The rich are getting richer. And nowhere is the rise of the haves and have mores more obvious than in the Arab world, which these days can boast 30 billionaires and a thousand times as many millionaires. According Merrill Lynch’s most recent Wealth Report: “Well-above-average real GDP growth in markets such as Saudi Arabia and the United Arab Emirates helped drive high net worth individual growth in the region by 9.8 percent in 2005,” while the nations’ collective wealth rose by 20 percent over the same period. This spectacular rise in fortunes begs a question: who’s keeping an eye on all this private money? It’s a question TRENDS put to someone who should know: Serene El Masri, who handles ultra-high net worth individuals for BNP Paribas’ private banking division. To even get an interview with El Masri, as a potential client, you have to be in the Seriously Rich Club. The bank defines a ultra-high net worth individual as someone who deposits a minimum of 25 million euros. For that, he or she should have a net worth of 250 million euros, including business assets and property, El Masri says. While the figure for the number of wealthy Arabs the bank has on its books is confidential, El Masri puts the importance of the ultra-rich into context: worldwide, the bank has 140 billion euros of assets under management, of which one-third belongs to ultra-high net worth individuals, who hail mainly from Eastern Europe, the Arab world, Greece, India, Turkey and Spain. Most of her clients have what she terms a “complex wealth situation” involving extended families, multiple companies, numerous properties scattered around the globe, and even private jets to get around. “Many are highly international, with multiple passports and multiple residencies, that expose them to cross-border complications,” she says. Are these many billions washing around the world’s financial systems, unchecked and unmonitored, mixing with dirty money as the wealthy try to avoid the prying eyes of the taxman, or worse? According to El Masri, not at all. “In the Gulf, there is no real tax, so we’re not hiding anything from the authorities,” she says. “There is banking secrecy legislation that is used here really for personal purposes - for instance if you don’t want your kid to know he’s going to inherit a huge sum of money, yet. So for Arabs, I don’t really know what the concern is. They’re not hiding anything from the regulators because they live in a world where the regulators are very friendly, so they are compliant with regulation. “Abroad, it’s different. Abroad, that’s a view that is a bit antiquated in the sense that we don’t think there’s much of a difference anymore between the offshore world and the onshore world. Ultra-high net worth clients are already in a cross-border situation. An Arab, for instance, will have money with us here, locally, and in Spain, Switzerland, Luxembourg, wherever. We’re finding that the distinct approach of offshore banking doesn’t have much meaning for large families that are already global.” Big changes to the global regulatory framework have also lessened the attraction of the offshore world. The Basle Accord, which ensures banks in certain jurisdictions have a set amount of operating capital, cleared out a lot of cowboys, while, since 2000, the Organization for Economic Cooperation and Development (OECD) and the Financial Action Task Force on Money Laundering (FATF) have made life harder and harder for those seeking to avoid scrutiny from regulators and investigators in their home nations or elsewhere. “There is no place to run anymore,” says El Masri. “To think you can escape from the taxman is ridiculous. So you still have a lot of funds outflowing to Asia right now, it’s the new haven, and even to this part of the world, where there’s a perception among Europeans that banking secrecy laws are stronger, there’s less transparency than in Europe. That’s the idea but, really, you’re just gaining a little time. The OECD, the US, The EU, FATF, all of these things are there to make the world more transparent and to increase exchange of information between the countries and the regulatory bodies.” She sees the role of a modern private banker as something of an educational one. “We explain to clients, and it’s something very few banks do, that it’s no use to run because the administrations are getting more and more sophisticated, they’re communicating with each other more and they have more and more ways to get to your money, get to your account, break through the corporate veil, break through the banking secrecy veil and get to you. Do you want to transmit this incompliant situation to your kids?” Outside the Arab world, especially Eastern Europe, El Masri faces a tougher task, with wealthy individuals who have, for many reasons, lacked trust in their national regulatory bodies and so have put the bulk of their wealth offshore. “Part of our role is helping clients make their assets official again,” she says. “I’m not talking about Arab clients, because they don’t have those concerns. It’s more European clients that have that problem. There are ways of going back into the ‘white’ market, and that’s something we encourage them to do. “A lot of our job is long-term management. By giving a short-term answer, which is: you’re not happy with Switzerland, you’re not happy with Dubai, then go to Singapore, go to Hong Kong. That doesn’t make sense. Not in the long run. Neither for the client or for us.”

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