Remember the scene in Office Space when Peter, Michael, and Samir accidentally steal $300,000? They realize they can’t give it back without admitting they stole it in the first place, so they think the only way out is to keep the cash and launder the funds. But three law abiding guys don’t really know how to launder money,, so they try looking up “money laundering” in the dictionary, hoping for a clue of how to do it.
They don’t find an answer and give up on the idea. Bu then again, the dictionary doesn’t exactly give you a step by step guide and those were the days before the prevalence of internet. If the guys had had Google, they may have had better luck.
Today if you Google money laundering you might come across Global Witnesses new handout An Idiots Guide to Money Laundering. It’s a satirical, yet accurate, illustration of how the average person might launder illicit funds.
Here are the highlights:
Step 1. Register your company in a place that keeps the names of people who own it and run it secret.
Step 2. Make sure you look legit by having some of your companies in above-board sounding places.
Step 3. Give yourself some extra protection by finding some other people to be owners and directors of your company.
Step 4. Open your company direct with the corporate registry—they don’t do any checks on you!
Step 5. Open a bank account in the name of your company and get spending!
You might think to yourself “registering a company is hard work. It probably takes a lot of paper work.” But actually you’d be wrong. Registering a company offshore is pretty easy. Just ask Jason Sharman, he’s a professor of political science, who used a small budget and Google to set up shell companies and open anonymous bank accounts in 22 countries – including tax havens and respectable OECD members. Or you can ask Jess. She’s a former intern at Public Citizen who set up a shell corporation in Panama in this video.
There are obviously a lot of problems with this, but let’s focus on the tact we started with: the average-cubicle-working-white-collar-guys from Office Space. If these guys have access to this system, so does everyone else. And if everyone else does, so do the people who we really would rather not.
In part in response to effective anti-terrorism operations, terrorism has become highly decentralized in the last ten years. In fact, many of the world’s recent terror attacks, including the 2004 train bombings inMadrid and the July 2005 attacks inLondon, were carried out by local al-Qaida branches, with no proven links—financial or otherwise—to bin Laden’s inner circle. Security Affairs has called the decentralized nature of modern terrorist attacks an “enormous challenge.”
So what does all this have to do with Office Space?
The problem is that one of our major counter-terrorism tools is tracing terrorist financing. But following the money isn’t just important for disrupting terrorist plots, although the 9/11 commission has called it “very effective.” Financing is essential to funding attacks and recruiting Jihadis. They must spend money on training and recruiting, particularly for new recruits and when specific operations require specialist skills—like piloting planes—training is particularly expensive. Terrorist cells spend significant sums on procuring reliable and secret channels of communication. Most importantly, they must spend money on disseminating their ideology, winning support, and creating social legitimacy. This comes in a variety of forms including propaganda, charitable activities, subsistence living costs for recruits and family members, and payments to terrorists’ surviving family members.
While improvements have been made in this realm, our international financial system is still disturbingly easy to exploit. With the advent of Google, the guys from Office Space could probably figure out how to launder their $300,000, so could you, and so could all the criminals. The thing is you’re not going to do it. Neither are the Office Space guys. But the criminals and those who seek harm to ordinary citizens? They will. Given the changing nature of terrorism and international crime, the security threat this flawed system poses to the innocent citizens of the world is unacceptable.
Disclaimer: Unless specifically stated to be the views of the Financial Transparency Coalition, the opinions expressed on this blog are solely the opinions of the individual blogger and are not necessarily those of the Financial Transparency Coalition.