Systemic Challenges and Future Outlook

Charleston in Sussex was the modernist home and studio of some of the artists, writers and thinkers known as the Bloomsbury Group. Until the sixth of September, a new exhibition at Charleston in Ferl, Virginia Wolfe and the Hogarth Press considers Virginia Wolf not just as a writer, but as a printer and publisher. The exhibition brings together hand printed books, illustrated editions, and collaborative works. And the Charleston Festival the opens on thirteenth of May, with the publishers Margaret Busby and Charmaine Lovegrove joining Gabby Wood to discuss the radical legacy of the Hogarth Press. Later that evening, ten Hogarth Press books from Orlando to the Wasteland will be brought vividly to life in a dramatic reading. This year's festival programme also includes Douglas Stewart, Jeanette Winterson, Tyari Jones, Olivia Lang, and Jo elle Taylor, among many others. Visit W . Charleston. org.uk to find out more. You're listening to the London Review of Books podcast, I'm Thomas Jones, and our subject today is the great mystery of money laundering, a more mysterious business than you may realise, certainly more mysterious than I ever realised, and who better to shine a light on the murk? And it is very murky than the author of How to Speak Money, John Lanchester, who's also a contributing editor at the LRB, and the author of many novels, including most recently, Look What You Made Me Do, which was published by Faber in March. His piece in the latest issue of the LRB is a review of two books, Everybody Loves Our Dollars, How Money Laundering Won by Oliver Bullock, and How to Launder Money, A Guide for Law Enforcement , prosecutors and policymakers by George Cottrell and Lawrence Burke Files. Hello, John, and thank you for joining me today. Hi Tom, thank you for having me. So do you have any cash on you? Not uh not a red hackney. I did actually go through various you know, we got sort of dishes and bowls and various, you know, receptacles that you think have parking permits in the open and it turns out not to have parking permits in it. Um just to draw from recent experience. The other day and counted and I think in the house there's something like 13 pounds forty seven in cash. But I'm not I 100% I haven't checked whether it's the old pound coins that don't work anymore or the new ones. And the reason for that is because card payments, you know, pay for everything by card or direct debit or whatever else now. Yeah, we're accelerating momentum I'd say over the last decade and then the thing that completely changed it was the pandemic and contactless became not just the new normal but the new norm in the philosophical sense that you had to do it. Lots of um businesses in this part of town don't take cash. I mean there's a there's quite an interesting one there's a cafe near me that they got robbed a couple of times and then went cashless, straight you know, contactless only, um, in about twenty twenty two. And I think I mentioned in the piece there used to be seven 'cause I live near a a high street, busy high street, there used to be seven cash point machines within five minutes of the house and they've all gone. Um and that you know just does seem to reflect a societal trend just away from cash. And you know, as you say, it's not just you that you and I, most other people, almost everyone is using less cash than ever. But there is there's no shortage of of cash out there. No, apparently there's more of it than ever. So I suppose the first impossible question is is where is it all? Well, the incredibly strange answer is that nobody knows and it's a really understudied thing 'cause everybody you know just categorically people, in normal life, in civilian life, just we are using less cash. Surveys show that. And you would logically have thought that therefore there is less cash being produced . You know, in the UK, ninety-one per cent of all transactions are non-cash. So why are we why are there more banknotes in circulation than ever? And those numbers are we use less cash in the UK than most developed economies, but it's the same trend. And yet more and more cash is going into circulation. I've off the top of my head, I've forgotten the numbers, but it's something like um in the US, hang on, I'm looking up now, the average American holds four hundred and eighteen dollars in cash, that's in twenty twenty-two, but there's almost seven and a half thousand dollars of cas h in circulation for every American. So a household of four, so there's twenty-eight thousand dollars of missing cash. And it's very and you know A that's weird and B it's weird that the powers that be don't seem to be interested in it. I think it's partly because there's a a conventional you know, there's a thing about ha what we're taught um there's an orthodoxy about what money is and what money does and money is defined by its use. It has three uses it's a means of exchange, a store of value , and a unit of account. That's like economics 101, what money does. And anything that fulfills all three of those functions is money. Some societies, it's as it were, cowrie shells, you know, units, tally sticks, things like that. And in the modern developed world it's central bank money. So unit of account, store of value, means of exchange. Well, since the less and less cash, the central bank orthodoxy is is since we can see less and less cash moving in the system, it must be being used as a store of value. Yeah, l logically there's nowhere no other use for it to have. Problem is if you actually go and ask people, they aren'.t You know, household surveys consistently show that's just not where the money is. In the UK, the number is one s one seventh of the amount of cash in circulation is actually the my £13.47 in my jar. So the the gigantic question is what the hell's