A new report from a leading security think tank has uncovered a sophisticated money laundering operation, with Chinese state-linked gangs allegedly washing hundreds of millions of pounds for British criminals through the bank accounts of international students.
The Mechanics of the Student Money Laundering Scheme
The investigation, authored by Kathryn Westmore, a senior research fellow at the Royal United Services Institute (RUSI), details how these groups exploit China's strict capital controls. Chinese citizens are restricted from transferring more than £38,000 out of the country annually for approved purposes like education.
The gangs collect cash from low-level drug dealers and other UK-based criminals. They then target the large population of Chinese students in Britain, many of whom come from wealthy families but are limited by these transfer rules. The gangs offer these students British currency, effectively selling them greater spending power.
In return, the students pay the equivalent sum in Chinese currency into a bank account controlled by the gang, often incurring fees as high as 30 per cent. This makes the students unwitting 'money mules'. The Chinese group then makes the laundered sterling available to the original UK criminals.
Scale and Political Repercussions
The sheer scale of the operation is staggering. With nearly 150,000 Chinese students in UK universities during the 2023-24 academic year, the system provides a vast pool for these activities. The high fees paid by the students mean the service can often be offered for free to British criminals, undercutting other money-laundering networks.
Labour MP Phil Brickell, a member of the foreign affairs committee, placed blame squarely on Chinese authorities, stating they are 'responsible for fuelling the rise of these professional money launderers here in the UK'. He told The Times that Chinese financiers honed their skills with students before offering expertise to serious crime gangs.
Ms Westmore warned that the limited number of UK prosecutions, involving networks moving tens of millions and individuals depositing six-figure sums, likely belies the true scale. 'Based on my research, it is likely that these groups are laundering, at the very least, hundreds of millions of pounds related to organised crime activity in the UK,' she stated.
Broader Concerns for UK Institutions
This report emerges alongside growing unease about the influence of the Chinese state on British academic freedom. It follows recent revelations that Sheffield Hallam University initially complied with a demand from Beijing to halt research into human rights abuses in China, before later U-turning and apologising after legal threats.
A Home Office spokesperson commented on the money laundering threat, saying: 'Money laundering impacts our communities by drawing people into crime, gangs, and exploitation, and undermines our national security.' They reaffirmed the government's commitment to working with law enforcement and financial institutions to tackle money mule networks.
