Oliver Bullough – How Money Laundering Won

Yes. Thank you, Hannah, and thank you everyone for being here on a rainy, rainy Tuesday evening. I've been writing about financial crime for, I don't know, 10 or 15 years or so. And when I first started investigating kleptocracy and fraud and writing about it, it was so sort of dreadful how easy it was that I slightly imagined that, certainly with my first book, that the problem would be solved before I managed to get it published. You know, and I was hurrying desperately to say so that the book would still be relevant because it was so appalling that clearly governments could not possibly tolerate what I was investigating and writing about. And you know, it turned out that they didn't sort it out before the first book came out, and in fact then I wrote a second book and they didn't sort it out before that one came out either. And so by the time I was looking at the work I was doing that became this book, there was sort of one question that really sat in my mind, which is that if we care about financial crime and if we care about stopping it, why on earth have we so spectacularly and completely failed to stop it. So, so what is money laundering? Money laundering is the crime that underlines all other crimes, or certainly all acquisitive crimes. So, you know, theft, fraud, trafficking of anything, kleptocracy, corruption, all of these things mean that you end up with ill-gotten gains, money that you have and that you shouldn't otherwise have. And, and you know, this is, I mean, it's great, a great way to earn a living, but it's a problem because if you want to go out and spend it, you know, in a shop or wherever, people will inevitably wonder where you got it from. You know, if suddenly you've, you've, you know, you are the health minister of a former Soviet republic and suddenly you find yourself a hundred million dollars richer, you know, people may start wondering, has he done something a little bit dishonest when it comes to selling medicine to obtain that money? Where's that money come from? So, what you need to do is find a way of making it look legitimate. And that's what we call money laundering. The sort of common derivation of the term is supposedly back in Chicago under Al Capone during the prohibition years when alcohol was illegal, supposedly the mobsters who were earning this huge amount of money selling whiskey that was being trafficked from Canada used to buy laundromats and then would put the money through the laundromat. So it looked like the laundromat was washing a really improbable quantity of clothes. And, and you know, and, and all of their money was just profits and, and excellent, and, and then it would be put in the bank and it all looked legitimate. That isn't actually true. That isn't where the origin of the phrase comes from. But it's such a lovely sort of post-factual rationalization of the term. It's just a, it's, it's not literal laundering. It's like metaphorical laundering that you have money that's dirty and you launder it and make it look clean. And so the process by which that happens is the process that essentially governments have been nominally determined to stop, or at the very least severely restrict, since the 1970s, on the, on the, on the basis that if you can make that process more difficult, you will make crime less profitable and therefore there will be less crime. I mean, it's an, it's a completely obvious sort of rational process to, to think that, that, that's a sensible thing to do. And you know, I suppose what's interesting about it is, I mean, you know, this has been a really involved process. There's been, you know, government, there's been treaties, there's been, you know, really quite dramatic sort of legislative innovations. There's been really huge quantities of money spent on doing this, and it's failed to achieve anything at all. As far as we know, the, the amount of money that's laundered now, as a proportion of the money that exists, is basically exactly the same as it was 20, 30, 40 years ago, despite all of this effort. And that's quite weird because normally when governments put their mind to something, they can have really dramatic effects. If you look at, for example, how many people die in road traffic accidents, you know, it used to be a really terrible problem, you know, 50 years ago, and yet it's a fraction of the number of people die now, despite the fact that far more people have cars. If you look at, you know, international efforts against diseases like smallpox or rinderpest, you know, the world said we're not going to have smallpox anymore, and hey presto, we don't have smallpox anymore. And yet with money laundering, the world said we're going to stop money laundering, and not only did we not stop money laundering, we didn't even reduce it. It continues. It's happy days for criminals just like it was back then. So that's essentially, long story, long answer to your short question. That's essentially the process that led to me saying, there's a, something weird here and I need to work out what it is.

Well, I mean, this is, I mean, it's, it's a hard problem. Partly one of the problems with criminals, there are a lot of problems with criminals, but one of the problems is that they don't file always like, you know, all the paperwork that legitimate businesses do. So there's a degree of guesswork.