going on? And the answer seems to be, the answer that comes back from various people who've studied it is that a principle, or even the principle use of all this cash, which is overwhelmingly by the way, other things are overwhelmingly in a high denomination notes. In the US, eighty percent of all the outstanding cash is in the form of hundred dollar bills, which most people never use, and a lot of people have never even seen a lot of the outstanding value of the Euros in the five hundred euro note, wittily known as the Bin Laden. Um they withdrew they stopped making it in twenty nineteen, but it's still in circulation. It's still legal tender. And the Swiss have this utterly bizarre mad note, a thousand Swiss francs, which is basically a thousand pounds. And so yeah, overwhelmingly the the money out there in circulation is in these volume is in the form of these incredibly high denomination bills. And um the you know, it seems to be that it's used overwhelmingly for crime. Well m money laundering tax evasion crime. I mean as let's follow the money hypothetically for a bit. So let's say someone's selling cocaine or cannabis or cashmiten on the street and they're paid for in cash, that bill then goes up the chain of the the drug dealers and at some point it gets to someone who's um gonna want to make it appear to be legal tender. So what happens, what would happen to that probably not a thousand franc note, but that, you know, twenty pound note moving through the black economy, how does it come out again? Apparently clean? Or maybe they don't need to need to be. I mean we're talking about money laundering, but if all this money is in being used for crime and is always invisible, presumably some of it just continues to circulate in the black economy. Yeah. I mean exactly. It so coming back to the uh the classical definition of money, it is a means of exchange, it's just a means of exchange used by criminals. And as one of the US uh one of the cops, I think, quoted by Oliver Bullock in his very good book, says, you know, the missing link between Medellin and Moscow is the hundred dollar bill. 'Cause there's nothing but of of that eighty percent of US dollars in circulation by value, 70% the in form of hundred dollar bills. Seventy percent of that is held abroad. I mean, that that we know. Um and so yeah, a lot of it just stays in circulation. It's just settling transactions, you know. You're smuggling me coke, I'm selling in the street, I'm paying you back in 500 euro bills, you're use you know, you're keeping those in circulation to pay off other people and it doesn't actually touch the formal banking system. For the stuff that does , there again, there's a I'm afraid this is another three part thing. The way that you're taught the kind of formal instruction about how money laundering works is that there's three faces there's placement, layering, and integration. And placement is just your twenty quid note for your Coke, is getting that into a bank account somewhere, and very often that would be different in different places, but very often in developed world it's a a business that takes cash of which there is no shortage. Uh I mean it's a big issue in the UK at the moment. Just the number of slightly this mysterious proliferation of cash only businesses just as everyone is using less and less cash. So vape shops, nail bars, barbers, American sweet shops, things like that. Cause and then moving side up value chain in terms of transactions, things like casinos, construction is often paid for in cash, things like that. Anything where the customer is handing over cash is a very good place for you to take the illegally earned money and mix it. That's what's called layering. Mix it with legal sources of funds. So it gets harder to unpick. Your 20 quid note is mixed in with other 20 quid notes that are legitimate. And then the third layer is integration where you've pl placed the money, you've you've layered it and then you use it to buy a flat. And then that flat is to all intents and purposes everything you do subsequently with the money from that has been fully integrated within the system. Oliver Bullock had this quite a good thing about it being Godfather One, Two and Three, that you know, Godfather One, they're, you know, running um all the various criminal things. Uh Godfather Two, he's trying to take the business legitimate by mixing it with casino money and Godfather three, they are legitimate and they're the huge businessmen. But that's the classic thing and that's the thing the system is set up to look out for. And quite a lot of money laundering doesn't actually function like that. Aaron Powell So how does it function? What are the other more elaborate ways of doing it though? Well the i one of the interesting things about the more elaborate way of doing it is that it's actually it's kind of the history of banking in that uh a lot of firms that turned into big banking institutions, the classic example, the Medici , who were cloth traders, um laymans were cloth traders. I can't remember what Barclays did. I think Lloyd said what you iron or cloth. Nat West again was iron or cloth. And were play paid back in credits in place B that were then set and then the account was settled back in place A. And they noticed that it was more efficient, that they were making more money, having the credits and debits move backwards and forwards and taking a tiny piece of every transaction rather than in shipping physical goods. It's actually more efficient to have the credits and debits as the flow of funds rather than actually shipping cash. I mean oddly enough there's a thing we think of credit as a sophisticated modern thing, but in the Middle Ages you had a very similar thing of balances of credits and debits and actually the money was physically moved on one day. I've