AI in Detecting and Preventing White-Collar Crimes: A Legal and Ethical Analysis

Abstract

White-collar crimes, characterized by deception, breach of trust, and abuse of power for financial gain, have undergone a paradigmatic transformation in the digital age. The proliferation of complex financial instruments, cross-border transactions, and cyber-enabled frauds has rendered traditional mechanisms of detection and enforcement increasingly ineffective. In this context, Artificial Intelligence (AI) has emerged as a revolutionary instrument in identifying, predicting, and preventing such offences through data-driven analytics, anomaly detection, and automated compliance monitoring systems.
AI-powered systems are capable of processing voluminous financial data, detecting irregular trading patterns, and predicting fraudulent activities with remarkable precision. Regulatory authorities and corporations are increasingly deploying AI in compliance auditing, insider trading detection, and anti-money laundering mechanisms. However, the incorporation of AI into legal enforcement introduces a host of legal and ethical concerns notably issues of data privacy, algorithmic opacity, accountability, and potential bias. The current Indian legal framework, primarily governed by the Information Technology Act, 2000, the Companies Act, 2013, and the Digital Personal Data Protection Act, 2023, remains nascent in addressing these challenges.
This paper undertakes a doctrinal and analytical study to evaluate how AI contributes to detecting and preventing white-collar crimes within the Indian legal regime, while examining its comparative alignment with regulatory approaches in the United States and the European Union. The study analyses frameworks such as the U.S. AI Bill of Rights and the EU Artificial Intelligence Act, focusing on their implications for accountability, data governance, and ethical AI deployment. Thus, the paper contends that while AI enhances the efficacy of enforcement mechanisms against white-collar crimes, its application must be circumscribed by a robust legal-ethical infrastructure to ensure justice, fairness, and adherence to the rule of law.