They have a lot of paperwork, but the paperwork tends to be more obfuscating what they're doing rather than revealing it. So, and they don't always answer the kind, you know, the surveys like YouGov or, or the Office for National Statistics. So, there are issues with, with the statistics, but as far as we know, like the first estimate of how much money is laundered globally was made in the late 90s by the International Monetary Fund, and they came up with this figure that it's 2 to 5% of global GDP. That's, you know, yeah, finger in the air. It's that. And there's been lots and lots of efforts since then. You know, academics have looked at this and attacked this estimate from all sorts of different angles, of going from the bottom to the top, from the top to the bottom. And all the estimates end up in that general ballpark. So, so now, I mean, the world economy is approximately 100 trillion dollars a year. That's global GDP is about that. So 2 to 5% is 2 to 5 trillion dollars of money laundered globally. So, I mean, if you, you can think about that in two ways. If you think about that in terms of how many victims there are, that's kind of amazing. 2 to 5 trillion US is, is almost unimaginable amount of money. I mean, if you had, if there were $5 trillion in a pile here, it would be quite a big pile. And you settled down to count them, you know, a dollar a second until you were done. That would take you somewhere around 150,000 years to count them. By which point there would be 150,000 years' worth more of 5 trillion dollars to count. So it's a huge amount of money which is being stolen every year from ordinary people and is being laundered so the criminals can keep it. And our failure to stop that as a world is cumulatively creating an unbelievable amount of suffering. If you look at what's happening in Ukraine at the moment, you know, the drones which are causing complete mayhem at the moment in Ukraine, they are powered by electronic components that come from Western countries that should not be selling them to Russia. And yet somehow that money is finding its way to buy those electronic components. If you look at, you know, what's happening in Mexico with the wars of the drug cartels, that is all being powered by money laundering. If you look at the terrorist groups in Nigeria or the Middle East, that's being powered by money laundering. It is. So, this is why I call money laundering the support mechanism for the worst people in the world. It is the crime that underlies all other crime. And without it, I mean, there would always be a certain amount of crime, but it would be so much smaller that the world would be a radically different place. And I mean, this whole book is about why, why governments have failed, essentially.

Um, yeah, it can get, look, I mean, I'm an optimist, um, despite that. Um, um, but just because there's no point being a pessimist, you know, there's this saying that, you know, if you're a pessimist, even if, even if you win, you lose, right? So, so you, you have to imagine a better future, um, and write into a better future because, like, I mean, otherwise, I, I mean, I don't know how you are about the world at the moment, but it can feel a little bit like some things are going in the wrong direction. Um, and just, you know, one or two small things on the margin, and, and it is, I think, important to, to not give into that, not be like, that's just how it's going to be now.

Yeah. So, yeah, I mean, so the, my previous book I wrote, Butler to the World, was about British...

Highly advised. Um, um, is about British complicity, specifically British complicity in kleptocracy and money laundering. Um, and after that book came out, quite a lot of people said to me that I was being a bit unfair and that lots of people were doing lots and lots of things. Yes. And, and, and I thought, well, okay, let, let's take them at their word and say they are doing lots of things, but there's this, this saying which I, which I really like, which I only learned relatively recently, that the purpose of a system is what it does, right? You shouldn't listen to what people say that they're doing, but what they actually, look at what they actually are doing. Um, and if the purpose of the money laundering, anti-money laundering system that we have, which is astonishingly elaborate and involves vast numbers of people doing huge numbers of things, as we'll get on to, if its purpose is to stop money laundering, um, I mean, then that's just not what it's doing. Um, and what it is doing instead is colossal waste of effort and a colossal amount of paperwork and with some, you know, uh, really very, very bad consequences for a lot of people. Um, and so that's what I wanted to focus on, saying, okay, I'm going to take you at your word. You say you're trying to do the right thing. Here's what you're actually doing.