forgotten which Saints' Day it was, but there's a uh there was a one particular day in the year when the balances were settled in physical thing and the rest of the time it was this ledger of credits and debits. And the the modern version of that would be I mean Oliver Bullock cites the example, but you can m rinse and repeat almost any combination of criminal activity and physical goods in it. But his example is drug dealer in Mexico, who, you know, historically would have been oh so you see it's narcos is quite good on this. You see the transition from it starts out as marijuana. Problem with marijuana is you have these whacking great fields of it which are visible, very clearly visible from the air. Then it moves to coat, which is better because it's the coca comes from cocaine, it's it's smaller, it's easier to conceal, um, it's easier to hide from the authorities, you can't immediately spot it by flying a plane overhead. And now even better from the drug dealer's point of view, it's fentanyl, which is fantastically potent in very small quantities. The precursor chemicals which mainly are shipped from China are very, very cheap. You can make it in your garage. And it's very cheap, very hard to detect. And very potent. And so fentanyl shipped over the border from Mexico to the United States. Drug dealer in the United States sells it for cash. The cash is then used to buy whatever, agricultural equipment, helicopters, fancy cars, who cares, buy the equipment. The equipment is shipped back to Mexico and that they're sold in Mexico for pesos. So the drug dealer has explained fentanyl for pes os , but no funds have actually crossed the border. The thing that has crossed the border are physical goods, smuggled in one direction and then clearly visible, but you know, accounted for the receipts, there are bills of lading, all of that, in the other direction. And because that trade is hundreds of billions, almost a trillion dollars a year, you know, billions of dollars of value in goods crossing the border daily , it's much easier to hide. You know, i y y i i you're hiding teardrops in a torrent, doing it that way. And the system is set up to monitor financial transactions, but you have this colossal flow of physical goods and debits and credits attached to them, which are effectively invisible to that thing, which is just monitoring people's bank acco unts. And presumably the cash which is used to buy the tractor has been through one of these other cleaning systems that it's been you know, probably gone through nail bars or casinos or something before it's used. So it's clean by the time it's buying the tractor. Or does it not even need to be? You can just turn up with your suitcase of hundred dollar bills and No, a lot of the time it doesn't need to be. Yeah. The lot lots of things in in businesses like construction and contractors and things like that, they they still use a lot of cash um because people play their sub their suppliers and their contractors and things on the black so it's fairly you know there's a lot of cash washing around in that business. I mean one of the things I didn't have room to put in the piece is one very simple m way of money laundering is you know store cards like um gift cards and loyalty cards, which you can load up with quite a lot of value quite quickly. You know, there are lots of towns in America where a mall would have ten or twenty different shops that use storecards and a typical city would have twenty of those malls and you do you know, $500,000 of value in each one of those shops every single day, you can put millions and millions of dollars of value on st in stored cards a day per courier you have doing it. And what happened to them is that they're then sold to contractors who buy stuff for like house renovation, things like that, usually at say 90% of the value. So you'd have say ten thousand dollars worth of value on a stored card, the contractor would buy it for nine thousand dollars. And the thing about the the the utility to them is that they bill the client for the full value. So they buy it on a loaded card, bill them for the full f full thing, and they get effectively ten percent off. The money launderer gets the loan of the money and the contractor gets ten percent off. So there's you know, there are a lot of businesses out there that still use it. And the the other one another one I think I mentioned is casinos. Casinos would take cash for chips, absolutely no questions asked. And you can get, you know, you can in proportion to you can lose a lot of money very quickly in a casino . That's kind of the whole point of them. You can launder a lot of cash very quickly in a casino too. And of course, as you make clear in the piece, that these things the things that we know about and that the are written about in these these two books and that a huge amount of what way people are doing it that uh we don't know about because if we did the authorities would be onto it. Although maybe that's giving the authorities too much credit and there are these things still going on that people do know happen and you know it's too hard to catch. Or or may I mean is there I mean in terms of that, you know, the sort of the economic threat, if you were the amount, all this cash, all this money that's moving between the criminal economy and the legitimate economy. If you were to clamp down on all this stuff, I mean is there a risk that some of these malls would then close and so on? And that actually you'd have you know the one of the reasons governments don't do anything about it is because it would because of the e you know the economic threat. That's definitely the case. And one of the reasons we know that's true is that when there's a financial crisis there was a thing in, you know, 2008-9 , suddenly the rules were a lot more lax. You