The business of moving money

On any given morning, a client in Bahrain can call his money broker on a beach in Bali. With a laptop and a cellphone next to his suntan lotion, all this broker needs to do is send an electronic fax to an anonymous administrator and almost instantly a physical transfer of funds takes place.

Funds can be dispensed and deposited with the click of a keyboard, and in off-shore banks it can be done twelve times a month free of charge and for a nominal fee thereafter. Not a bad deal for someone funding a terrorist operation.

These days, funds can be bounce around the world like a basketball. Within minutes money that was in one hemisphere can suddenly be in another. This is the main difficulty confronting those trying to hunt down terrorist’s assets. A vital clue is where to look. The answer is: here.

Asia is not just any black market, it’s the grand bazaar. A stroll through the southern Chinese city of Shenzen could cause one to believe that the shout "Nokia?! Nokia?! is a standard Chinese salutation. Many Filipino homes contain libraries of VCDs that all begin with images of heads bobbing in a movie theater. In Indonesia, baby brokers haggle over the price of an infant as if it were a faux Louis Vuitton bag.

This culture of evading economic rule of law has helped to give rise to passive acceptance of an extensive and accessible money-moving network.

Asia is rife with off-shore money brokerages. This is partly due to the high density of wealthy expatriates who are legally able to set up offshore bank accounts, and partly due to the underdevelopment and lax enforcement of the laws concerning this industry.

Though they blend into the landscape, money-brokers are about a ubiquitous in Asia as pedicabs are. Some have expensive and prestigious business educations. Others have been plucked from the halls of insurance and pension fund companies where they demonstrated a phenomenal gift for sales.

A certified CPA with first-class honors from a British red-brick university, Russell is a Tokyo-based broker who peddles off-shore investment vehicles to expatriate lawyers and high-earning underwear models across the Asia-Pacific. Attractive and articulate, Russell possesses the two most valuable assets a broker can have.

Russell claims not to provide service to any questionable clients, but he admits that he has been approached before by an Indonesian man that wished to set up to 20 accounts within 3-4 days. That would be roughly one account for each million that the anonymous client was seeking to unload. Russell claims to have declined the individual, but it is easy to see how someone else would not have.

New clients are typically acquired through word of mouth. Though brokers can be found through the Internet or advertisements in the back pages of The Economist, more often clients pass around a broker’s name as if they were recommending a good dentist. Brokers typically tap into ethnic or social enclaves, learning just enough of their clients’ language to get the client to chuckle and introduce the broker to even more friends. It would not be surprising if a single broker handled a dozen al-Qaeda related clients.

Generally, only expatriates are allowed to take advantage of investing off-shore. The benefit of off-shore banking is not only the tax shelter, but also the supreme privacy that it provides for its clients. Off-shore havens are the smartest places to hide money in the world. There are numerous funds and institutions, as well as lenient transfer rules, making it easy for a client to shuffle funds.

Eligibility standards are not difficult to thwart. Proof of residency outside of your native country is the main requisite. This can be provided with a Xerox copy of your passport and a Xerox copy of a bill addressed to you a country that is different than that of your passport. Those who don’t fulfill this requirement might put everything in a spouse’s name, if he or she would qualify. Another trick is to purchase property in a foreign country and apply from there.

Those wishing to remain anonymous or shun attention can easily do so. A common practice is to parcel money into many separate funds or institutions, perhaps under false names. Often, clients might change only a single letter in the spelling of their name.

This is not hard to do with Arabic names, which can be difficult for non-Arab speakers. Spouses and children are sometimes unwitting account holders of millions of dollars.

Clients can extract funds with an ATM card that works on any machine, anywhere in the world. This card also functions as a debit credit card. One can conduct all of the daily financial transactions of life in ghost-like fashion, leaving no trace at all.

Off-shore brokerages are not the only Asian portal to money-moving. Amateur currency trading is a lucrative and in demand skill. In Indonesia, insolvent banks simply may not have US dollars readily available for withdrawal or purchase, even if clients keep US dollar bank accounts. The alternative is to buy dollars from a black market broker. Brokers often undersell banks. These factors keep the industry thriving and capable of handling large orders.

The Philippines has passed anti-money laundering legislation, but ironically, these laws may be encouraging the industry that it seeks to choke. Bureaucratic fetters have made the process of transporting dollars so exasperating that many ordinary people prefer to pick up the phone and call the neighborhood currency dealer. It can be as easy as ordering a pizza.

Increasingly, there has been greater rule of law for the regions’ financial centers. Tokyo, Hong Kong, and Singapore are all solvent and responsible banking centers that have and are training employees to spot suspicious activity. On the eve of its entrance into the World Trade Organization, China, too, is reforming its banks.

Accountability is improving for the region as a whole, yet these bright signs don’t make it less likely that al-Qaeda operatives hold thousands of bank accounts, many of them in off-shore or negligent banks. Given the Islamic terrorist links with the Philippines and Indonesia, it is highly plausible that al-Qaeda money is being funneled through the porous financial borders of Southeast Asia.

The evidence lies in guys like Russell, the off-shore money-mover. A perspective client – the managing director of a large multinational, once asked him "Why do you do this job?" Russell replied simply, "Because I make more money than you do."

Jones, 24, is a graduate of Cornell University (double major in Political Science and Asian Studies, cum laude). Her thesis was on corruption in East Asian countries. She has worked as an off-shore investment broker in Singapore and as an editorial assistant at Random House in New York. She has written personality profiles on international billionaires for Forbes Magazine and lifestyle pieces on Belize, Southern Italy, and Tunisia for international travel publications. She is the niece of STAR sports columnist Joaquin Henson.