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Monday, 1 October, 2001, 14:41 GMT 15:41 UK
Q&A: Bureaux de change under scrutiny

The UK government's battle to eradicate terrorist finance has highlighted that bureaux de change are involved in laundering dirty money. BBC News Online explains why money changers are falling under increasing scrutiny.

What do bureaux de change do?

Bureaux de change operate on the High Street and at airports to change money into different currencies.

Most people presume that they are used by tourists.

However, the UK's Customs & Excise department estimates that almost 1bn in drug money leaving the country has been laundered through bureaux de change.

Other sources estimate that bureaux de change are laundering about 2.6bn a year.

Customs & Excise inspectors say it is difficult to track the exact amount of money laundered because the industry is unregulated.

Families also use bureaux to wire money to relations living abroad.

Why are bureaux de change under the spotlight now?

As a result of the attacks on New York in September, the government has stepped up its efforts to deal with money laundering.

At the weekend, UK Prime Minister Tony Blair announced a raft of measures, including action to regulate bureaux de change.

The Treasury claims that it has been looking at the issue for some time, but has decided to redouble its efforts amid the current campaign.

Unlike banks, bureaux de change are not regulated, or even registered, which means that they are open to abuse.

The OECD's Financial Action Task Force (FATF) on Money Laundering has also issued guidelines on dealing with bureaux de change.

The Treasury says its plan to clean up the sector was partly as a result of the FATF recommendations, but "not entirely".

How is the government planning to curb the illegal activity?

Soon all bureaux de change will need to be registered and regulated by a specific body.

The Treasury also plans to set up a code of practice that would make it illegal for High Street banks to deal with unregistered bureaux de change.

The regulatory body is still to be determined but could be the Financial Services Authority.

It would have powers to investigate suspicious activity at bureaux, including entering and checking records.

When would these measures take effect?

The Treasury is reluctant to provide a timeframe, saying only that it will carry out the reforms as soon as possible.

But the problem is likely to be deemed high priority.

At this week's Labour Party conference, Chancellor Gordon Brown said: "Ready access to finance is the lifeblood of modern terrorism and no institution, no bank, no finance house anywhere in the world should be harbouring or processing funds for terrorists."

What has been done in the past to combat this problem?

In the past 18 months, Customs & Excise has arrested 89 people who used bureaux de change, or money-transmission agents, to launder 590m of drug money.

A spokeswoman says the agency had been fighting money laundering through bureaux on a case-by-case basis, and has welcomed the tighter regulations.

What does the industry think?

Thomas Cook, which operates 800 bureaux in the UK, says it has procedure to deal with suspicious transactions.

The company says it often liases with the National Criminal Intelligence Service and has "never knowingly assisted with the laundering of money".

A spokesman, however, declined to comment on the amount of suspicious transactions that are reported by its bureaux.

Is this problem unique to the UK?

No, other European countries also have problems with bureaux de change.

In its recommendations for dealing with the sector, Paris-based FATF says:

"The bureaux de change sector tends to be an unstructured one without (unlike banks) national representative bodies which can act as a channel of communication with the authorities.

"It is important that FATF members should establish effective means to ensure that bureaux de change are aware of their anti-money laundering responsibilities."

In the Netherlands, one third of the bureaux de change decided to close down after the government recently introduced a licensing system.

The BBC's Patrick Bartlett reports from Frankfurt
"European airlines are suffering from the impact of the US hijackings."
See also:

01 Oct 01 | UK
UK freezes terror funds
28 Sep 01 | Business
Net closes on terror cash
19 Sep 01 | Business
Following the money trail
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