UK universities ‘vulnerable’ to money laundering

A fifth of UK universities still accept cash for tuition fees despite the risk of it being a method of laundering criminal money, according to new research.

A report from Cardiff University and the University of the West of England (UWE) says that a significant number of providers are failing to provide staff and students with guidance on money laundering risks.

The study, published in the journal Criminal Law Review, says that the UK government requires financial institutions and non-financial businesses to implement preventive measures against money laundering and terrorism financing vulnerabilities.

But because higher education institutions are not explicitly incorporated within the scope of these regulations, it leaves a “significant gap” in how the law is being implemented.

However, the UK is not alone in this, Nicholas Ryder, lead author and professor of law at Cardiff University, told Times Higher Education. The US also misses higher education from its anti-money laundering laws.

Researchers submitted Freedom of Information (FoI) requests to 120 UK institutions identified by Universities UK between November 2021 and March 2022.

Of those that responded, 22 per cent said they accepted cash payment for tuition fees, accommodation or both.

Three institutions each accepted more than £1 million in cash payments in 2019-20, with the total amount of cash payments across 39 universities adding up to £12 million in the same year.

Professor Ryder said the issue with accepting cash was the anonymity associated with it, coupled with the risk of organised criminals or politically exposed persons spending their proceeds of crime on tuition fees or accommodation.

He said organised criminal gangs were increasingly using higher education institutions and students as a means to launder money.

“Many universities are failing to establish robust preventive measures, putting staff and students at risk of being targeted,” Professor Ryder said.

“Most universities have ceased the acceptance of cash payments, but we found a significant number are still willing to do so. What’s even more concerning is that some organisations do not impose any limit on the amount paid in cash.”

The FoI requests revealed that 20 per cent of respondents did not provide any internal anti-money laundering training for staff, and 24 per cent did not provide any guidance to their students on the risks posed to them by financial and organised crime.

And they found that, while a small number of universities submitted many suspicious activity reports (SARs), which alert law enforcement to potential instances of money laundering, the majority did not use them.

Professor Ryder said this disparity across the sector would leave universities, their employees and their students at “high risk of money laundering and criminal liability”.

Samantha Bourton, senior lecturer in law at UWE, said the research identified reports of universities accepting suspicious payments from convicted criminals, while other cases had shown how students had allowed their bank accounts to be misused by organised criminals.

“To address this issue, our paper recommends that universities are explicitly included within the scope of anti-money-laundering regulations,” she added.

patrick.jack@timeshighereducation.com