know, when banks were worried about running out of money, there was a a deliberate lowering of not so much lowering of standards, but a conscious effort to not ask inconvenient questions . There's a John LeCary novel about it. One of John LeCary's last books is about um there's a a Russian banker who's doing exactly that, who's getting as much money as possible into the British financial system, but basically because he's been asked to, because the banks need the deposits . And yeah, there are definitely times when I mean there are, you know, the analogies with um it's true the thing you say, the analogies with cheats in drug cheats in sport where you know the people on the cutting edge of what they're doing right now are a very long way ahead of what the authorities are actually testing for. The authorities are testing for things that people have been caught doing in the past. Whereas you know the cutting edge is stuff that no one's been caught doing and the authorities don't even know they're at don't even know they're doing it. If they were doing it, they'd be testing for it, which they aren't. And money laundering is a bit like that, but we can we only know the things that unsuccessful crooks have been caught doing in the past. We don't know what successful crooks have been in the present tense. But there are instances where there are known scams and scandals that the authorities are kind of it's either incapacity or deliberate policy not investigating, pursuing, cracking down on. And the the massive glaring current example here at the moment, here in in UK and Europe, is a thing called missing trader intercommunity fraud or intra community fraud, which is it's c slightly too complicated to explain on the hoof, but it's to do with VAT. It's to do with the fact that one of the huge design flaws in VAT is it's not charged on products moving across borders. Different countries have different rates, it's too complicated. So if it goes across the border, it's zero rated for VAT. And the MTIC, as it's called, it was a big, big thing in the it started in the UK. Oddly enough, it started in Stok e. Somebody worked out, body or bodies worked out that there was a scam possible in you import phones, it happened with phones because say mobile phones are grand each. You import a phone to the UK, zero rated for VAT . You control two companies. Company A, it's imported it for no Novio, sells it to Company B in the UK, charges VAT . It was 17.5% then. Let's say it's 20% now. So your phones come in for a grand , you sell it to your other company and charge 200 quid VAT. Your other company then exports it, the export doesn't have VAT. So to make the system balance, company B claims back the 200 quid it's just paid. So we paid those blokes 200 quid. We demand our 200 quid back from the government, because that's how VAT works. Government says, okay, here's your 200 quid. Company A, can we have our 200 quid please that you were paid? And company A has disappeared. That's why it's a missing trader. So one trade the trader imports it, sells it, and then vanishes. It's a huge, huge, huge multi-mtiul-mtiul-billion dollar sc am that ran for years. And it's one of the rare success stories that the British government actually with a whole range of tools, uh, prosecutions changed some laws, cracked down on it over the course of about a decade. And you can can't it't you can't eliminate it and they got more and more successful. They'd have a chain of companies. You'd have sort of ten companies involved in a chain, of which the majority were legit, but you and you and you'd hide at one or two missing traders in in the middle of the flow and also you'd have it cross multiple borders. You'd have that chain of 10 transactions crossing, you know, five borders. Um and you'd mix it, this thing about layering that we were talking about earlier, you'd mix it with legitimate transactions that were going through those companies and you would have goods going backwards and forwards and it would be like a shell game. So it's very hard to get rid of, but it's been massively cracked down on here in the UK. But the problem is it's just re-relocated to Europe and the European authorities themselves say it's the the estimated value is fifty billion euros a year. And that the proposed solution is there isn't one. They because th to to tackle it, the only way you can actually tackle it is by adjusting the VAT system and the vested interests and the design of it as such that that they can't do it. And it's a pretty amazing thing that, that you've got a fifty billion euro annual form of criminal activity that's effectively not policed. They can't do anything about it. Or choose choose not to do anything about it. And it I mean clearly there could be a money laundering element in that, but it doesn't on the face of it sound like money laundering. That's just robbing governments, essentially. You're claiming VAT rebates from governments is defrauding the taxpayer. Well a lot of money laundering is that. I mean the and the the system to the the systems that were set up, I think all the Financial Action Task Force set up in uh late eighties as a result of um a conference that that hosted by Meteor among the G seven, the were the rich country group. Um and the Financial Action Task Force, its its primary concern was people shifting money between jurisdictions to pay less tax, to avoid tax. And part of the focus on money moving between legitimate parts of the financial system, you know, ticking boxes about the sources of funds and things like that, is because it's actually not directly targeting money laundering, it is t targeting tax evasion. And insofar as the system is misdesigned and set up wrong, which it is, it it's because it comes from that. Yeah. But the thing about that the uh missing trader intercommunity thing