Business Schools join the battle against criminals
When in the 1960s, beginning in French May, the slogan “imagination to power” was used, an issue undoubtedly for debate, what is certain is that, in the field of economic crimes, what is spoken of in the Saxon doctrine Clearly a crime to define this type of crime, it has not ceased to surprise us in terms of its inventive capacity to reinvent itself with each new decade. In this way, what it has done is make life impossible for all the police in the world that fight against organized crime, and not least the fight of both governments and organizations that work within the law, in the case of the big brands that annually they have millionaire losses due to counterfeiting and trafficking of illegal products that increase the criminal fabric that must be combated.
Therefore, it does not surprise me that, regarding the impact of the communication of economic crimes, a professor like Laurent Deville, who is an associate professor at the Edhec Business School in France, told the Financial Times that he fears when he reads the newspapers every day because he says that “it is our duty to make sure that these talented young students do not get caught up in the next dirty money scandal.”
But as I said at the beginning, also in our postgraduate educational field, there are initiatives such as that of the Edhec Business School, which is currently intensifying its efforts to prevent errors of judgment that can lead to financial irregularities. This has led him to hire a philosopher who, with his explanations of business ethics and morality, makes finance students aware of how these gray areas of morality actually behave, to ensure that they can recognize criminal activities inside and outside their organizations. And what Deville maintains, which there is no doubt, which we share 100%, is that “financial crime is damaging economic growth and public faith in the financial system.”
Let’s put ourselves in context
Like all great crises, the Covid-19 crisis also awakened those dark parts of human nature. And although during two long years of pandemics we have been surprised by the good news from epidemiologists and health professionals in general who made of that imagination to which we alluded above, a flag to fight the virus, there was no shortage (as always happens) of people and organizations unscrupulous people who took advantage of this terribly disastrous cycle for the countries of the world, mainly in health and as a consequence also in the economy, to take advantage of carrying out Machiavellian formulas of economic crime.
In spite of everything, let us say that the movements that occur in the curricular contents of business school programs regarding organized crime are not central to any study plan, but rather as an essential complement in those modules that especially refer to to financial planning and management, because it is inevitable that in any sector of the economy and society, to the extent that the economic and financial variable appears, there will also be temptations to circumvent the law (in the least of the criminal qualifications) or to organize criminally with the purpose of committing economic and financial crimes (that is, the organized crime gangs that the nations fight through the special divisions of the state security forces).
With regard to the applicants for this type of training, there are not many yet, because it is fundamentally focused on those professionals who, due to their training, have a set of very specific skills and experience, and who occupy positions of responsibility in the financial system, be it in Banking, Insurance, Securities Agencies, or that in one way or another, can, due to their privileged position, alter and influence the information for the purchase and sale of assets or worse still, manage to alter their market value, that is, , influence negatively with tricks basically linked to having first-hand information.
And as for the variation in the type of crimes, as we have said, they are also adapting to the new economic and financial realities, which is evident that they are influenced, in this case for the worse, by the availability of NTs and their capacity to adapt to any situation always from the evil and dark side of crime. What has always been called “white collar crime”, a true paradox since precisely through the laundering of money from illegal drug trafficking and organized crime operations, what this description of “white collar” is intended to do is actually nothing of transparent color, and only has the dark color and unfortunately dyed red in a large number of situations, which organized crime causes, such as the death of people, for the sole fact of having been collateral damage for said criminal gangs.
In recent years, illegal conduct, such as fraud, money laundering, insider trading and corruption, has been the subject of heightened concern from governments, especially fueled by a wave of scams during the pandemic. of Covid-19, the growth of unregulated cryptocurrency markets and trading venues linked to suspicious activity, and attempts by Russian oligarchs and companies to evade sanctions over the war in Ukraine.
Some academic institutions are beginning to respond
Courses that can help students fight economic crime have been made available, and are needed.
In the United States, financial regulation was tightened after the 9/11 terrorist attacks with the Patriot Act of 2001, the goal of which was to prevent the financing of terrorism. However, the global effort has been called ineffective by many.
The cost of economic crime
During 2020, a study has been carried out that estimates that the costs of compliance worldwide for banks and other companies amounted to 300,000 million dollars a year, more than 100 times that of the dirty money recovered from criminals . And this for the world economy (for the great white and good part it becomes unaffordable).
The figures, as well as the impact of economic crime, continue to strike fear into our bodies, as, for example, the charity Spotlight on Corruption said UK authorities were being “overwhelmed and outgunned” by criminals, with an amount lost through financial crime equivalent to 14.5% of GDP.
