The UK’s National Crime Agency (NCA) has highlighted the increasing difficulty in tracing the money laundered by organized crime gangs. According to Brian Ludlow, a senior money laundering expert at the NCA, following the money “gets you absolutely nowhere” due to the utilization of international controller networks (ICNs). These networks, which charge a fee, employ informal money transfer systems to move illicit cash globally, making it challenging for investigators to track the funds.
Informal money transfer systems, such as the hawala system, have been used for centuries as a means of transferring money without documentation. Criminal organizations find these systems attractive due to their anonymity and apparent reliability. In the hawala system, the value of money is transferred rather than the physical cash. Brokers receive money in one country and instruct another broker to distribute an equivalent value in another country, settling the debt between them.
ICNs have become the primary method for moving criminal cash, including funds generated by drug trafficking. These networks have the capability to move billions of currency units globally, according to Ludlow. Additionally, specialist money laundering networks are increasingly utilizing cryptocurrency and Chinese underground banking to launder criminal money. Encrypted phone system data revealed large movements of cryptocurrency between South America and Europe, primarily to pay for cocaine shipments to Europe.
The NCA estimates that £12 billion of criminal cash is generated annually in the UK, but Ludlow believes this is a conservative estimate. He suspects a portion of the missing cash, which the Bank of England cannot account for, is connected to the drug trade. Despite a significant drop in cash usage by the public, the number of banknotes in circulation in the UK has doubled in the past decade, indicating a demand for cash in illicit activities.
While the money trail becomes increasingly opaque, the NCA continues to dismantle organized crime gangs and apprehend individuals involved in criminal activities.