No. No one knows who Wright Patman, or Wrong Patman as bankers used to call him, um, was, I think, one of the most amazing politicians of the 20th century and completely forgotten. When I was researching this book, Wright Patman is the father... blow the cobwebs off. Literally, like, I was in, you know, he was in, I was in the LBJ Library in Austin, Texas, and there were all, you know, they'd had all these... when he'd retired as a, he served in, for the first Texas congressional district of Texas from 1928 to 1974. Incredible guy. Um, but when he retired, he was told that he would have his own room, you know, with all his archives in the, in the LBJ Memorial Library. And now instead of that, you don't, not only do they have that, but it's like the librarians have never heard of the guy. And they'd bring me these boxes with bits of paper tied in string that had become so fossilized that they'd have to have special equipment to untie these documents. But this is what, what's amazing about Wright Patman. Um, he came from nothing. Um, he, he was, he grew up in a log cabin with no shoes. He put himself through school by lighting a fire in the morning, by cleaning in the evening, put himself through law school by picking cotton. Um, he came from the poorest conditions that almost anyone could be in. Um, he, he, he, he rose to be in, in Congress from the 1920s. Um, and he, he, he fought very hard against, um, entrenched interests on behalf of what he called the little man, 'I'm on the, on the side of the little man or the simple folk.' Um, and he was, I mean, he was one of these people who never, man, never monetized his position in, in Congress. He never, you know, took money from anyone. He lived in, in a very sort of basic, modest lifestyle and just worked all the time. In a sort of perfect distillation of the man's sense of humor, because he, you know, would work all the time, 'only, only Robinson Crusoe got his work done by Friday.' That was his, that was his idea of a really good joke. He was a sort of pioneer of the dad joke. Um, but, uh, but, um, but he, he had this, basically before Wright Patman, um, although money laundering has always happened, um, no one had really thought about it as a, as a, as a, as a, as a concept before. That, that, you know, in a way the financial system, money went into it and money came out of it in a slightly, in the same way that the sewage system, you know, that, that, you know, what goes in at one end and what comes out the other, that's what people are interested in. What, what you've had for dinner isn't the sewage company's business. So it was a bit like that with banks. You put money in, you took money out. Where the money came from, it wasn't their business. And I mean, it is genuinely fascinating looking at some of the examples of how easy it was to launder money. My, my personal favorite example was after the Brinks-Matt bullion robbery here in the UK, which I think is still the third largest heist in British history, when, when these gangsters managed to steal a huge amount of gold from a warehouse near Heathrow in the early 1980s.

The Gold, definitely worth, worth, and a very good documentary. Um, but there was a, a very small gold bullion dealer in the West Country that started suddenly needing so much cash that the local branch of Barclays was having to arrange special shipments from the Bank of England to satisfy their demand for cash. Like totally wild amounts of money, and, and no one at the bank thought, someone's just stolen a huge amount of gold and everyone's talking about it, and a small gold bullion dealer is buying so much gold for cash that they need special shipments with the Bank of England. And they were just, sure, you know, give the guys cash. And meanwhile at the other end, um, the recipient of the cash, who, the person who had stolen the gold, they would take that cash in, in Essex and pay it into the bank. And at one point, one of the couriers taking the money to the bank dropped £125,000 on the way to the bank on the street, on the street. And when they arrived at the bank, they were £125,000 short, went back, looked for it in the same way you might look for your keys, it's gone, and went to the police station and said, 'Has anyone handed in £125,000?' And the police were like, 'Yeah, yeah, here you go.' Um, so then they took it, took it back to the bank. This is what it used to be like to launder money. It was just like so easy. And Wright Patman, who was on the side of the little guy, had absolutely no time for big bankers, big business of any kind. He'd grown up at a time when farmers, as he was from a farming family, were relentlessly screwed by, by big, big companies, the companies that transported their stuff, the companies that sold them stuff. He, he, he was, you know, really opposed to, you know, monopolies and everything. Really very radical guy. Um, he said, 'No, banks have a responsibility to the society that they serve, not to serve criminals. The banks are part of the fight against criminality.' And this was a time in the 1960s, um, when there was sort of a lot of concern around this in the United States, the beginning of the war on drugs, a lot of concern around, you know, hippies, the black radicals. There were the sort of, you know, the, the riots in the inner cities, you know, the, the civil rights there, you know, this really like, um, militarized police response to a lot of these problems. And he said, no, you can't only go after, you know, marginalized groups. You know, the, the core problem with crime is white-collar facilitators. That's the people we need to be going after. And he was very firm about this. And as he was chair of the Senate, of the House Banking Committee, and so he passed through this piece of legislation called the Bank Secrecy Act, weird name for something that was about transparency, which was the, it was, it's a fairly modest piece of legislation actually in terms of what it did. But the idea was revolutionary, which was that, no, money laundering is a problem that banks have to be part of the solution. You can't just expect them to do the right thing because they won't. They want profits. And this is a way of getting profits. And so, and, and so he, yeah, he, so he's in a way, if there's a hero of the book, Wright Patman, or Wrong Patman, is the hero of the book.

Yeah. I mean, to, yeah, banks by their very nature are driven by profit and the fact that they are so responsible for compliance and all of these things is one of the major failings. So, so the problem with Wright Patman's idea, as he himself recognized, um, is that if you are essentially dealing with criminals with very large amounts of money, um, and this is going into the 1970s when the drugs trade, particularly into Florida, became incredibly profitable. Um, you know, really took off first marijuana and then cocaine, you know, huge amounts.