is that y the money that goes in initially is cash that buys the phones and then it's repeatedly laundered, moving the thing backwards and forwards. Because look at the reason it's phones, a phone, say, you know, fancy iPhone a grand a pop, a lorry full of those is is ten million quid. So you know, you've every one of those going backwards and forwards, you're clear, you've got ten million quids of cash transaction being sorted every time. And they would and it's called the the nickname. M T I C was the formal name. The nickname is carousel fraud, is because it was just like a carousel, go round around that lorry would literally just go backwards and boards backwards and forwards. What's your map of podcasts from Occuli Mundi won gold at the twenty twenty five British Podcast Awards? Occuli Mundi is Latin for eyes of the Wldor and What's Your Map features a fascinating range of guests talking about the stories and ideas behind maps that they love. Guests this series include the Norwegian explorer Cecilia Skug, who's climbed the world's seven tallest mountains , and Ross Perlin, co director of the Endangered Language Alliance. Every episode is filled with history, culture and conversation. What's your map is hosted by the historian Jerry Broton, whose bo oks include A History of the World in Twelve Maps and Four Points of the Compass. And you can zoom into the maps on Oculi Mundi's website, OculiHyphenmundi.com. Subscribe now to What's Your Map , available on Apple, Spotify, and all major podcast platforms . And would the phones themselves sometimes be stolen? I mean, I meant the whole that whole recent business about Morgan McSweeney's phone and you know people joking oh that the only phone theft in London the police have ever bothered to investigate. But I did see, you know, or hear someone saying that they'd you know used their find my phone tracker and it was in a a j a container in Dover about to head into the continent. So I mean, would it be something that you could be selling you got a container full of stolen phones that you're selling or or or do you do they need to be legitimate in the first place for it to be for you to get away with it? Or could it be a that feels to me like it could be a different business because the well where's the cash transaction there is someone because the phone's been nicked so it's not clear to me where the cash transaction aspect of that would be. I mean it is a big question the thing about the missing phones and why I mean there's a a baffling thing about the why the Metropolitan Police were so slow to act on it. When you had hundreds of thousands of phones a year being stolen in London and very often you people could see where they were. You could see on the but the police they always said that the tracking thing isn't sufficiently accurate, it doesn't meet the legal threshold. And I suppose if you're saying it's in a container somewhere at f in at the port of Felix though, it's kinda well great, but we're not opening all those containers, so there's not much. Well well in fact when they eventually acted on it, it was a bunch, I think. They had a a number of missing phones were tracked to a specific container at Heathrow. They just had just it reached a point where I hesitate to say to say even the Met, but you know that there was something going on here when you had, you know, a dozen phones in one specific location and they raided it and found I think it was it was thousands of phones in this one one location. I mean I the thing that is odd about it is because the Financial Times ran a piece about the building in Shenzhen. They literally named the building. It had the address you can look it up on Google Maps. They had the address where most of the stolen iPhones in the UK were ending up. And why there wasn't enough of an evidence chain to trace that back to specific excriminator. Anyway, they and they they didn't immediately raid, I think. What they did is they tracked backwards to w find the gang who were nicking all those phones and shipping them off and made a series of arrests and although it's a this is an underreported fact, but phone thefts are down forty percent in London because of busting that gang. No, no, it's not opportunistic. It's definitely an organised crime. But um uh it's not and there will definitely be money being cleaned at some point in that process, probably when they sell the phones in China. But it's not you know, the initial transaction isn't a money laundering thing, it's just physical theft. And I mean that you'd write in your piece about other things going to and fro between the UK and China, including from um you talking about Malls earlier, but Bista Village, the fashion outlet. Yeah, that's the thing Bullet thinks is that, you know I mean this is this slightly mysterious thing about just what a immense success Bista Village has been and it's the only tra in I've ever heard of in the UK that has its announcements in Mandarin, the train from Maralibone to um Bister Village. And um Bullet's the thesis is that well the cop he talks to, the thesis is that it's Chinese gang sends drugs to UK UK drug dealers sell drugs for cash, cash given to or deposited in the bank accounts of Chinese students of travelers who are visiting, they don't necessarily know they by the way, there can be innocent parties in this transaction. Just, you know, can you buy it and take it back to China? The luxury goods bought and taken back to China, which in many instances, yeah, these these are ten grand a pot, some of these handbags and and the kind of luxury tat. And then it's sold in China for you know the full full whack of value and you've taken again, you've turned drugs into drugs in one place into cash in another in a way that's invisible to the financial system. And it does look like, you know, quite a lot