Universities have been accused of inadvertently facilitating money laundering after a Times investigation found that they accepted millions of pounds in cash from students from “high-risk” countries.
At least 49 British universities let students use banknotes to pay £52 million in fees over the past five years, including millions from China, India, Russia and Nigeria.
Financial crime specialists said the disclosure showed that institutions had turned a blind eye to being used to launder proceeds of illicit activity overseas. One security expert said they were “putting out a welcome mat for the world’s kleptocrats and money launderers”. Cash payments do not leave a paper trail that could allow police or banking regulators to track them back to source. They are typically not allowed for most high-value purchases, such as houses.
University officials say that rigorous checks are carried out. However, only 24 out of 478,437 suspicious activity reports filed to the National Crime Agency (NCA) in the 2018-19 fiscal year came from the education sector. Data obtained by The Times under freedom of information laws shows that the top cash-paying country was China. The universities that replied, including some from the elite Russell Group, had received £7.7 million in banknotes from Chinese students since 2015.
All universities said that they had strong due diligence procedures in place and some now refused to accept cash. Universities UK said: “Universities work together with the government, the police service and relevant sector bodies to help protect students and individual institutions from potential money -laundering activity.”
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The top cash-paying country was China, with respondent universities receiving £7.7 million in banknotes from Chinese students since 2015. This was followed by £1.8 million from Indian students, £1.2 million from students from Pakistan and £1.5 million from Nigerian students. Some universities did not specify nationalities.
Many universities accepting banknotes were newer institutions such as Essex, which took £5.4 million, and Wolverhampton, which took £2.8 million. Older universities have also received big sums. Manchester University took £5 million, while Nottingham University accepted £1.8 million, mainly from Chinese students. Durham received £440,000 from foreign students, £200,000 of which came from Chinese students and tens of thousands from Saudi and Kazakh students.
Strathclyde University in Glasgow, which took £700,000 in banknotes, said that it would allow students who could not pay electronically to bring cash to campus.
Russia and Ghana were also identified as “high-risk” cash suppliers. Payments were made for tuition, accommodation and other course fees.
The National Crime Agency said in a 2019 report that overseas students were a target for money launderers. In February that year the authorities froze 95 UK bank accounts containing about £3.6 million, mainly held by overseas students.
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Matthew Page, a fellow of Chatham House who has researched money-laundering risks at UK universities, said that students studying abroad whose parents were public officials posed a significant risk. Page, a former US government security analyst who specialises in Nigeria, said: “Any educational institution that accepts cash payments is essentially putting out a welcome mat for the world’s kleptocrats and money launderers.
“Universities that accept cash are at high risk of laundering the proceeds of crime, corruption and other illicit activities. Universities that fail to conduct basic due diligence cannot plausibly deny that they are involved in money laundering.”
He said that university admissions staff were unlikely to question discrepancies because they were focused on the ability to pay, not the source.
Chris Greany, a former UK national police co-ordinator for countering economic crime, questioned why universities had not stopped taking cash payments years ago. “You can’t buy a car, a flight or rent a hotel room for cash any more, so I don’t see how it can still be acceptable for universities,” he said.
“It is known that cash payments from many of the countries mentioned here are sometimes linked to money laundering and other criminal enterprises, so cash-based payments need proper scrutiny and accountability, but there is no good reason for them at all.”
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Ben Cowdock, lead investigator at Transparency International UK, a not-for-profit group, said: “Whilst not subject to anti-money-laundering rules, British universities are exposed to illicit wealth as wealthy criminals seek the best education for their children. Universities should be alert to signs they may be handling dirty money.”
All universities said they had strong due-diligence procedures in place to avoid the possibility of money laundering through cash takings. Essex said it worked closely with “Lloyds bank and other sector experts to keep up with latest advice”. Wolverhampton said it had stopped taking cash in March last year, that it had “rigorous procedures and policies”, and that all its due-diligence checks complied with regulations.
Some said they stopped taking cash before the pandemic, with Manchester saying it took all precautions to ensure all financial guidelines and regulations were followed, and ceased taking cash in November 2019. Others such as Nottingham said it ceased taking cash as part of its response to the pandemic.
Durham said its procedures regarding the acceptance of cash were in keeping with the UK money-laundering regulations, which require that it keep a record of all single transactions in cash of £2,000 or more.
Strathclyde said students were told before they arrived that cash was not accepted for tuition fee payments. However, it said it allowed a small number to pay in cash if not doing so would pose safety concerns.
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Frozen bank accounts and thousands of pounds held
President Assad of Syria’s niece had her bank account seized in 2019 while studying in London after it was used to launder money.
Aniseh Chawkat, who was then aged 22, forfeited almost £25,000 from her Barclays account. She had been given a visa by the Home Office to attend university in Britain despite her mother, Bushra, the president’s sister, being subject to financial sanctions imposed on the Syrian regime. Her father, Assef, had been the head of Syria’s feared military intelligence.
The National Crime Agency found that 56 cash deposits totalling more than £150,000 had been paid into Chawkat’s account at branches across England during 2017 and 2018.
Luca Filat, the son of the former Moldovan prime minister Vlad Filat, was ordered to hand over almost £500,000 of suspected dirty money held in three accounts in 2019. Filat, then aged 22, was living in a penthouse in Chelsea and driving a £200,000 Bentley while studying in London.
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The accounts were frozen in 2018 after an investigation into the whereabouts of money allegedly laundered by his father, who was in jail in connection with the disappearance of £650 million from three Moldovan banks.
A report commissioned by Catriona Laing, the British High Commissioner to Nigeria, found that 40 per cent of its present and former state governors have educated their children in the UK, and many of them have links to corruption offences.
James Ibori, a former governor of Delta state, admitted to fraud and money-laundering and was sentenced to 13 years in jail by Southwark crown court in 2012. He was accused of using stolen money to buy houses in London and to put his children through private school.
A practice allowed on campus — but banned in scrapyards
While there are no rules preventing universities from taking payments in cash, the practice has alarmed experts.
Cash payments are inherently high risk, they say, because the origins of the funds can be more easily obscured. Some universities have stopped the practice because of the threat. De Montfort University told The Times that it stopped taking cash in September 2019 due to the “risks of accepting cash payments becoming more evident”. Essex University said its decision to stop taking cash for the duration of the pandemic “reduced our exposure to risks of money laundering, and it had no plans to return to accepting it”.
Unlike finance and accountancy businesses, universities are not covered by anti-money laundering regulations requiring enhanced checks on the money’s source. Institutions that continue to take fees in cash of £7,500 or more may have to register as “high-value traders”.
Many universities set limits on how much they will take at one time in cash from students. Staff are also guided to report suspicious transactions. However, despite internal guidance stating that cash should be avoided, some universities continued to accept it. Bristol accepted £140,000 in cash last year despite its guidance saying staff should “avoid accepting large cash payments”. A spokesman said: “We closed our cash office in September 2020 and we have an anti-money laundering policy.”
These payments were usually a relatively small proportion of the university’s income. Manchester University, for example, said these payments made up less than 0.5 per cent of its direct receipts, and Wolverhampton said it made up about 0.2 per cent of its takings.
However, questions remain as to why these payments are still permitted, as many sectors have been banned from taking them.
Scrapyards for example, were banned from accepting cash payments as long ago as 2012, given the high risk of laundering or the sale of stolen materials.
