How money laundering took over our high streets
American candy stores and vape shops are the new face of financial crime, hiding in plain sight, says Marit Rodevand
Walk down almost any British high street today and you’ll see them: neon-lit candy stores selling purportedly “American” sweets, vape shops and barbers with a faded poster of Cristiano Ronaldo taped to the window. Superficially, these look like the new face of post-pandemic retail, catering to shifting consumer demand.
But peel back the stickered windows, and a darker economy hums beneath the till. Recent police operations, which have seen hundreds arrested and thousands of shops raided across the country, make clear something much darker is happening on our high streets.
Take a singular transaction for example. A man walks into a vape shop and buys a £10 disposable vape. The owner then pockets the cash, so as to seem like part of a daily turnover that looks legitimate enough to the outside world.
But instead of declaring the true revenue to HMRC, a chunk of those earnings gets folded into an offshore network of shell companies registered under harmless-sounding names: “Cloud Retail”, “Sweet Candy Imports”. Funds are then shifted repeatedly between those shell companies, sometimes into accounts in low-visibility jurisdictions, often via payment processors or crypto exchanges. Each hop is intended to mix the funds and break the direct link between the original cash.
A significant portion of these companies exist only on paper, created with a few keystrokes on Companies House. Equally these firms are often trading invoices between one another for ‘stock’ that never exists.
Within days, that same £10 note – and thousands just like it – has been absorbed into a paper trail of fake suppliers, offshore accounts and shell entities. What started as a casual high-street purchase has now become a component of a vast global laundering network.
This is the new face of financial crime in Britain. Low-profile, high-frequency and hiding in plain sight.
The illicit high street economy
The UK’s money laundering crisis is no longer confined to luxury property and art auctions. High streets across the country are littered with empty or suspiciously transient shops: the “American candy stores” that took over Oxford Street following the pandemic or the vape shops that seem to multiply faster than they can sell stock.
Westminster Council has found that many of these stores owe millions in unpaid business rates and often cannot provide proof of ownership – regularly changing directorship and ownership is a principal tell-tale sign of money laundering.
The reason for their proliferation is simple. These are perfect vehicles for money laundering: cash intensive with rapid turnover and until yesterday minimal scrutiny. Beyond money laundering they operate as perfect cover for a slew of other crimes: tax evasion and fraud, human trafficking and the fencing of stolen goods.
The National Crime Agency estimates that more than £10bn is laundered through the UK each year. To put that into perspective – it is roughly equivalent to the country’s entire education budget.
The cost of looking away
We often refer to money laundering as disengaged from human suffering, as if the movement of illicit funds is a victimless crime that proves an irritant to banks and regulators but does little in the way of immediate and consequential harm. This couldn’t be further from the truth.
When dirty money floods local economies, it distorts real estate values for legitimate tenants, prices out real, genuine entrepreneurs and transforms town centres into hollow shells. At the foundations of these “ghost shops/towns” lies human exploitation, with many of these cash businesses reliant on underpaid, exploited labour.
It also encourages the trafficking in illegal and stolen goods. There is a clear correlation between money laundering networks and the phone theft epidemic that plagues Britain’s streets.
These shops are often connected to wider criminal enterprises, from modern slavery to drug trafficking, whose proceeds are laundered through those innocuous tills.
A system built to fail
For decades, Companies House has been among the easiest corporate registers in the world to abuse. Anyone could set up a company within minutes, with little more than a name (fictional or true, it needn’t matter) and an email address. No identity verification. No authentic oversight.
This has resulted in a corporate landscape so porous that fake directors like “Adolf Tooth Fairy Hitler” have actually appeared (and still exist) in official filings. Indeed, thousands of companies list the same registered address.
This laissez-faire approach was introduced to make the UK a corporate-friendly environment; in truth it has simply become fraud-friendly. Without real time data sharing between Companies House, HMRC and banks, criminals can open, operate and shutter businesses faster than authorities can track them.
The government’s recent Economic Crime and Corporate Transparency Act is a step in the right direction, introducing ID verification and new powers for Companies House to query suspicious registrations. But it is only the start. Technology and enforcement capacity must catch up with the scale of the problem. With the pace of criminal money movement, regulators can’t simply still be pushing paper.
The fix
Box-ticking is not going to be the solution for Britain.
Corporate data, financial records and tax information must be connected in real time, with regulators empowered with the tools to act on them. AI-powered systems already exist that can flag high-risk networks, detect circular direction and flag directors linked to multiple suspicious entities. The technology is already here. What is missing is coordination.
Crucially, we must stop seeing anti-money laundering as a back-office compliance task. It’s frontline national security. The same financial networks that launder drug money today may fund terrorism or sanctions evasion tomorrow.
The reforms to Companies House are encouraging. So too is the growing recognition among banks and fintechs that data-driven AML systems are not just ethical but competitive. But until that transformation takes hold, the UK will remain what too many criminals already view it as: the world’s laundromat.
The battle against money laundering won’t be won in Westminster or Whitehall. It will be won, or lost, on the high street.
Every time a cash-only barber opens next to a shuttered cafe, every time another “American candy store” mysteriously survives a rent hike, we must be asking: whose money is really keeping the lights on? The answer might tell us far more about Britain’s economic health than the FTSE ever could.
Marit Rodevand is CEO of Strise