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Bankers among 19 held in 2018 for helping gangs hide money: UK tax investigator


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Bankers among 19 held in 2018 for helping gangs hide money: UK tax investigator

British tax investigators, who also have prosecution powers for money laundering, have arrested 19 people, including workers at financial institutions, for being involved with helping gangs hide the origin of their funds, said Simon York, a director in the fraud investigation service of HM Revenue and Customs, or HMRC.

The authorities are increasingly alert to international organized crime groups infiltrating banks by bribing employees, York told a witness session of the British parliament's Treasury Committee on Oct. 10.

"We see people who are professional money launderers, they might be abusing the sectors we work with or they might be facilitating tax criminals ... They are bribing officials in financial institutions, and in that case we have arrested 19 people [and] frozen assets in four or five jurisdictions across the world [during 2018]."

The U.K. loses around $400 million to international crime groups abusing the financial system, York said.

HMRC has seen cases in which highly organized gangs collect cash from criminal activity into so-called counting houses, then break it up into small bundles, which are 'smurfed' to bank accounts controlled by the gang and subsequently transferred abroad. The money is then used to buy assets, York said. Smurfing is a practice by which criminals use the bank accounts of people unconnected to the crimes to launder and transfer small amounts of money.

The gangs also have their own cash machines, or ATMs that they fill with their criminally derived money, York said. As legitimate customers peruse the ATMs, the owners become entitled to credit from the bank equal to the amounts withdrawn.

Money launderers use the U.K. to process more than £90 billion in criminal money every year, according to estimates cited by the financial services regulator, the Financial Conduct Authority.

York did not offer any detail on the nature of the prosecution, and a spokesman for HMRC said that the institution "cannot comment on ongoing investigations."