The Book

The recently released book « Les mécanismes de la criminalité financière »
(« Financial crime mechanisms: how dirty money and terrorism financing have become a threat to companies ») aims to provide business professionals with practical methods and solutions based on experience, as a well as in-depth management research thoughts to cope with money laundering and terrorist activities’ financing.

The book presents and analyses how the “new crime economy” works through 6 chapters focusing on topics such as “how can banks fight terrorism?” and “money laundering, terrorism and insurance companies”.

The authors

The research was supervised by 3 Professors at HEC:

- Marc Chesney, Professor, Finance and Economics Department at HEC, scientific Director of HEC International Finance Specialized Master. He worked for the World Bank and is Founder and President of CEBC (Centre d’Etudes sur le Blanchiment et la Corruption – Laundering and Corruption Study Center)

- Pascal Chaigneau, Affiliate Professor, scientific Director of the International Risk Management Specialized Master at HEC

- Ludovic François, in charge of HEC Specialized Masters, and of Economic Intelligence teachings within the Risk Management Specialized Master at HEC

The book also benefited from La Lettre du Blanchiment’s collaboration (Money Laundering Newsletter), which provided numerous real case studies.

An interview with Marc Chesney

You wrote a chapter in this book, which you also co-directed. What is the central theme?

After analyzing public financial data,
I thought it would be surprising if terrorists hadn't used 9/11 as an opportunity to make much money on financial markets in just a couple of days.

It is quite obvious that Bin Laden has a good knowledge of financial markets. In one chapter of the book, I cite facts that corroborate the hypothesis that insider trading could have taken place: it would have been extremely profitable for 9/11 terrorists to trade put options on companies directly hurt by the attacks (insurance companies, airlines, banks based at the WTC...), with yields as high as 380% in one week on American Airlines, for example. When I investigated, I found that the number of certain puts traded on 9/10 was 64 times as high as the average on the 3 previous weeks…

As opposed to traditional mafias seeking to launder dirty money with a global “turnover” estimated at 1,000 billion dollars, terrorists do “reverse” money laundering by using clean money generated by the licit economy to perform destructive action. Although their budget for the 9/11 attacks was relatively low (estimated to be between 200,000 and 500,000 dollars) - , their “turnover” must be assessed by looking at terrible death tolls and at huge insurance company expenditures.

As crime is changing faces, investigations could be carried out also by financiers and not just by regular policemen: justice is not reactive enough in a world where trusts and tax paradises allows capital to circulate so quickly, and where market operation is almost anonymous. This is why HEC is currently considering creating a specific training for bankers, insurers, businessmen and politicians to tackle these new issues more efficiently.