of I mean it's a mis it's a slight mystery why there's such a demand for this mad luxury goods, things like watches and Gucci bags. But um it looks like quite a lot of that is just money laundering and things like watches. You know, there's not too many ways you can take a you can just walk across a border with a hundred thousand pounds in value, no questions asked, but you can do that in the form of a watch. Um and you can do that in the form of handbags. Um but y uh as bullet quotes aspect saying, you know, it sounds a bit mad if you get it wrong. S saheys the l the link connecting these drug dealers with Chinese organised crime is Gucci bags. You know, what? But actually the answer is yeah. Yeah. And you don't need to you don't need to load them with drugs or or cash because the bag itself is the repository of value. The bag itself is the thing. I mean it's a and you know there are other examples of it's in um Kotrul and Far's book, uh I forgot what that I think he was a drug dealer in Turkey and, his thing of taking money across the border would be in the form of gold. He would go in one direction with a uh he had a bangle on his wrist, like a three-pound brass bangle. He in one direction it was made of brass, and then the other direction it was made of gold. And that sort of that m that amount of gold was a hundred and fifty grand a pop. So physical goods are very good you know, they're cash is exceptionally handy in criminal transaction, but so is gold and so is the thing that was so so big I didn't even get to in the piece, which is crypto. Gold, by the way, has one of my favourite um there wasn't room for this in the piece, but one of my favourite um forms of money daundering is it was a thing that was discovered by the the alchemists called aqua regia, which dissolves gold and it makes it look like um makes it basically like leukazate. You apply the salt to it and it you get this thing called leucoside. Uh and then you smuggle the leucoside wherever you want to in its container, then you apply a mineral salt to it and it recrystallizes as gold. And it was used in the second the Nazis at one point banned the Nobel Prize and confiscated Nobel Prizes because the um Nobel Foundation had awarded it to uh the Nobel Peace Prize to Karl von Elsiecsky, who was an anti-Nazi activist, and in retaliation the Nazis spanned the Nobel Prize and started confiscating them. So two German scientists, Max von Leuer and James Frank, smuggled their Nobel Prizes out to Denmark, as a Hungarian c chemistalled George De Heversy, looked was set to look after them. And the next problem is the Nazis invade Denmark. So de Hevesy has this issue with his two whacking great Nobel statuettes in the corner of his lab. Um, so he dissolved them. He applied them at Aqua Regia, dissolved them and just left them in beakers on the shelf of his lab from where she's then locked out for the duration of the war. Goes back in at the end of the war, and lo and behold, they're the Lucas ad resembling jars are still on his shelf. And he did this rather wonderful thing of he um sent them to Sto Stockholm, says, you know, these are the Nobel Prizes uh in the original. And they uh crystallized out the salt back as gold and reforged them as the Nobel Prizes and gave them back to the two Nobel laureates. I think that's a it's not exactly money laundering, but it's a rather wonderful story about, you know, hiding cat hiding ma value. Yeah, exactly. That sometimes yeah, sometimes it's they're on the side of the angels of the people doing the the smuggling. But I mean that thing about the people apart from you know the goodies who are smuggling gold and so on across borders. And as you say , most money laundering, most of the smuggling happens. There there are all these things in place. There's a blizzard of acronyms of all these organizations trying to stop it and they you know, they're not very good at catching most people. But if they don't catch the big fish, do they I mean, how often do the innocent people get caught up in the nets, as it were? All the time, is the answer. I mean absolutely all the time. And um that thing it it attracted a lot of attention when Nigel Farage was debunked, as they call it, a couple of years ago by Coots . But actually that's the tip of the iceberg. It's more than three hundred I think it's three hundred and fifty thousand people that get debacked in the UK every year. And it's for any kind of transaction that looks in any way suspicious, which very often it's an it's a nightmare for charities. It's a particular nightmare for charities that have anything to do with the Islamic world. It's a nightmare for charities that have anything to do with Ukraine. That people get debanked for being politically exposed, as they call it. And the problem is that the incentives for the banks, the banks have been the target of colossal fines for dealing with entities, companies, countries that they're not supposed to deal with. Some of those f fines fair enough 'cause the banks knowingly doing things they shouldn't. And in other instances things that yeah, it's less fair because they couldn't necessarily have known. But the way that to the way that the system is set up is that you get these gigantic, I mean in the billions fines if you're a bank and make a mistake. And there's no incentive, there's no upside for catching people. The banks don't even, if they report transactions, which they do by the way, on a colossal scale, in America it's over 10,000 transactions a day get reported. Um what they call SAR suspicious activity report, which is millions a year, which of is the same as not reporting anything because it's just impossible to look into. And the the banks have no incentive for getting it right because they don't find out anything that happens. And massive incentive for getting it