The NTs that help fight organized crime
Without a doubt, technology is neutral and you don’t know if the person who uses it is one of the good guys or the bad guys. Therefore, what must be ensured is that on the side of legality, all the varieties of economic crime that are emerging with the new times are learned and well known. This includes that the learning in the financial management modules of the Masters, and especially those that are specialized in finance, explain and deepen in great detail this phenomenon of organized crime that is not punctual, but generalized and that each year affects the global economy and the operating accounts of millions of companies around the world.
At Singapore Management University, Jiwei Wang, an associate professor of accounting, teaches students how to use machine learning to detect financial crime. We find his position regarding algorithms very interesting, since he maintains that these are the instruments that can scan a large amount of financial and non-financial data from companies to look for anomalies that could be the first warning signs of fraud.
A Business School of interest to study organized crime
Located in the heart of downtown New York, the University of Utica is a comprehensive and independent private institution founded in 1946 as Utica College. It offers many of the advantages of a great university, such as undergraduate and graduate degree options, excellent academic programs and an outstanding faculty, and we have been struck by the MBA in Financial Crime and Fraud Management.
He puts it this way: “The use of the Internet for electronic commerce and electronic business, the availability of information, and the globalization and competitiveness of business have combined to create opportunities and pressures for the commission of criminal fraud.”
It also indicates that global financial losses from fraud have reached staggering proportions, with several recent surveys indicating that traditional fraud, as well as technology-enhanced fraud, will continue to experience significant growth over the next decade.
Therefore, this postgraduate educational institution believes in the need for managers to understand how fraud is committed and to have the skills to manage the risk of fraud through cutting-edge prevention, detection and investigation techniques. Because they will continue to grow during this century.
Hence, the MBA in Fraud and Economic Crime Management provides students who have completed their university education in related academic areas or students currently employed in law enforcement or industries affected by fraud or security issues, the professional skills in specific management for the prevention and detection of fraud.
The program, which can be completed in two and a half years of part-time study, uses a flexible distance learning format, two residence halls on campus, and home study. Each residency is two and a half days.
Learning objectives of the students of this MBA
What we can draw an interesting conclusion regarding the content proposal, since it starts from the general and conventional knowledge to:
– Identify complex problems.
– Demonstrate critical thinking by implementing a solution.
– Demonstrate quantitative skills.
– Demonstrate competence in the use of technology.
– Demonstrate leadership and effectiveness in teamwork.
– Demonstrate effective communication skills
So that they can then:
– Identify and analyze legal and ethical issues in management. When they enter this field, they have a methodological unit Management of Fraud Prevention and Detection that consists of the development of technology against fraud, in which proactive programs and tools for detection are studied. and prevention of fraud in face-to-face transactions, e-commerce and e-business, as well as business models for the development of prevention and detection products.
They have in another module a Seminar on Fraud Management, Research and discussion of current policies and legal issues that affect fraud management, including privacy, security, ethics, auditing and compliance.
In another unit of the contents they study the Investigation and Analysis of Advanced Fraud, in which it covers the Types of criminal fraud, methods used to detect and analyze the occurrence of fraud, fraud investigation techniques, interviews and interrogations, file management and cases, interaction with external investigations, regulations and law enforcement.
How are economic crimes committed?
Economic crimes cover a wide range of crimes, from those that correspond to the financial field committed by banks, or people who use banks or any other financial institution to achieve concealment objectives such as tax evasion, illicit tax havens, proceeding to money laundering capital, as well as crimes committed by public officials (such as bribery, embezzlement, influence peddling, etc.) among many others.
What is considered an economic crime?
Economic crimes, also known as financial crimes (we do not agree with assimilating both terms, because economic crime is much broader than financial crime, and the latter becomes the tool or instrument to carry out organized crime), refer to illegal acts committed by an individual or a group of individuals to obtain an economic or professional advantage. The main motive for such crimes is economic gain, but not a profit that can be considered normal. What we know in accounting jargon as operating profit. No way. What this type of crime pursues are absolutely disproportionate profits and in very short periods of time.
What is the meaning of economic and financial crime?
The term “economic and financial crime” refers broadly to any non-violent crime that results in financial loss, although such losses may sometimes be hidden or not socially perceived as such. Such crimes therefore include a wide range of illegal activities.
What is the most common type of economic crime?
There are considered to be 5 common types of economic crime and fraud:
– Sanitary crimes.
– Identity theft.
– Fiscal crimes.
– Organizational structures (corporate and networks) to carry out scams and the very nature of the scam itself.