Yeah. I mean, real Miami. I mean, what's amazing about this, Miami Vice is a documentary. It's astonishing, like what they were showing in that. Okay, I'm not sure the police actually had an alligator on their yacht, but other than that, I mean, the kind of crimes they were talking about, you know, I was talking to a guy, um, Mike Weneman, who was a, um, a detective in, in Florida in the early 1980s in the first big federal effort against money laundering. He was talking about this. He was, um, uh, staking out a bank, which was one that they suspected was receiving a lot of criminal cash. And the, the courier turned up as he did every day in a car full of money and went into the bank to get the security, security guard to come out with a trolley to help move these boxes of cash into the bank. And while the guy was in the bank, someone stole the car. Um, just got into the car which was full of cash and just drove away. And the courier comes out and was like, 'Ah, someone stolen my car.' And the, and the, and the security guard is like, 'Oh, I'll call the police.' He goes, 'No, no, no, no, no. Just call me a cab. I'll be back tomorrow with a different car.' And, and that was it. And this was how it was. They had so much money that everyone was just, oh, it's a car full of cash, whatever. Um, and you know, it was just absolutely extraordinary. Money was pouring in. So they started to enforce this piece of legislation, Wright Patman's piece of legislation, which obliged banks to record the identity of anyone paying in more than $10,000 at a time and various other things. Um, which was really annoying if you're a criminal trying to pay in, say, four or $500,000 at a time because, you know, you have to go to all these different banks to pay in slightly less than $10,000. It's a lot of work. They did that, but it was still a hassle. Um, and the problem was for the Americans, who were very ahead of the game when it came to tackling money laundering, this is around the time when Barclays in the West Country was happily moving all of that money in the UK. We didn't even know any of this, but is that Florida is very, very near lots of other countries. Um, the Bahamas is about 20 minutes in a plane. Um, you know, a lot of those countries are British. The Cayman Islands, Turks and Caicos, British Virgin Islands, Anguilla, all of whom very, very happy to take as much money as they could be flown in by private jet. I don't know if anyone's read The Firm by John Grisham. Again, you might think it's a wild story. Uh, the book is better than the film, by the way, just saying. But the, um, but again, basically a documentary, jets full of cash flying into the Cayman Islands, which would then put the money in the bank, fly back, and just take more. Panama, the same. So what they needed was international cooperation because all they needed a way to make all these countries stop accepting this money. And so at the end of the 80s, they created this international body called the Financial Action Task Force, which remains the sort of global standard setter. And this is where the Brits enter the story. Um, once again, I'm afraid the Brits end up as...

Everything has an acronym. And the more important something is, like, you know, the three-letter acronyms are just, everything is three-letter acronym, but you know something is important if it's a four-letter acronym. That's when, that's when you need to sit up and pay attention. So, FATF or FATF as people call it is four letters. It's a big deal. Um, but, but Britain as a member of the Financial Action Task Force, um, wasn't that keen on really tackling money laundering because by this point, you know, we were really getting going. Um, and you know, this is the, the, the story I, I tell in Butler to the World that Britain, the City of London had been reborn moving a lot of dirty money, but was definitely not that keen to actually do anything about it. So, so Britain's contribution, which sadly was adopted, was that unlike the American system whereby all transactions above a certain size had to be reported and it was up to the law enforcement agents whether they investigated them or not, in Britain we said, let's not do that because that will produce a lot of paperwork. So instead, why don't we ask banks if they're suspicious about something to report their suspicions in what's called a suspicious activity report. Um, and then, and then there will be far less paperwork going into the law enforcement agencies and they'll be able to only look at suspicious transactions and that will be fine. Um, which is quite a good idea except that basically what you're saying is that if you are a clean institution, you will report your suspicions about things. But if you are a dirty institution, you won't do anything. So it's basically a way of creating a lot of paperwork for clean institutions and no, essentially not stopping dirty institutions from doing anything. You're basically asking money launderers to blow the whistle on themselves, which they're not going to do. So, we've ended up with this system, sadly, Britain's great contribution, which generates a tremendous quantity of paperwork, like an unbelievable quantity of paperwork. I mean, in the, I think in last year there was something like 900,000 suspicious activity reports filed in the UK. Um, in the, in the US it's over 3 million. Um, Canada has some incredible quantity like 10 million. I don't know why. Um, it is unbelievable quantity of paperwork. There's no one to read them because no law enforcement agency don't have enough people to read them. So you basically just, this astonishingly expensive system, um, financial crime compliance every year costs about $200 billion US, um, and just unimaginable amount of money in order to comply with the system and produce all of these reports. I mean, just to put that into context, $200 billion, if you were to just take that money and do something else with it, that would be sufficient to solve world hunger and to provide clean water and sanitation for everyone on Earth, and you'd have $50 billion left over to do other things with. Um, and yet that's what we're spending every year on financial crime compliance while failing to stop financial crime.

