Calls for Tighter AML Controls as UK Universities Shown to be at Risk

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UK universities and other institutions for higher education are vulnerable to money laundering due to many continuing to accept cash payments, leading to calls for stricter anti-money laundering (AML) controls for the sector.

Research from Cardiff University, the University of the West of England (UWE), and the University of Reading found that one in five institutions are leaving themselves vulnerable to organised financial crime by continuing to accept cash for tuition and accommodation.

The report, published in the journal Criminal Law Review with an accompanying piece in The Conversation, is based on a series of Freedom of Information (FOI) requests that were submitted to 120 universities across the UK, with 110 providing responses.

Of the 110 universities that responded, 22 said they continued to accept cash payments for tuition payments and accommodation. A further 17 reported that they accepted cash until 2019–20, with three institutions each accepting more than £1m in cash this year alone.

In 2019–20, the total amount of cash payments across these 39 universities added up to £12m.

Analysis also showed that many higher education institutions fail to provide staff and students with guidance on money-laundering risks.

According to the report, 20% of respondents do not currently provide any internal anti-money laundering training for staff, and 24% of respondents do not provide any guidance to their students on the risks posed to them by financial and organised crime.

The findings have strengthened calls for the UK’s AML controls to be extended to incorporate universities and other academic institutions. Currently, higher education institutions are not explicitly incorporated within the scope of UK anti-money laundering regulations, leaving a “significant gap” in how the law is being implemented, said the report.

Professor Nicholas Ryder, from Cardiff University’s School of Law and Politics and lead author of the report, said: “Organised criminal gangs are increasingly using higher education institutions and students as a means to launder money.

“But the response to the issue from the sector up to now has been poorly understood. Our findings demonstrate that many universities are failing to establish robust preventative measures, putting staff and students at risk of being targeted.

“Most universities have ceased the acceptance of cash payments, but we found a significant number are still willing to do so. What’s even more concerning is that some organisations do not impose any limit on the amount paid in cash. Most higher education institutions are also seemingly failing to recognise the value of financial intelligence created by suspicious activity reports, as well as the related defence they provide to employees.

“Current legislation needs to be tightened. While universities are not explicitly included within the regulations, the disparity of its application across the sector will continue, leaving universities, their employees, and their students at high risk of money laundering and criminal liability.”

Dr Samantha Bourton, Senior Lecturer in Law at UWE, said: “Our research has identified reports of universities accepting suspicious payments from convicted criminals and corrupt Politically Exposed Persons.

“Further, several reported cases have illustrated how students allow their bank accounts to be misused by organised criminals, with detrimental consequences to their wellbeing and future career prospects,” said Bourton.

“Despite these risks, our research revealed that there is significant disparity among higher education institutions regarding the implementation of established anti-money laundering measures. To address this issue, our paper recommends that universities are explicitly included within the scope of anti-money laundering regulations.”

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