What is the impact of economic crime?
It has been observed that the impact of economic crime is manifested in the phenomena of inflation, poverty, commercial crime, development and corruption. In each of the stipulated sectors, a key objective of the investigation will be to determine the causal relationship with the criminal business.
What are the top 3 financial crimes?
If it comes, it is commonly considered that financial crimes cover at first glance those that most impact us through the media themselves, in the case of fraud, the entire wide range of cybercrimes or also money laundering from illicit operations and terrorists, the variations that technology has facilitated to break the law is almost infinite, to which an unfortunate drop in business ethics and morality also contributes.
What is financial crime?
THE INTERNATIONAL COMPLIANCE ASSOCIATION (ICA) is the leading professional body for the global financial crime and regulatory compliance community. And the importance that this institution has been acquiring since 2001 is that they have substantially improved both the knowledge, skills and behavior of more than 160,000 professionals, either through this institution’s portfolio of internationally recognized professional qualifications (granted in association with Alliance Manchester Business School, The University of Manchester) or through accredited in-company training.
And with regard to financial crimes, this institution knowingly affirms that, in the last 30 years, they have become a growing concern for governments around the world. This concern arises from a variety of issues, because the impact of financial crimes varies in different contexts. What is certain is that this mutating capacity of economic crime means that the prevalence of crimes for economic reasons in many societies is a major threat to the development of economies and their stability. Especially when they are not developed democratic societies.
For educational purposes so that society understands the scope of economic crime, this institution says that there are two clear types of criminal behavior but that they are closely linked.
First, there are those activities that dishonestly generate wealth for those who engage in the conduct in question. For example, insider trading or the acquisition of someone else’s property by deception will invariably be done with the intent to obtain material gain. Alternatively, one person may engage in deception to secure material benefit for another.
Regarding the other conduct, there are also economic crimes that do not imply the dishonest taking of a benefit, but rather protect a benefit already obtained or facilitate the taking of said benefit. An example of such conduct is when someone attempts to launder the criminal proceeds of another crime in order to place the proceeds beyond the reach of the law.
Who commits financial crimes?
There are essentially seven groups of people who commit the different variety of types of economic and financial crimes:
1º) Organized criminals, including terrorist groups, who increasingly carry out their criminal adventures and commit large-scale fraud to finance their operations.
2º) Corrupt heads of state can use their position and powers to plunder the coffers of their (often impoverished) countries.
3º) Business leaders or senior executives manipulate or misreport financial data to misrepresent the true financial position of a company.
4º) Employees, from the oldest to the youngest, steal company funds and other assets.
5º) From outside the company, the fraud can be perpetrated by a client, supplier, contractor or by a person with no connection to the organization.
6º) Increasingly, the external fraudster colludes with an employee to achieve greater and better results more easily.
7º) Finally, successful individual, criminal, serial or opportunistic swindlers in possession of their winnings are an additional group of people who have committed a financial crime.
What are the main types of financial crimes?
Financial crimes are commonly considered to encompass the following offences:
– All kinds of fraud and scam.
– Cyber crime.
– Money laundering.
– Financing of terrorism.
– Bribery and corruption.
– Market abuse and insider trading.
How are financial crimes linked to the financing of terrorism?
Terrorist organizations require financial support to achieve their goals, and therefore a successful terrorist group, like any criminal organization, is able to build and maintain an effective financial infrastructure.
Terrorist organizations are generally believed to raise funds through the following means:
– Legitimate sources, such as abuse of charities or legitimate businesses.
– Self-financing (ie through its members or supporters).
– Criminal activity.
– State sponsors.
– Activities in failed states and other safe havens
Terrorists often control funds from a variety of sources around the world and employ increasingly sophisticated techniques to move these funds between jurisdictions. To manage their finances, they turn to professionals such as bankers, accountants, and lawyers, and take advantage of a variety of financial services products.
How should a company react to suspected fraud?
A financial institution must take appropriate action when a corporate customer, a member of its management, or a high-level representative of the customer is the subject of an investigation by a law enforcement agency or regulatory body.
Financial Institutions should also consider any obligation they may have to report suspected money laundering (including any successful fraud).
Obtaining appropriate legal advice should also be considered to reduce the risk of customers fraudulently transferring or moving funds, or using that particular Bank, and the banking system in general, to transfer or dispose of assets, including money or other financial instruments. negotiable.
How do you motivate employees to fight fraud?
The foundation of any successful fight against fraud is the culture within the institution. When properly motivated, employees remain honest and become the most effective first-line defense against the scammer.