How and where money is being laundered

Security Minister Ben Wallace has pledged to take action against criminals laundering billions of pounds through public schools, football clubs and luxury-car sellers.

Announcing the crackdown, he said: “We have to make sure that when the [criminals] go out to try to spend their ill-gotten gains, that we all take a role in asking: does this pass the sniff test?”

So what is money laundering?

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Money laundering is when profits received from illegal activities are disguised by making it look as if the money has come from a legitimate business source.

Under the UK’s Proceeds of Crimes Act 2002 (POCA), money laundering includes all forms of “handling or possessing criminal property, including the proceeds of one’s own crime, and facilitating any handling or possession of criminal property”.

Examples include tax evasion, theft, fraud, bribery, smuggling and illegal arms sales.

How is the UK affected?

The latest report from the National Crime Agency says that organised crime in the UK, including money laundering, poses a greater threat than terrorism, the BBC reports. According to the assessment, organised crime gangs cost the UK economy £37bn a year.

In an interview with The Guardian, the security minister outlined plans for the UK’s new National Economic Crime Centre to crack down on Britain’s most serious money-laundering offenders.

“The ones who pretend their hands aren’t really dirty and profit from moving dirty money... they’re cowards to pretend they’re nothing really to do with it,” Wallace said.

The minister wants to prevent serious offenders from using their illegal cash to boost their reputations, explaining: “If you’re denied your ability to spend your ill-gotten gains... then you strip away the ability for them to launder their reputation.”

Members of the public must take responsibility for the role they played in supporting organised crime, Wallace continued.

“The wink, wink, nudge, nudge, is a guy who might push ten packs of fags... but he is [also] pushing a container [of drugs],” he warned.

Where do schools and football clubs come into it?

Under the crackdown, institutions and people who fail to report suspicious spending will face harsher penalties.

“So the purveyors of luxury goods, the public schools, the sporting institutions, who don’t ask many questions if suspicious people come along with cash or other activities, we will come down on them,” said Wallace.

Such institutions are already regulated and required to file suspicious activity reports, but will now face closer scrutiny.

Football clubs, in particular, have become targets for money launderers. According to a 2009 report by the Financial Action Task Force, links between criminal organisations and the world of football range “from internationally operating organised crime infiltrating top football to locally operating criminals with connections in lower leagues”.

At least one professional football club is currently under investigation, Wallace told the BBC. “I couldn’t reveal how many and what they are, for that is an operational matter,” he said.