Well, I mean, there is an argument that the situation would be even worse without this, um, which is possible. Um, but I don't think that's a very good argument. I think if we had, if we had that approach to sort of health care that, um, you know, yes, okay, it's terrible that loads of people are dying of cancer, would we spend $200 billion on the system and more people would be dying of cancer if we weren't spending that money? I don't think that's a good argument. I think we should be saying, well, actually, should we be, be spending the money more efficiently? Um, and you know that, and you know, and it is particularly egregious because the system that's been created and, and since, uh, September the 11th, 2001, um, the system was then adapted to also fight terrorist financing. So it goes much further than just tackling money that derives from crime. It's also attempting to tackle terrorist financing as well. Um, and so that means that it has, you know, if, if financial institutions get caught moving dirty money or even worse, moving money for terrorists, the consequences are very serious. I mean, the fines that they face could be, you know, billion-dollar fines, two, three, four billion-dollar fines. It, it, you know, it's very serious. So they will always over-report absolutely everything just to make sure that they've reported anything that might have the tiniest bit of suspicion, which just, it's just a sort of, you know, giant spam assault on the law enforcement agencies, which achieves really nothing at all.

FATF.

So after 9/11, for very obvious reasons. I mean, you know, the world was appalled. The world changed overnight, instantly, and, and rightly. And there was a, a tremendous effort to try and find a way to make sure nothing like this could ever happen again. And one of the first things that the George W. Bush White House said was, you know, terrorists depend on financing, the money that came into the terrorists. Those 19 hijackers have been living in the United States. Someone had been paying for them. Um, so we need to make sure that we can track those movements of money and, and if, if the money doesn't get to them, they won't be able to live and they won't be able to commit their terrorist acts. And so, you know, that was a totally legitimate and rational thing to think. I mean, ironically, as the later investigation into the terrorist acts showed, that there would have been no way of, there, there was no suspicious transactions to look for, but initially at that point it was felt that that was a good way of doing it. And so they, they passed these new, they added various regulations to the things that the Fed, the FATF did, um, which meant that banks had to look for terrorist financing. Problem is that no one knew what terrorist financing looked like. No one had any idea. Um, but it was felt that Muslim charities had been funding terrorism. It was felt that, that there were people who were contributing, um, the alms that, that devout Muslims pay and that, that money had been diverted to fund terrorism rather than good causes. And so it does say in the FATF's sort of guidelines, um, that essentially you should look for charitable organizations targeted at, they don't say Muslims, they say a certain community, but you know, it's pretty clear what they mean, that you should pay, pay special attention to charities that fund Muslims. Um, and this was, I mean, this isn't to deny that some charities probably were involved in funding terrorism, but it was also absurd because also organized crime was funding terrorism, governments were funding terrorism. Um, you know, that terrorists had their own, you know, people like Osama bin Laden who were just rich, who were funding them or whatever, but this idea stuck that it was charities in particular. And since then there has been, I mean, and this, that was sort of 25 years ago, this scrutiny on Muslim charities has been relentless and constant. And, and one of the really difficult things is, is that, you know, Muslim charities and individual Muslims lose their bank accounts because of suspicions of being connected to terrorism or the possibility that there might be suspicions at a far higher rate than everyone else does. But it's something that no one talks about because it's incredibly shameful. And if you publicize that it's happened to you, you're definitely not going to get a bank account again. Say, 'Why did I lose my bank account?' 'Oh, he lost his bank account. We won't give him another bank account.' So, no one is willing to talk about it. But there have been investigations by, um, in, actually in the US, in Canada, in the UK and in Holland and in other places that show that this is happening at a really massive rate. And I was, I really wanted to write about this because it's, it's a terrible side effect of what was intended to be a good policy. The fact that you're essentially discriminating against an entire class of people. Um, and I managed to, fortunately, a friend of mine called Hamish Wilson who runs a really amazing, uh, charity near me in Wales. Um, uh, incredible story. I don't really have time to go into it, but his dad was a war hero, won the Victoria Cross fighting in Somaliland and his friend and sergeant died alongside him. And in the honor of his friend, Sergeant, um, they sold the Victoria Cross and bought a farm in Radnorshire in Mid Wales and set up a cultural center for, for ethnic Somalis in the UK to go to, to visit, so they could get out of the city, learn about their culture from, you know, from, in a, in a sort of rural setting and, and, and to really appreciate what Britain has to offer rather than just what you see in Cardiff or Manchester or London or whatever. It's an incredibly wholesome project. I mean, and it's, and it is lovely to visit. You got these, these all these city kids in, in white trainers sort of splashing around among cowpats and everything. And speaking as a farmer boy, it is, you know, very funny to see. Um, but every single time he gets paid for the expenses of the charity by community groups who are coming to see him, he gets called by the bank who say, 'Where's this money come from? Who are these people?' And he says, 'I run a campsite on a farm in Wales.' And they go, 'Who are these people who are giving you money?' And then the people who collect the money, um, you know, will literally, they will lose their bank accounts. I mean, I, and this, this, this chapter was excerpted in The Guardian today, um, and, uh, and Hamish wrote to me, emailed me just now to say that since the article came out in The Guardian, 30 different of his Somali friends wrote to him and said, 'Oh, that's happened to me too,' you know, and he didn't even know. So it is this, this entrenched policy which is supposed to be keeping us safe from terrorism is instead excluding an entire group from, discriminating against them purely on the basis that they're Muslim. Um, it, I mean, it's doing precisely the opposite of what it's supposed to be doing. And actually since, um, March, uh, so February 2022 and the full-scale invasion of Ukraine, it's actually started doing that to Russians as well. Like ordinary Russians have also started losing their bank accounts in very large numbers. So people who are originally from Russia but are living in the UK or other European countries or North America are losing their bank accounts because of the fact that they're Russian. And, and, you know, essentially the bank said, 'Well, they might have a connection, you know, or, or there is some possible connection to an oligarch. We need to de-bank them.' And yet the actual oligarchs who have been sanctioned, they get, the lawyers can go to court and win them, you know, an allowance for them to be able to continue to use their bank account. So you have oligarchs who have a monthly allowance of £60,000 to keep their household going. And meanwhile, ordinary Russians who are just trying to run a business in East Anglia are losing all of their bank accounts altogether. And, you know, there is a particularly mad example with, um, one of the allies of the Russian opposition leader Alexei Navalny, who after he was arrested and, well, he was poisoned and then killed, uh, she left the country and they tried to set up a continuation organization in, in Lithuania called the Free Russia Foundation. Um, and the bank wouldn't give them a bank account because it had the word Russia in the title. Um, despite the fact that they were literally the people opposed to what Putin's doing. It is, it's madness and, and it's so frustrating to look at it because it's a, it's not, it's not that just that it's not achieving anything, but it's actively driving the people away who you want to include.

