UK Government Targets Informal Money Transfers in Crackdown on Money Laundering

An estimated £2 billion ($2.6 billion) is laundered annually through informal money transfer systems in the UK, according to HM Revenue and Customs (HMRC). In response to the growing concern, HMRC has launched a new campaign to tackle the issue, urging operators of these services to register with government authorities.

Businesses that fail to comply with registration requirements face severe consequences. HMRC has warned that non-compliant operators could face “civil penalties, criminal prosecution, and closure.” The campaign, which will run until the end of this month, employs various outreach methods, including community radio broadcasts, digital advertising, and local engagement efforts, to inform operators of their legal obligations.

“Criminals exploit informal money transfer services in the UK to launder an estimated £2 billion annually, hiding the proceeds of serious organized crime that harms communities,” HMRC stated.

One of the most widely used informal money transfer services is Hawala, a trust-based system that enables individuals to send funds abroad without physically moving cash. Instead, a network of Hawaladars ensures that money reaches intended recipients, often in regions with limited banking infrastructure.

HMRC has emphasized that all businesses engaged in informal money transfers must be registered to operate legally. “Registering helps ensure that they have proper controls in place to prevent criminals from exploiting their services,” the agency explained.

Operators seeking to determine whether they are liable can find guidance here, while those needing to register for anti-money laundering supervision can do so here.

Louise MacDonald, HMRC’s Deputy Director for Economic Crime, underscored the importance of safeguarding these networks. “Informal money transfer networks like Hawala help people support family members in parts of the world where conventional banking is limited. We must protect these essential services from criminal exploitation,” she said.

“When criminals launder money through these networks, it funds serious organised crime that directly harms the communities these services aim to support. By registering with HMRC, businesses can safeguard their operations and protect their communities,” she added.

The campaign follows a series of joint visits by HMRC and the National Crime Agency (NCA) to more than 40 premises last month. These visits were part of a broader effort to educate Hawaladars on their legal responsibilities and ensure compliance with anti-money laundering regulations.

By fLEXI tEAM