlights the slow pace of disposal of cases by the judiciary, as also the paradox that the same facts could be interpreted in diametrically opposite ways. Further, the same statistics show that 531 people had been arrested by ED. Given the stringent bail provisions in PMLA, many of these persons could be incarcerated for long periods, without any crime being proved against them. According to an affidavit filed by Opposition parties in the Supreme Court, less than 30 per cent of cases filed under PMLA had come up for trial. Thus, process is the punishment for those charged under PMLA. The then Chief Justice of India, NV Ramana had observed thus at the 18th All India Legal Service Authorities Meet in Jaipur in July 2022: “In our criminal justice system, the process is the punishment. From hasty indiscriminate arrests to difficulty in obtaining bail, the process leading to the prolonged incarceration of undertrials needs urgent attention.” The learned Chief Justice blamed judicial vacancies and a lack of judicial infrastructure for the unsatisfactory state of affairs. Given that the Supreme Court and several High Courts have held that ‘economic crimes are worse than murder,’ the lot of those charged for financial crimes is sometimes worse than that of dacoits and murderers. Last year, in a celebrated judgement the Supreme Court held that the powers of Enforcement Directorate went far beyond those of ordinary police; ECIR (Enforcement Case Information Report, the counterpart of FIR) was quite different from FIR and contents of ECIR need not be disclosed to the accused person. The Supreme Court also upheld the stringent provisions of bail, arrest and attachment under PMLA. Alarmed by the potential for misuse of such unrestrained powers, the Supreme Court is in the process of reviewing its earlier judgement. Intolerance of economic crimes is not unique to India; Bernard Madoff the mastermind of the largest known Ponzi scheme, worth an estimated $18 billion, was sentenced by a US court to 150 years in prison, making people wonder if financial fraud was worse than violent crimes like rape and murder. One of Madoff’s victims retorted that while a murderer kills only one person, Madoff had killed the dreams of thousands of people. Waxing lyrical, the victim quoted the Italian poet Dante in The Divine Comedy, to the effect that fraud was the worst of sins, the ultimate evil, because it violated God’s gift to mankind ~ love. Putting fraudsters in jail for long periods upholds the majesty of law, but does little to help the victims of fraud, who would be much better off if they simply got their money back. However, law enforcers and financial regulators do not share this view. A number of scams ~ Bofors, 2G, CWG and the Coal Scam, to name a few ~ allegedly running into lakhs of crores of rupees, have seen some arrests (none was convicted in the first three scams) but not a single rupee has been recovered from the alleged scamsters. This does not seem to be the correct approach. Enforcement agencies and financial regulators should act pro-actively, staying a step ahead of scamsters, preventing fraud and nipping frauds in the bud, and concentrating on recovering money from fraudsters. However, the current investigative record of enforcement agencies and financial regulators inspires little confidence if we consider that the investigation ordered by the Supreme Court on 2 March 2023 into alleged share manipulation by the Adani Group, which was given a timeline of two months has still not been concluded. Significantly, SEBI is being aided by CBDT and ED in the investigation. The Expert Committee constituted by the Supreme Court, for a similar purpose but with a wider remit, held that though there had been no regulatory failure by SEBI, certain improvements were definitely required. The Committee found that SEBI had been investigating price manipulation by Adani group companies since 2020, without any concrete result. Also, SEBI’s automated surveillance systems (ASM) had generated 849 alerts vis-a-vis shares of Adani group companies between 1 April 2018, and 31 December 2022. Of these alerts, SEBI had closed the 603 alerts related to price volume movements while the 246 alerts related to suspected insider trading were still being evaluated. The Committee also concluded that some amendments made to relevant rules by SEBI and Finance Ministry during pendency of the current investigation, were not bona fide. The Committee opined that the surfeit of disclosures mandated by SEBI loaded investors with so much data and noise that real issues got obfuscated. Clearly, far-reaching reforms are needed to sanitise the financial sector. Piecemeal action, like putting some people in jail, while others roam free, only damages the credibility of regulators and enforcement agencies. But the question remains: “Who will bell the cat?”