wrong. And so what they do is they err on the side of reporting and flagging everything. And just it's it's simpler to just ban and block your customers rather than to just take the the huge downside risk of fines running into the billions. And so we have the system that misses a lot of the legitimate the illegitimate activity because it's looking for the wrong kind of transaction, but blocks lots and lots of legitimate activity and it's politically exposed people, it's charities that have anything to do with dangerous parts of the world. But it's there's also a thing, KYC, you know your customer. There's a lot of legislation around that, which in the UK has this sort of bizarre that's the thing where you need a utility bill. Yeah, this mysterious, sacred, all powerful document in British life, which is your gas bill. And that you know you very often need two proofs of address to do all sorts of legal things. And you get this thing where because of no your customer, KYC, as it's called, legislation that's brought in as part of the AM L anti-money laundering apparatus. And you have people who have the same bank account for 50 years. I mean just to cite specific example known to me, so been with the same bank for 50 years. But the bank has changed the way the account works or has a new policy in place about having to verify things that they've had in place for a long time. So you get this old catch 22 thing because exactly because your identity has been known for ages you have to now verify it. But you have people who the case of say a widow, the utility bills are in her late husband's name because he hasn't changed it, passport's expired because he hasn't travelled for more than a decade. Driving license has expired because she never drove in the first place or is unsited or whatever and things like that. And so this person can't prove their identity. They they fail KYC test s at a bank where they bank not just the same institution, the same branch for half a century because this apparatus has been brought in to, you know, stop Mexican drug dealers. And so it yeah it, has colossal consequences. I mean again, um I think the it's in the billions. I think um the estimate that's come up with it's like a sort of $200 billion a year annually, the cost of what was compliance apparatus that you know isn't doing the thing it's supposed to be doing and is causing enormous consequences for ordinary businesses, charities and ordinary people. So the these things that are in place clearly failing to catch most of the bad guys, making life very difficult for lots of ordinary people. I mean, do you do either of these books have any suggestions for what might work a bit better? Well Bullock has three. He thinks that a lot of the problem is to do with drugs being illegal and that it would help to shift a lot of that in the way that prohibition helped create a huge apparatus of criminality in America in the twentieth century that an equivalent thing is happening now with drugs. He thinks getting rid of high denomination bills would massively help. And it I mean it is a head scratcher, this thing about eighty percent of the value being of the US dollar in hundred dollar bills, seventy percent of them being abroad. That earns a lot of money for the US government, something called seigniorage, which is means you for the cost of printing a piece of paper you get you know, hundred dollars of value and that scales up, I think the estimate. I notice I'm talking exclusively in billions, I think that's thought to be worth something like fifty billion dollars a year to the US Treasury. Same thing happens in the Euro . Um on a slightly smaller scale, same thing happens in the UK again, slightly smaller scale. But you know, printing your own currency is a very powerful it's a good little earner. It's effectively free money for central banks. So scrapping those high denomination bills would help, he thinks. And then you you know, the the other missing piece is just finding out what's going on, you know, instead of or as well as or just to deflect some of the two hundred billion dollars you spent on compliance on just properly trying to know , you know, get back to the analogy of drug testing, finding out what the cheats are doing now in the present tense as opposed to the stuff that, you know, they have been caught doing in the par.k Lamina was a big thing in America. Um it was chain of jewelers and um gold dealers and things like that. Actually was controlled by the by the cartels and that was the at the point that was the that was busted. That was the biggest fraud of its kind, money laundering scheme of its kind ever found. But you know, that was nearly forty years ago. And so we need an equivalent thing about just what's happening now. The as it were, the equivalent of missing trade at intracommunity fraud, but not the one that they they know about, the ones that they don't know about. There is just a genuinely problemat you know, massively problematic knowledge gap about this and it's caused by the fact that it's so lucrative that there are just so many reasons for being ahead. So at the moment the criminals are ahead. And if you if you could get them for money laundering, stop the money laundering, then that would have a knock on effect of mak ing other kinds of crime possible. I mean you mentioned prohibition earlier and and a bit in the way that Al Capone was finally got for tax evasion. If you can get terrorists and drug dealers for money laundering then you're going to stop those other kinds of cri me too. Yeah, because that that's right. I mean that's ha it's the thing that makes everything else possible. Um if you couldn't use the proceeds of whatever criminal activity you're up to, if there was no then would literally be no profit in it. So y I mean in a sense, money laundering isn't