The recent acquittal by a jury of a defendant for whom I had prepared an expert report highlights how important it is to counter the Crown’s case with an independent and impartial viewpoint.

I had been contacted by a solicitor to see if I could help in what seemed to be an open and shut case of money laundering. The defendant client had been apprehended in the process of receiving a large quantity of cash in a supermarket car park. The subsequent investigation revealed that this was not the first time that the defendant had received cash in this way, which he then subsequently broke down and deposited into a number of different bank accounts held with various different banks. The defendant had purchased a cash counter to help with managing the large volumes of cash and did not know the identity of the person who delivered the money to him, both parties using the unique code on a five pound note to verify each other’s identity.

The Criminals Use Tokens When Hijacking Hawala

This method of identification is known as a “token” in money laundering circles. The criminals with large quantities of cash to launder would ask for the code from the organised money laundering gang who in turn would obtain this from its agent that it was using to dispose of the money (the defendant in this case).

The trouble was, the defendant thought he was doing a favour for his uncle, who ran a money transfer business in India. The defendant was told and believed that the token was an acceptable means of identification in Hawala circles. The defendant was comfortably employed in the UK, having no need to risk everything for the typically small returns paid to collectors of criminal street cash. Unfortunately, he was however naive, and demonstrated the increased willingness of some eastern cultures to accept cash transactions (and the word of a relation) more readily than most people now do in the West.

The money transfer system being operated by the defendant’s uncle is commonly referred to as Hawala. It is entirely legitimate when complying with the regulatory framework in its own country. Unfortunately, the uncle’s business was most probably unregistered and therefore unregulated. Therefore, it was highly vulnerable to being hijacked by organised criminal money laundering gangs who constantly seek flows of otherwise legitimate transfers in and out of the UK with which to layer their criminal funds. This appears to have happened in this case, and the Defendant was asked to act as an unwitting link in the money laundering chain.

Money Laundering Is Rife

Unfortunately, this case is not unusual. Every year I see at least half a dozen similar instances among the instructions I receive. Sometimes the defendant is a willing participant. Other times he is exhibiting the characteristics of many non-western cultures who appear to be happy to conduct large transactions in cash, often on a very informal basis.

It is this naivety when dealing with cash that the Proceeds of Crime Act 2002 originally intended to overcome. We are now encouraged to conduct all our finances electronically, even down to buying a coffee with Apple Pay on our mobile phones. Even small businesses can open cost effective accounts with institutions that provide terminals to process the smallest transaction electronically.

Yet, cash is still favoured by many. There will always be a proportion of the population that resist the change, and this will continue to facilitate the crooks who launder cash for many more years.

Can Money Laundering Be Slowed Down?

Not all money laundering is conducted using cash. Much of the criminal street cash derived from drug deals, extortion, slavery and contraband is not circulated but must be introduced into the banking system as profits to allow ill-gotten gains to be enjoyed. However, when this money is added to the major fraud deals and massive organised crime transactions, the electronic criminal funds being circulated around the globe make the piles of dirty cash being moved look small.

So combatting money laundering is not just a matter of removing the ease with which cash is used. The financial systems as a whole must be considered. The introduction of an increasingly robust anti-money laundering framework around the world (such as the Proceeds of Crime Act and associated anti-money laundering regulations in the UK) was intended to move the focus from the initial criminal act to targeting unexplained wealth. I sometimes wonder if a bigger emphasis on the predicate crime is needed, with too much reliance now being placed on “catch all” money laundering indictments?