Money laundering on the high street
18 May 2020

The money remittance and foreign exchange shops that dot most British high streets are the lifeblood of immigrant communities who send funds home. But in London, they are also playing a key role in a vicious drugs trade and fueling a surge in violent crime.

Sweeping changes to the U.K.’s banking regulations in recent years pushed most dirty money outside the official financial system. As bankers developed detailed new processes to verify the source of funds, money launderers and criminals turned elsewhere to deposit and move their profits: the burgeoning cottage industry of remittance and foreign exchange shops known as money service businesses, or MSBs.

In the U.K., these shops “rarely ask for proof of address and source of funds,” according to a money laundering consultant who has worked as a British police officer for 30 years, including 10 years on various aspects of financial crime and organized crime.

A lack of coordination even among members of large money transfer networks such as Western Union or MoneyGram also allows criminals to make multiple smaller transfers to the same destination undetected, the retired officer said.

It’s a loophole that is heavily exploited by London’s violent drug gangs, allowing them to ramp up their activities and leading to an exponential rise in crime, according to multiple insiders with knowledge of the situation.

London saw a 10-year peak in murders in 2018 with 132 reported deaths, a majority of which were gang-related. In the first nine months of 2019, the city saw 90 murders and a third of all recorded knife crime offences in England and Wales, with an average of 42 knife attacks per day for the whole year.

There is a direct link between the crime wave that’s overtaken London and the growing number of MSBs crowding the city’s shopping streets, experts say. The city has 9,000 such shops, according to the latest data, but police and industry representatives say the real number is likely to be much higher because many operate without registration.

“There is clear evidence to support the claim that MSBs are playing a significant role in the rise of violent crime, gang-related crime, drug dealing, in London,” Nick Stevens, a detective and the head of the Met police force’s organized crime division, said in a speech at the Cambridge Economic Crime Symposium last year.

One money service shop in London, closed by the police in 2019, laundered £310 million over a one-year period, using the funds to procure bulk cocaine. Nearly £900 million worth of cocaine was also confiscated from other MSB-linked investigations in the first nine months of 2019. According to Stevens, “principal subjects were connected to a number of shootings in London.”

By Matei Rosca, Politico, 15 May 2020

Read more at Politico

Photo (cropped and edited): Monito [CC BY 2.0] via Flickr

RiskScreen: Eliminating Financial Crime with Smart Technology

Count this content towards your CPD minutes, by signing up to our CPD Wallet