medium | Renaissance
Technologies (RENTEC) is the second largest hedge fund in the US,
managing $45 billion in assets. It has a reputation for being the most
successful hedge fund in history, for using quantitative trading
strategies designed by top scientists, and for being extremely
secretive.
Publicly
available information on RENTEC implies that the firm is a massive
money laundering tool disguised as a hedge fund, operating on behalf of
Vladimir PUTIN.
BACKGROUND
Money laundering involves a transaction where illicit money is spent by one party, producing a seemingly legitimate profit for another party. Ostensibly the two parties are unrelated, but in reality, both parties are closely connected.
Money laundering involves a transaction where illicit money is spent by one party, producing a seemingly legitimate profit for another party. Ostensibly the two parties are unrelated, but in reality, both parties are closely connected.
The money laundering process can be summarized in three steps:
• SOURCE Secure illegally sourced funds.
• TRANSACT Illegal money is used in a transaction, resulting in profits for another party.
• COVER UP The true nature of the transaction is visible only to insiders.
• SOURCE Secure illegally sourced funds.
• TRANSACT Illegal money is used in a transaction, resulting in profits for another party.
• COVER UP The true nature of the transaction is visible only to insiders.
Evidence suggests money laundering via financial markets works like this:
• SOURCE Criminal organization invests in a hedge fund (Fund A) operating in a market with a high degree of corruption (for example Russia).
• TRANSACT On behalf of Fund A, an international bank purchases a security in the corrupted market. The bank then sells(i.e. shorts) the same security in a second developed market (for example the UK), and forwards the proceeds to Fund B. Both funds are owned by the same criminal organization.
• COVER UP The nature of the transactions are obfuscated with advanced financial techniques and the inner workings of the fund are kept secret.
A
significant degree of sophistication is required to launder money in
plain sight via financial markets. Due to this sophistication, it’s
unlikely direct evidence will come to light without access to internal
records. However, by using other cases as a guide, the following mosaic of indirect evidence will likely be found:
• SOURCE Key people are connected to criminal organizations via one or more intermediaries.
• TRANSACT An abnormally high rate of return that allows significant amounts of money to be laundered in a short amount of time. Evidence of buying and selling the same securities in different markets.
• COVER UP History of using financial engineering to hide the nature of transactions and a reputation for extreme secrecy.
