Money laundering moving to RMB as US cracks down
Money launderers will increasingly move away from the US dollar to the renminbi as US authorities continue to crack down on international banks’ AML systems. The shift will have consequences for London’s aspirations to become a global centre for RMB clearing and settlement.
According to Freddie McMahon, director of strategy & innovation at Anomaly42, a specialist in AML and terrorist financing, there is already evidence that criminals are moving their activities into other currencies.
“Today’s money launderers are highly sophisticated and monitor every move the banks and regulators make. With international US dollar wire payments under the microscope, we have seen early evidence that financial crime networks are switching to the renminbi,” he said. “The dollar is becoming increasingly high risk and it’s a level of risk money launderers are proving less willing to take. Relative to the dollar, the renminbi is off the beaten track and affords a new level of camouflage for criminal transactions. With London set to become a clearing centre for the renminbi, exactly how prepared is the UK for this level of responsibility?”
With London set to become a major clearing house for the Renminbi through the establishment of the China Construction Bank and other initiatives, and global money laundering estimated at between $1.44 trillion and $3.59 trillion annually, there are “clearly ramifications for the UK authorities”, the company said.
“The irony is that proactively countering the money launderers represents an unprecedented opportunity for the Chinese authorities to make the renminbi the default global currency,” said McMahon. “There is already an acceleration in the switching of funds away from the dollar and if China can take the initiative and set a new golden standard from an AML/CFT perspective, the global financial landscape could be set for seismic change.”