As more and more financial crime cases make headlines, Laurent Deville, associate professor at Edhec Business School in France, fears that one day a graduate of his institution will make headlines for bad reasons.
“It is our duty to ensure that these talented young students do not become embroiled in the next dirty money scandal,” he said. “I’m always scared when I read the newspapers.”
Edhec is now stepping up its efforts to prevent errors of judgment that could lead to financial malfeasance. He hired a philosopher who takes finance students through the gray areas of morality, to make sure they recognize criminal activity inside and outside their organizations. “Financial crime harms economic growth and public confidence in the financial system,” says Deville.
At other business schools, however, financial crime is still seen as a backwater of global finance studies, not a central part of the curriculum. Many students are not interested in a career fighting white-collar criminals and kleptocrats, and job opportunities are limited for all but those with very specific skills and experience.
But, in recent years, illegal behavior — such as fraud, money laundering, insider trading and bribery — has come under greater scrutiny. This interest has been driven in part by a wave of scams during the Covid-19 pandemic, the growth of unregulated cryptocurrency markets and trading venues linked to suspicious activity, and attempts by oligarchs and corporations Russians to escape the sanctions linked to the war in Ukraine.
Some academic institutions are starting to react. Courses have become available to help students fight economic crime – and they are needed.
In the United States, financial regulation was strengthened after the terrorist attacks of September 11 with the United States Patriot Act of 2001, which aimed to prevent the financing of terrorism. However, the global effort has been dismissed by many as ineffective.
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A 2020 academic study estimated global compliance costs for banks and other businesses to be $300 billion a year, more than 100 times more than dirty money recovered from criminals.
A more recent report by charity Spotlight on Corruption said UK authorities were “overwhelmed and overwhelmed” by crooks, with the amount lost to financial crime equivalent to 14.5% of GDP.
New technologies can, however, help detectives stay one step ahead of criminals. At Singapore Management University, Jiwei Wang, associate professor of accounting, teaches students how to use machine learning to detect financial crime. He says the algorithms can analyze large amounts of companies’ financial and non-financial data to look for anomalies that could be early warning signs of fraud.
The many regulations introduced since the 2008 financial crisis mean that big banks such as Citigroup and HSBC already employ armies of risk and compliance staff. But Wang says it’s increasingly Big Tech companies that are hiring his students as they come under pressure to combat rising online fraud during the pandemic.
“The increase in online transactions and the growing availability of data has exposed technology companies to the threat of online fraud and data privacy or security breaches,” he said.
But, while job opportunities are on the rise, fighting financial crime remains a niche career path with only 20% of Wang’s accounting students working in this field.
For Rémi Canavese, who works for a consulting firm in Monaco that helps private banks manage their anti-money laundering risks, it’s the dynamism that seduces. “Banks must constantly evolve to keep up with ever-advanced practices and ever-increasing regulations,” he says.
The graduate obtained an MSc in audit and corporate governance at the Ecole Supérieure de Management d’Aix-Marseille in 2015 and then spent several years in a large French retail bank, carrying out audit assignments related to financial crime.
Canavese says curiosity and critical thinking are key to getting hired in the field. “You have to be able to put all the elements together and take a step back from what you see to be able to form your own opinion, a bit like a police officer conducting a criminal investigation,” he explains.
However, business schools still face many challenges in providing the skills students need to fight financial crime. A need for legal knowledge means that many universities offer economic crime programs through their law departments rather than business schools.
Ten years ago, Grenoble Ecole de Management launched a course that helps finance students recognize and report cases of market abuse and money laundering to authorities.
But Philippe Dupuy, professor of finance, says: “I thought we would be the first of a big wave of teaching financial crime in business schools, but that has not happened because there is no not many specialists on this subject because it crosses the academic streams. boundaries between finance and law.
Academic institutions also say there is little demand for the subject from employers or masters in finance students, in part because these degrees are aimed at those with little or no work experience.
“Fraud cases are so complex that in many cases it is a gray area, which makes them difficult to detect and verify,” says SMU’s Wang. “That means you need a lot of experience to get hired.”