Written evidence submitted by the Centre for Finance and Security, Royal United Services Institute (SOC0048)

About this submission

At the Centre for Finance and Security at the Royal United Services Institute (RUSI), we examine how illicit finance is the lifeblood of serious and organised crime (SOC) and national security threats. We have conducted work across a range of threats to the UK and the intersection of illicit finance and SOC, for example, the security implications of the online fraud epidemic and the role of money mules, the effectiveness of a sanctions regime that targets organised immigration crime, and the direct threat posed to the UK by Chinese and Russian professional money laundering networks. Further details of our programme and activities can be found at the end of this submission.

In summer 2026 we will release a research paper, co-authored with Associate Fellows from the National Economic Crime Centre (NECC) at the NCA and UK Finance, which combines CFS’s expertise in money laundering, financial regulation and national security to examine the issue of high street money laundering in the UK. This submission draws on the research we have conducted for this forthcoming paper, and we would welcome the opportunity to give oral evidence to the Committee on our findings.

Background: high street money laundering

1. In the last six years, public concern has grown about the number of cash-intensive businesses with potential links to organised crime on the UK’s high streets. High street money laundering, which is the laundering of the proceeds of crime through cash-intensive retail and/or service businesses, is not necessarily a new phenomenon, however it has become increasingly visible in recent years not least as the number of legitimate businesses on the UK’s high streets has declined.
2. Fiat currency remains attractive to criminals because it is anonymous, difficult to trace and widely accepted. Cash-intensive high street businesses provide a relatively simple mechanism for blending illicit funds with legitimate revenue streams and introducing them into the financial system. The full scale of this activity is not currently known: of the estimated £12bn of criminal cash generated in the UK annually, the proportion laundered through high street businesses has not been reliably quantified.

Why has high street money laundering grown as a problem?

3. High street money laundering is not a new phenomenon, but several compounding changes in recent years have increased both the visibility and prevalence of illegitimate businesses in local communities. Over the past decade, consumer habits have changed considerably in favour of e-commerce, most markedly in the wake of the Covid-19 pandemic. As a result, a significant proportion of high street premises have been left vacant. In response, successive Governments have introduced measures to reduce the number of empty stores, such as High Street Rental Auctions, in which a local authority can put the leases of persistently vacant properties up for auction. Initiatives such as this have placed additional pressure on landlords to fill their properties.
4. In England, the additional pressure on landlords has coincided with planning reforms which, while implemented in a bid to help struggling high streets by easing restrictions around planning permission for commercial lots, have substantially curtailed local councils’ ability to vet potentially suspect businesses before they open. The 2020 reforms merged what had previously been separate categories of commercial use (e.g. shops, offices, restaurants, gyms) into a single category: Class E. Changes of use within Class E do not constitute “development” in planning terms, meaning a bookshop can become a beauty salon without any planning application to the local authority. While councils retain limited tools such as Article 4 directions, in practice landlords now have much greater power to decide what kinds of businesses open on local high streets, and a much greater financial incentive to accept any paying tenant.

Enhancing the response

Learning from partners

5. The misuse of legitimate business structures to generate and launder criminal proceeds is not a uniquely British problem. Indeed, many EU member states have grappled with comparable challenges, and over the past decade have developed what is known as the “administrative approach” to tackle such crimes. The European Network on the Administrative Approach (ENAA) defines the approach as “a complementary way to prevent and tackle the misuse of the legal infrastructure through multi-agency cooperation by sharing information and taking actions in order to set up barriers”. In practice, the approach involves three core elements: mapping the administrative tools already available to local authorities (licensing, planning, environmental health, trading standards and similar levers); equipping and empowering those authorities to deploy these tools against organised criminality instead of simply treating them as discrete regulatory functions; and embedding joint working and information-sharing between and among local and national level actors as standard practice. In line with other initiatives, such as taking a finance-led approach, the administrative approach is explicitly designed to complement, rather than replace, the criminal justice response.
6. We recommend that the UK engage with the ENAA to assess the applicability of the administrative approach in the UK context, including through a feasibility study examining how existing local authority powers could be mapped, coordinated and deployed against high street money laundering.

Commercial planning

7. The 2020 reforms to England's Use Classes Order, while welcome in their intent to give struggling high streets greater flexibility to adapt to changing consumer habits, have substantially curtailed local authorities’ ability to shape the composition of their high streets. While councils do retain limited residual tools, such as Article 4 directions, in practice the default decision over what opens on a given high street now rests in large part with landlords who are under financial pressure to fill vacant lots.
8. Restoring a measure of oversight, in a way which is carefully calibrated to avoid reintroducing the friction the reforms sought to remove, could help local authorities identify and respond to high-risk business activity before it becomes a widespread issue in their respective area. Changes of use into designated high-risk categories would require notification to, but not necessarily full planning permission from, the local authority. This would enable councils to: (i) build a real-time intelligence picture of the business composition of their high streets; (ii) flag anomalies, clusters or unusually rapid turnover for further inquiry; and (iii) monitor for the potential displacement of activity in neighbouring areas following successful enforcement efforts in another.
9. We recommend the introduction of a high-risk sub-category within Class E, covering business types designated by local authorities as posing elevated money laundering or organised crime risk (for example barbershops, vape shops, mini markets, car washes, nail bars, et cetera).