But so what was extraordinary about that example, and there have been some examples in the US particularly with, well, well-connected, uh, people who've invested heavily in crypto, um, so Marc Andreessen and a couple of others, um, is, is that they've talked about this as, as a great injustice that's been done to them as if it's only being done to them. Um, but actually this is happening to hundreds of thousands of people. Um, and, and, you know, they, it's like they've suddenly discovered this. And, but what's, what's particularly difficult, particularly about the Nigel Farage case is that he had a point, right? It was really, it was wrong that he lost his bank account because of his political views and that shouldn't be the way it's done, but you have no appeal under the, you don't, no one has a right to a bank account, um, you know, not in this country anyway. So you, you have to, you know, it is, it is this incredibly intrusive system that has been established that obliges banks to blow the whistle on, you know, essentially even pretty blameless people. Um, and, and you have no appeal against it. You have no way of, of arguing that actually you're perfectly fine. It's just someone else with the same name as, or, or whatever. And, and once it's happened, it's happened. And, and the reason beyond, as I say, beyond the sort of staggering discriminative nature of it that it's so frustrating is because essentially banks are, are taking the easy way out in finding, in, in targeting the marginalized, the wrong people entirely, wasting all their time with them because the people who are actually committing the crime of money laundering, they don't actually see that, you say, as inherently bad. That's actually something that they have in their mindset, that isn't a morally bad thing to be doing.

I mean, this is the, so, I mean, this is the amazing thing about crypto. Um, I didn't want...

I didn't want to write about crypto in the book just because I find crypto people really annoying.

Um, I mean, they are, aren't they?

In a can. There's this, yeah, and I can't remember the full quote, but there is the...

