UK universities still taking cash payments for fees ‘is money laundering risk’

A significant number of UK universities are still taking millions of pounds in cash as payment for tuition fees and accommodation, making them vulnerable to criminal gangs and money laundering, according to a study.

A fifth of universities who responded to a freedom of information (FoI) request said they had accepted cash payments, while three institutions each accepted more than £1m in cash in 2019-20 alone.

Researchers received responses from 110 universities of which 22 were continuing to accept cash payments, while a further 17 stopped taking cash during or after 2019-20. Cash payments across the 39 institutions totalled £12m for that year.

It is thought most universities have stopped accepting cash after a Times investigation highlighted the risks of inadvertently facilitating money laundering, but the new research says “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,” said the lead author, Prof Nicholas Ryder from Cardiff University’s school of law and politics.

Although universities are not doing anything illegal by accepting cash payments, the research, published in the Criminal Law Review, highlights a “significant gap” in how the UK’s anti-money-laundering regulations are being implemented.

None of the universities are identified in the report. “There is no law against accepting cash payments,” said Ryder. “The purpose of the study was not to name and shame, but to highlight what we felt was an area of risk.”

The research, which was carried out by teams from both Cardiff University and the University of the West of England (UWE), found a “significant minority” of higher education institutions were failing to provide staff and students with appropriate guidance on money laundering risks.

It also showed that most universities did not submit suspicious activity reports (SARs) to authorities despite guidelines requiring organisations to do so when they suspect criminal activity and to ensure they are not liable for wrongdoing.

A fifth of universities who responded do not provide any internal anti-money-laundering training for staff and almost a quarter (24%) do not provide any guidance to their students on the risks posed to them by financial and organised crime.

The report also says students are increasingly being used as “money mules”, allowing another party to use their bank account in order to earn quick money, with a resulting increase in the number of students charged with money laundering offences.

Ryder said: “Organised criminal gangs are increasingly using higher education institutions and students as a means to launder money. Our findings demonstrate that many universities are failing to establish robust preventative measures, putting staff and students at risk of being targeted.

“Most higher education institutions are also seemingly failing to recognise the value of financial intelligence created by suspicious activity reports, as well as the related defence they provide to employees.”

He said legislation should be tightened. “While universities are not explicitly included within the regulations, the disparity of its application across the sector will continue, leaving universities, their employees and their students at high risk of money laundering and criminal liability.”

The Department for Education and Universities UK (UUK) were approached for comment. UUK previously said: “Universities work together with the government, the police service and relevant sector bodies to help protect students and individual institutions from potential money laundering activity.”

Article Credit: https://www.theguardian.com/education/2023/sep/07/uk-universities-still-taking-cash-payments-for-fees-is-money-laundering-risk