Commercial property and due diligence

10. Commercial landlords currently have no statutory obligation to scrutinise the nature of a prospective tenant’s business, and have a strong financial incentive to accept any paying occupant. Extending due diligence obligations to commercial landlords would align this sector with other parts of the anti-money laundering framework and address a clear vulnerability.
11. We recommend the inquiry considers introducing statutory “know your tenant” obligations on commercial landlords, including verification of identity, source of funds for deposits and rent, and basic due diligence on the prospective business. Penalties should apply for non-compliance, with escalating liability where landlords knew, or ought to have known, of criminality. This could be delivered through amendment to the Landlord and Tenant Act or through new primary legislation.
12. A “know your tenant” regime would be considerably more effective if supported by better data on commercial property itself. At present, there is no comprehensive picture of who owns and occupies commercial premises across England and Wales, which limits the ability of landlords, law enforcement and regulators to identify patterns of ownership, links between businesses and indicators of organised activity. The House of Lords Built Environment Committee’s November 2024 report recommended that the Government fund local authorities to develop and maintain databases of commercial property ownership and occupancy. While that recommendation was not made in the context of money laundering and was rejected by the Government, it merits revisiting on these grounds.
13. We recommend the Government revisit the Built Environment Committee’s proposal and fund the development of comprehensive commercial property ownership and occupancy datasets, with provision for sharing between jurisdictions and with law enforcement.

Data and intelligence

14. A key issue identified in our forthcoming research on high street money laundering is the fragmentation of data and intelligence across the system. At present, there are no mechanisms which provide a comprehensive national picture of the scale, typologies or geographic distribution of high street money laundering, and the evidence base remains largely anecdotal. While multi-agency operations such as Operation Machinize have demonstrated the value of collaboration, the bodies on the front line of the response (local authorities, Trading Standards, and local police forces) do not consistently have structured access to the information needed to identify and act on emerging risks. Strengthening data-sharing between law enforcement, local authorities and the private sector, building on initiatives such as the NECC’s Data Fusion partnership with the major high street banks, would substantially enhance the system’s ability to detect, disrupt and prevent high street money laundering.
15. We recommend that the cross-government taskforce announced in the Autumn 2025 Budget prioritise the establishment of formal data-sharing routes which connect law enforcement, local authorities, regulators and relevant private sector actors to ensure all parts of the system engaged in tackling high street money laundering can access and share usable intelligence. CFS’s Future of Financial Intelligence Sharing programme has conducted extensive research in this area and is well placed to assist HMG consider the options which would be most feasible to implement.

Burden of proof

16. Additionally, our forthcoming research demonstrates that authorities face considerable difficulty in taking action against suspected high street money laundering operations. As it stands, the onus rests with the authorities to establish that a business is engaged in criminal activity before they can pursue action; meeting this threshold is often difficult to do in a timely fashion and is poorly suited to the speed at which these businesses operate. Even where strong intelligence exists, the burden of evidence creates delays in authorities’ ability to act, leaving bad actors free to trade and to quickly dissolve and reconstitute operations before enforcement catches up.
17. There is, however, precedent in the UK framework for shifting this burden where the public interest justifies it. Unexplained Wealth Orders, introduced under the Criminal Finances Act 2017, require an individual to account for the legitimate origin of assets where there are reasonable grounds for suspicion, rather than requiring the authorities to prove criminality at the outset. Instituting a comparable civil power in the high street context could provide authorities with an agile disruption tool, while preserving the procedural safeguards which distinguish civil powers from criminal sanction. Such a power could be effected by enabling law enforcement or Trading Standards to temporarily suspend the trading licence of a business where reasonable grounds for suspicion exist, with the suspension lifted once the operator can demonstrate the legitimacy of their business.
18. We recommend that the Government consult on the introduction of a civil power enabling the temporary suspension of a business’s trading licence where reasonable grounds for suspicion of involvement in money laundering exist, with the burden falling on the operator to demonstrate the legitimacy of their business before trading can resume.

Conclusion

19. High street money laundering has become more visible in recent years, but the temptation to respond to that visibility with premises-by-premises enforcement should be resisted. The increased prevalence of questionable barbershops, vape shops and mini markets that have drawn public and political attention are symptoms of deeper structural vulnerabilities in planning, commercial tenancy frameworks, data sharing, and enforcement capabilities. Failing to consider these vulnerabilities will risk in any progress being short-lived.
20. The recommendations set out in this submission are intended to work together: restoring local authority oversight of high-risk business types; placing due diligence obligations on the commercial landlords who are currently the de facto gatekeepers of the high street; building the data infrastructure which landlords, councils and law enforcement need to identify potential criminal activity; and giving authorities enforcement tools that enable them to keep up with the criminals.
21. Legislative opportunities to address illicit finance on this scale are rare. This inquiry is a chance not only to respond to high street money laundering as it currently presents, but to address the structural conditions which will otherwise continue to generate it.

About CFS

Since its formation in 2014, CFS has focused on matters at the intersection of finance and security. CFS uses its evidence-based research and convening power to support policymakers, law enforcement agencies and the private sector across the globe, as well as undertaking extensive engagement with multilateral bodies.

CFS’s work in this area is grounded in a combination of long-running research, practical policy engagement and direct support to UK stakeholders. This includes the Economic Crime Plan Online Tracker, which provided an independent assessment of government delivery, as well as a body of research examining the effectiveness of the UK’s anti-money laundering supervisory regime, the role of professional enablers in facilitating money laundering, and the links between illicit finance and serious and organised crime. CFS researchers have regularly provided written and oral evidence to Parliamentary committees on issues such as fraud, AML reform and the risks surrounding cryptocurrencies.

May 2026