It's so frustrating. So, the Donald Trump White House is very crypto friendly. And the Trump family crypto business is called World Liberty Financial. And it isn't — I mean, it is a crypto business, but really it's just a way of investing in the business for people who want — probably be careful what I say. It is a useful way to invest in a Trump family business, I suppose we could say like that. And anyway, one of the people who runs World Liberty Financial famously said — there's this astonishing video of him driving his Rolls-Royce and saying that, what's it? You could sell 'in a can' wrapped in human skin, and if you've got the right story, anyone will buy it. And there's basically 'in a can'. That's it. It's a sort of point.

Which he's now selling around the world on behalf of the Trump family. Anyway, leaving you...

But the amazing thing about crypto, and the really worrying thing about the way that it's been embraced by the United States, is that it exists outside of the anti-money laundering system that's been built up. So for all of its, you know, inefficiency, the global anti-money laundering system, which is very expensive, does involve an awful lot of people checking transactions. So if you wanted to move a large amount of criminal money via a big British bank or an American bank, you'd probably get caught. I mean, it would be a foolish thing to do. Fortunately, there are lots of other ways of moving money, so they don't need to worry about that. The amazing thing about crypto is it's instant. So unlike other ways of moving money, which involve, you know, shipping things via the trade system, or buying a luxury handbag in Bicester Village and then taking it to China and selling it — all of those things which are useful ways of moving value around the world — the incredible thing about crypto is it's completely instantaneous, and it is a really growing new way of laundering money. But it isn't replacing, to answer your question, it isn't replacing the original ways of laundering money. It's just on top of them. So you've got all of the ways people used to launder money back in the 1970s when it was just all about cash and taking it into a bank in Miami and paying it in. And then on top of that, you have buying luxury handbags and shipping them around the world. Then on top of that you have crypto, and on top of that you have lots of other things. So every single way of laundering money is itself very, very difficult for any law enforcement agency to uncrack, because it involves understanding this incredible network of people and trade and everything. But when you add one on top of the other on top of the other on top of the other, it's like every single time it gets squared and then cubed and then quadrupled, if that's the word. And that is just immeasurably harder. And it is, you know, I mean, we could get to what should be done about this, but what's particularly difficult about this, what's particularly annoying, is at the heart of all of this stuff, still at the heart of money laundering, as it was back in the 1970s, is cash.

Cash. Banknotes. And...

That's what I was gonna say. Like, does anyone use cash much anymore?

Where we go? One. We got one. So if you look at two people, two cash users. But if you look at the country as a whole — and I'm not saying you guys are brave outliers — but the country as a whole, only 9% of transactions in the UK are now made using cash. It's the lowest percentage ever. It's down from about 50% just a decade ago. And across the world this is true. Although in some countries cash is more popular — it's still very popular in Germany and Austria, for example — but the proportion of transactions using cash are falling all the time, pretty much everywhere.

And yet...

It goes up all the time. I visited the Federal Reserve's cash printing factory, which is in Fort Worth, Texas.

See, they've got two. They've got another one in Washington that I visited as well. And these factories are amazing. I mean, they have these huge cream printing presses which are as long as from me to the end of the room, and they are unbelievably fast. I mean, the sheets fly past so quickly you can't tell what denomination they are. They print 82 banknotes a second, all day, every day. That's about, you know, one and a half million a day. It's really incredible to watch what they're doing, but they can't keep up with demand. They're building a whole new printing facility in Maryland to keep up with the demand for cash. But what's weird about it is there isn't demand for cash. If you look at all the statistics about cash being used in transactions in the US, it's like it is here — it goes down all the time. So who is using all this cash? And the answer is obvious. This is criminals using it to finance their crime. And what's particularly egregious about this is that this is a really profitable thing for governments to do. How much does it cost to print $100 bills? About 10 cents, and yet you make $100 every time you print one. So it's probably — I mean, I'm pretty sure that building in Fort Worth, Texas is the most profitable building in the world because it produces probably something like one and a half billion dollars' worth of banknotes every single day. So that's essentially one and a half billion dollars in pure profit. And so you have this system which is discriminating violently against the kind of people who want to go camping in Rhyl. It's costing the financial system, and therefore all of us, $200 billion a year. And meanwhile, in order to service the demand of criminals for cash, we have governments making truly colossal profits out of printing banknotes. So there's a degree of hypocrisy and wrong-headedness that is — I mean, you say it makes you cross reading this. I genuinely — what's weird about it is I end up being cross three times. Because I research this and I'm like, this is appalling. How did I not — I always think, how did I not know this? This is so dark. And then I forget about it because I research a different chapter and collect all the information, and then I sit down to write it and I start writing it. I'm like, this is appalling. How the hell did I not know this? And having forgotten that I did. And then I end up reading the manuscript and I'm like, oh my god, who wrote this? This is awful.

