An international crime expert has labeled London the center of international money laundering, saying the city's major banks disregard the anti-money laundering regulation that at the same time burdens FinTech startups.
Roberto Saviano — the author of the popular crime investigation books “Gomorrah” and “Zero Zero Zero,” dealing with the Italian mafia and the cocaine trade, respectively — made the comment in an interview on July 4.
In June, the UK's National Crime Agency published a report on the state of 'Serious and Organized Crime' in the country, which described how money laundering could impact London's reputation as an international financial capital. The report said:
“In many cases, the crime is enabled by corruption; at the macro level this can undermine inward investment in the UK and, like money laundering, jeopardise the integrity of the UK as an international financial centre.”
Speaking to the Observer on Sunday, Saviano said that “UK banks and financial services have ignored so-called ‘know your customer’ rules designed to curb criminals’ abilities to launder the proceeds of crime.” These anti-money laundering (AML) rules are the same set of regulations that have made it hard for digital currency companies to thrive while working to remain compliant the world over.
Unlike the major UK banks, however, digital currency businesses have repeatedly been hit by authorities over failures to fulfill their AML requirements. Charlie Shrem the ex-CEO of BitInstant faces two years in jail following a prosecution for facilitating unlicensed money transmission.
Cointelegraph spoke to Danial Daychopan, CEO of LazyPay, a London-based digital currency merchant payment processing platform, about the AML regulations that they also face. The startup has had to meet complex requirements to qualify for a UK Money Services Business license. Daychopan told CT about his frustration as a FinTech company trying to meet what he sees as outdated rules:
"In the past year, large banks have received public backlash after they were found violating AML regulations. It's not just banks who have been hit hard for not doing due diligence in this area. Unfortunately, most Bitcoin companies have to jump through these same hoops, but we have hope for noncustodial businesses not having to comply with these archaic regulations."
In 2012, HSBC was forced to pay out US$1.9 billion in fines following what investigators described as a “blatant failure” to implement the AML regulations allowing “at least $881m in drug trafficking money [to be] laundered throughout the bank's accounts.” The bank more recently, in June, also had to pay US$44 million in fines to the Swiss banking authority over similar charges.