Overseas Students Identified As Money Laundering Targets

• Published date: 27 May 2020
• Author: Mr Malcolm Lynch and LAUREL SLEET
• Subject Matter: Consumer Protection, Government, Public Sector, Criminal Law, Money Laundering, Education, Crime
• Law Firm: Wrigleys Solicitors

Why are criminals using international students and what can students' unions be doing to raise awareness and protect students?

Overseas students studying in the UK have been identified by the National Crime Agency as a key target for criminal gangs attempting to launder money, with Chinese students being particularly vulnerable.

The NCA reported in its 'National Strategic Assessment of Serious and Organised Crime' for 2019 that account freezing orders were placed on 95 UK bank accounts containing an estimated '3.6 million. The accounts were mainly held by overseas students studying at universities in the UK.

One bank, Santander, alerted the authorities in the UK about suspicious cash deposits of over '57m which were linked to 600 bank accounts opened by students.

Simon Lord, of the National Crime Agency, spoke at the Law Society's anti-money laundering and financial crime conference and said that the industry is worth 'hundred of millions, if not billions' and in particular is used as a way to transfer funds out of China.

There has been a rise in incidents due to restrictions introduced by China on overseas investments and outbound transfers of funds. Chinese nationals are subject to an annual cap of 50,000 USD each year unless they are emigrating, and transactions of more than 10,000 USD must be finalised through the State Administration of Foreign Exchange. This means that large transfers cannot be made without government approval which is unlikely to be granted.

Although some Chinese nationals may wish to transfer funds to invest in property overseas, there will also be criminals who need to use alternative means to circumvent such limits. The NCA suspects that the money contained in the 95 UK bank accounts of overseas students was either the proceeds of crime or intended to be used for criminal purposes.

Although these are issues of Chinese law, it is crucial to be aware of the money laundering implications of such restrictions as there are several ways in which overseas students may be implicated in the money laundering.

The National Crime Agency identifies 'money mules' as those who allow their bank accounts to be used to move money. Overseas students are likely to be targeted because they already have a bank account open in the UK and could be used as a way to channel funds out of a country. Students may not be aware that their account is being used for illegal means or may be acting under duress.

The NCA notes the two key methods associated with...