Why is no one pointing this out exactly? Why is no one — this seems quite an obvious thing to notice.

So 20 years ago, the most popular, most common bill that was being produced by the Federal Reserve in the US was the dollar bill. And then the second most common was the $20 bill. And the third most common was a $100 bill. And you can see that makes a degree of sense. But then $100 bills have been on a bit of a tear. In 2008, it overtook the $20 bill. In 2016, it overtook the dollar bill. And now the $100 bill is the most common bill produced by the Federal Reserve. It is actually 80% of all the dollars they produce are in the form of $100 bills, of which almost all of them leave the United States — about 70% of them leave the United States and are used overseas. So this is — I mean, they're being used. What's really weird about that is if you were in Fort Worth and you'd visited this factory, which I really recommend if you do go to Texas, it's super interesting and they're really lovely there. Everyone there is really friendly. There's a guy who welcomes you, goes 'howdy y'all' at the beginning of doors. It's great. Love it. I'm a sucker for that stuff. Anyway, but if you were to go into Fort Worth and try and buy a coffee in Starbucks with $100 bills, they'd be like, 'Do you have anything smaller?' So the money isn't even being used by ordinary people.

So it's completely...

HSBC, which was found to be complicit in laundering colossal quantities of cash for the drug cartels in Mexico, and was rightly punished and fined — I forget, I think 1.3 billion, I can't remember, it was a massive amount of money they were fined anyway, I can't remember exactly how much it was — and other banks the same have also been fined huge amounts of money. And yet what they were laundering was US dollars produced in ever larger quantities by the US government in Texas, essentially specifically so it can be smuggled south across the Mexican border and used. About $2 billion is estimated to be smuggled across the Mexican border every single year, and yet they don't apply the same rules to themselves that they apply to the businesses that they regulate. And this isn't a specific — I mean, the US is the most egregious offender here because it is the international currency, but the pound is the same phenomenon. People don't use sterling banknotes anymore, and yet the amount of banknotes in circulation went up 10% last year. It's almost 100 billion pounds of them out there now. The number of euros, the value of euros, has just hit an all-time high as well. About one and a half trillion euros are out there somewhere. And they have — I mean, in Switzerland they have a thousand-franc note. 80% of all the francs out there are in the form of a thousand-franc note. That's about a thousand pounds. It's a lot of money to have in one piece of paper. And you can't really do anything with it. It isn't like you can — I mean, you could tip someone if you were feeling very generous, but I think broadly speaking, you can't buy a meal with that because who's going to want to take it? It's like £50 notes. When do you ever see them?

Yeah. I mean, it's very profitable. Astonishingly profitable. It's one of the reasons why, going back to crypto, crypto is also — particular kinds of crypto, stablecoins, are very profitable for the US government as well, which is — I mean, they explicitly say they're encouraging them because it brings in so much money. But I mean, it is a complicated question there. I'm not saying policy-wise this is complicated. Central banks are independent and they like to be independent. How do they fund themselves? They fund themselves by printing money and taking the profits. So if we didn't have this money, then we'd need to fund central banks and that would cause policy issues. There are issues here, I appreciate that. But broadly speaking, there is a question of the cost to society that is caused by money laundering and all the crimes. If you think about fraud and theft and drug trafficking and whatever, people trafficking, like any acquisitive crime you think of, the damage that is done to society globally is immeasurable. And then if you think about that cost and you weigh that against the profit that is made by mainly wealthy Western countries by printing their currency, which is a lot of money, but it is clearly incomparable. We could easily surrender that profit just to not have that cost, and that calculation isn't being made. And this is — I mean, I'm not the first person to point this out. There's a particularly mad congressional committee hearing in the late 1990s when the euro was about to launch, and they announced that they were going to have not just the euro, but they were going to have a €100 bill, a €200 bill, and at that time a €500 bill. And there was a congressional committee hearing in which they were very concerned, and it literally said this, that this would mean that the $100 bill wouldn't be so popular with the world's criminals anymore, and that it wouldn't be — I mean, it's kind of amazing just reading the transcript to say they, you know, you just like he said the quiet bit out loud. It's like, but you shouldn't be saying this. You know, it's like, I think he said, 'we don't want to lose that franchise.' I think that's the word he used, franchise, because it's so profitable and such a useful way of essentially having an interest-free loan. But if you step back and net out the cost and the profit, it's obviously a bad trade.