LEAs Going After Small Money Businesses To Crack Down On Drug Trade
14 Feb 2020
Approx Reading time: 3 minutes
- According to findings by law enforcement agencies, drug barons are moving money around and out of the country through small money businesses as a result of lax regulation on the sector.
- This year, LEAs would go after SMBs and take action against those providing services to criminals and drug traders.
- It is believed that disrupting drug trade finances can help reduce drug-related violence on the streets of the UK.
According to the head of specialist crime at Scotland Yard
, drug barons have shifted away from using traditional banking channels for money laundering purposes to smaller financial service providers.
It is suspected that the large network of around 34,000 financial service businesses, which includes payday lenders, brokers for money transfers, and the bureaux de change, is now being used by people involved in organized crime of a significant nature to move around their money, according to the Detective Chief Superintendent Michael Gallagher.
Now, according to Gallagher, it has become a priority for law enforcement agencies in Britain to crack down on these small financial service providers and seize the profits being generated by the drug trade in the UK, in an effort to reduce the incentive of conducting the trade in the first place. As per Gallagher, money is an important factor in the drug trade and the violence that results from it, and cutting it out from the equation could have the overall impact of reducing drug trade and drug-related violence in the country.
As per the police chief, drug barons are using these small financial service providers as the primary method of shifting the money they have earned on the streets of the UK out of the country to other stakeholders in the drug supply chain.
According to Gallagher, a significant amount in cash is being transferred by criminal businesses through small financial service providers, especially since banks are no longer a feasible option due to tough regulations imposed on the banking sector. Gallagher estimates that now hundreds of millions are being transferred through smaller money channels, as the sector is not as well-regulated as banking.
Gallagher also pointed out the fact that regulating small money businesses (SMBs) is a tougher task than regulating banks, simply because of the sheer number of such businesses operating in the UK. According to him, regulation is so lenient that it is entirely possible that some small money businesses can be run by criminals themselves, posing as a front while their criminal owners easily move money around.
Law enforcement agencies would be focusing on separating the legitimate small financial service providers from those that are being used by drug traders, according to Gallagher. The primary function of small money businesses has been to shift money outside of the country by UK-based individuals to their families residing abroad.
Since the primary mode of transaction in the drug trade is cash, it can easily slip through all financial checks set by the government and move out of the country through such money service providers.
However, experts have appealed that although they should go after those providing services to criminals and shut them down to ensure the integrity of the system, law enforcement agencies should ensure they don’t disrupt the operations of SMBs that are providing legitimate services to their customers.
Another action being taken by the authorities against drug trade includes the issuance of unexplained wealth orders, whereby anyone in possession of an amount exceeding £50,000 with unclear origins would see such wealth frozen until they offer a valid explanation to the authorities about the source of their funds.