Entering island state, I abandon crime (8)

I believe the answer is:

iniquity

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'crime' is the definition.
(thesaurus)

'entering island state i abandon' is the wordplay.
'entering' means one lot of letters goes inside another.
'island' becomes 'i'.
'state i' becomes 'niy' (I can't justify this - if you can you should believe this answer much more).
'abandon' becomes 'quit' (quitting is a kind of abandoning).
'i'+'niy'='iniy'
'iniy' going around 'quit' is 'INIQUITY'.

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(Other definitions for iniquity that I've seen before include "Highly unfair or immoral behaviour" , "Going wrong" , "Sin" , "Evil act" , "Great wickedness or injustice" .)

I've seen this clue in The Times.

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