just a form of crime. Money laundering is crime. It's the thing that makes crime happen. And the the the if you look at the numbers it's the Michel Camdesou who us,ed to run the International Monetary Fund, put the range of between two and five percent of global GDP. Well, the upper scale of that is the th that makes it the third biggest business in the world and the third biggest economy in the world is criminal activity, you know, illicit criminal flows of funds. And so, yeah, making it impossible, or just making it harder, you know, hardening the target, as they say, would have a significant, I mean, as a direct consequence, would significant ly reduce other forms of criminal activity. Is it going to happen? Well, pro on the evidence you have to say probably not, because governments benefit from seigneurage, that's the thing that will stop them abolish abolishing the high denomination bills. And the West has this very bad habit of when it latches onto these things, it acts out its desire to, you know, see be seen to do something on other parts of the world. So there have been all sorts of crackdowns in banking systems that are you know smaller countries that aren't part of the big global hegemons that aren't part of the EU or US . But when the money laundering is attached to even entities controlled by Britain, I mean notoriously British Virgin Islands, you know, either man channel Islands is all sorts of suspicious things historically have been seen to be going on in th those places. And you know, we're very good at debanking and cracking down on you, know, if you're a charity linked to Ukraine, good luck opening a bank account. But there is a lot of illicit flows of money that are effectively ignored because that flow is important to the financial system as it currently stands. So short of some sort of outrage, I mean there was a there was a shift after 9-11, but again it was sort of slightly selectively enforced and yeah, the Americans cracked down on lots of things, but they didn't crack down on Saudi Arabian money flows and famously fifteen of the nineteen perpetrators of the nine eleven attacks were Saudi. So we just we in the developed world are hypocritical and selective about how we enforce these things. And that doesn't particularly cause optimism. Sorry to end on a note of gloom, but that is that's the current state of play. Yeah. And I suppose that thing about I mean it's it is notable that from your piece, and presumably that's true of of the books, there's a lot about Chinese gangs and presumed that you know there's a focus on if you can say all it's people coming from outside and and doing this, it's a way of deflecting attention from part among other things, it's a way of deflecting attention from, as you say, from domestic forms of crime. Yeah. I mean ch informal value transfer, as they call it, is this a massive thing in China because China has capital controls. You can only get $50,000 out at any one time in China. And so that is a global issue, effectively in industry. There's an awful lot of Chinese-owned flats in London that cost more than $50,000. And it's I mean it's just quite interesting to think about that, the amount of it you know, you actually can visibly see money being laundered in the form of those flats because it they can't legally be bought with a fifty thousand dollar cash limit. But yeah, there's a lot of stuff that doesn't attention doesn't get paid. I mean it's interesting when the after Ukraine when there was a crackdown on the oligarchs here in the UK mainly in London, you know, the only thing that happened before and after was that Putin invaded Ukraine. If the money was dirty, the money was just as dirty bef on at the start of February twenty twenty two th than it was, you know, the the month after. And , you know, it is the case that there is a a political convenience threshold for these things being caught. And and just to come back to the analogy with sport, you know, the sport that's had the biggest crisis in relation to drug cheating is cycling. And it's been in it's been a catastrophe for cycling that it was so brought into the spotlight and it became evident that you know drug cheating was absolutely rampant, at pretty much everybody was doing it, everybody knew. It had become a kind of accepted norm in the sport. But that didn't happened because people got upset about it or or governments thought this isn't the right thing. It happened because the police randomly stopped a car coming across the Belgian border, a car belonging to a soigneur, which is one of the sort of assistants, attached to the Festina's team, was randomly stopped by the police. You can have random checks in France that you can't have. Uh you can't have in the UK. You don't need probable cause in Fran ce. Stopped a car, opened the boots absolutely full full of drugs, and the next morning at dawn , this is in the middle of the Tour de France, everybody was raided. And that's where the scandal happened. And by the way, France is the only country in the world where doping in drugs is doping in sport is a criminal offence. It's actually against the law to take illegal performance and to take performance enhancing drugs in sports. It's illegal everywhere else, but it is illegal in France as a direct result of that thing. And that kind of destroyed road cycling as a sport. So it's a little bit like that, that you know, the thing that makes n you know national outrage happen that causes change to happen in relation to money laundering hasn't happened. There isn't that thing. And and it would be a kind of disaster, I think, in some respects for governments for the full ex tent of the dirty money in the system to become visible. So they're I think they're kind of happy that it hasn't. They ha it hasn't had that, you know, the the Festina car moment.