EMI Flagged Nearly 40% of UK’s E-Money Exchanges for Money Laundering Risk

  • Richard Marley
  • December 15, 2021
  • 3 minutes read
  • 1994

A report from Transparency International revealed that nearly 40% of the UK’s e-payment companies are red flagged for money laundering risk.

According to Transparency International (TI) UK research, nearly half of the UK’s e-payment companies, which made more than EUR 500 billion transactions in 2020/21, have been red flagged for money laundering risk.

While 40% of e-money exchanges appear to respect regulations, the paper warns that without stronger oversight, Electronic Money Institutions (EMI) will assist e-money firms to counter money launderers operating in Britain. TI examined UK’s 261 money exchanges that had been issued licenses by the Financial Conduct Authority (FCA) to operate in the country.

The research uncovered a risk, “rather than a suggestion of actual wrongdoing by the various… owners, directors or senior members,” of the U.K.-based Electronic Money Institutions (EMI).

“We found 100 EMIs (38%) with potential money laundering red flags including being named as having poor anti-money laundering controls or processing criminal wealth; having owners, directors or senior members of staff named in money laundering investigations; or owners, directors or senior members of staff having worked previously for institutions alleged or proven to have anti-money laundering failings,” states the report.

TI also warned of an emerging trend of EMI licenses and accounts being sold to criminals around the globe, including the UK. EMIs advertising services majorly to “high-risk” individuals in the Commonwealth of Independent States region, which further portrays aspects of OCCRP-exposed “Laundromat”  of money laundering approaches as well as the businesses with complex and ambiguous beneficial ownership structures.

That includes “40 Russian and Ukrainian language corporate services websites offering ready-made ‘secrecy packages’ comprising British EMI accounts and offshore companies for clients who want to hide their identities, and licensed U.K. EMIs advertised for sale on Linkedin and corporate service websites, with prices ranging from £600,000 ($792,844) to £1.5 million ($1.9million).”

Additionally, the investigation lead at TI, stressed that the gaps in effective controls on the companies directors and UBOs of EMIs have resulted in suspicious choices to grant licenses to organizations.

Ben Cowdock forewarned that the FCA and the UK governments are responsible for keeping an eye over the EMIs operations in the country. However, they “need to act quickly to avoid a major scandal hitting this sector.”

Suggested Read: UK Finance Sector and Police Stopped £32m Fraud in First Half of 2021