One of my hobby horses (I last blogged about it here a year ago, and I have also written on the subject for the Money Laundering Bulletin) is the exclusion of the education sector from the AML regulated community. In short, I worry that schools (both traditional and language), colleges and universities are merrily accepting quite large amounts of cash – most usually from overseas students – without realising their money laundering vulnerabilities. And because they are not covered by the AML legislation – which includes only high value dealers in goods, not in services – they are not taking the usual precautions against such abuse (CDD, monitoring, staff training, etc.). I was beginning to think that I was a lone voice in the wilderness, so I am thrilled to see that Transparency International is just as concerned about the risks to this sector.
On 1 October TI published its annual “Global Corruption Report”, and this year the theme of the report is education. You can download the whole report here. Of course, the main thrust of the report is corruption in (rather than money laundering through) the education sector, but if you search on the word “laundering” (as I do automatically with anything I read), you will find several references. And joy of joys, the UK’s case study contribution is entitled “Corruption, money laundering and fee-paying education in the United Kingdom”: “Money laundering takes the form of an individual using corruptly obtained funds to pay the fees of family members at private schools or universities in the UK. The vulnerability of the country to this form of money laundering has recently been acknowledged by the UK government. [Note to self: look this up, because it has escaped me – can any of you remember reading this?] The well-known case of Nigerian citizen James Ibori, who received a 13-year jail sentence after admitting fraud, revealed that, in addition to buying properties and luxury cars, he had also paid for private school fees in the UK. Although no provable link was established in the Ibori case between the proceeds of crime and the payment of school fees, the case illustrates how corruptly obtained funds could be used for such purposes. Anecdotal evidence suggests that educational establishments have in place weak money-laundering controls despite the significant increase in overseas students at UK schools and universities, and this is an area that would benefit from further research.” As they say in some of our finest schools here in England, na-na-ni-na I told you so. Come on, Money Laundering Regs – wake up and smell the corrupted chalk.