Concerns about the money-laundering safeguards operated by British banks have resurfaced after a drugs cartel was revealed to have used NatWest to launder nearly £30m of cash. There is no suggestion that the high street bank was any more than an unwitting dupe helping a major client. But that client turned out to be a Lebanese bureau de change in league with a crime family smuggling cocaine and cannabis into the UK.
The client was Schulmann Exchange, one of the largest bureaux de change in Beirut. It struck up a deal with Houssam Ali, a Lebanese businessman based in London, who laundered money for Constantine Michael Michael, a north London sauna owner who was also a major drugs smuggler.
Between January 1997 and April 1998, Ali laundered £28.2m through Schulmann, with the money transported via NatWest (World), the bank's foreign exchange arm. Couriers would bring money into London, where they would deposit it with NatWest, which would convert it into dollars. The money would make its way back to Schulmann via banks in New York and Dubai. Bank executives even intervened to stop officers from Customs and Excise holding up couriers from Schulmann.
The laundering network was uncovered when Michael was arrested in 1998 and turned supergrass.
Customs says there is no evidence that NatWest knew anything of the laundering operation. The bank, now owned by Royal Bank of Scotland, has since strengthened its money-laundering controls.
Even so, the scandal provides evidence to support worries about the relationship between bureaux de change and money-laundering, voiced recently by the Financial Services Authority.Reuse content