It’s not just the U.S. dollar that’s popular with warlords and drug dealers. More than half of all British currency in circulation is located abroad or on the black market, according to the Bank of England (BoE). A report from the English central bank stated that only 25% of the nation’s cash is currently circulating in the regular economy.
The BoE report also stated that around one fifth of British residents keep over $500 worth of currency stashed away in a deposit box, mattress, or the like. Counting all the currency that has been issued for circulation, the total amounts to nearly $97 billion worth of British banknotes.
In a statement from the BoE, “The evidence suggests that no more than half of Bank of England notes in circulation are likely to be held for use within the domestic economy for legitimate purposes. The remainder is likely to be held overseas or for use in the shadow economy.”
Due to comparatively lax regulations on British firms, front companies engaged in money laundering operations are prolific. The anti-corruption group Transparency International (TI) stated as much in June this year, and has warned the nation before of its status as a criminal haven.
The famous police force at Scotland Yard issued a report in March that raised its suspicions of money laundering related to human trafficking, tax avoidance, and drugs. The laundering is done through property purchases via anonymous offshore companies.
For comparison, the United States’ 2015 National Money Laundering Risk Assessment estimates that $300 billion per year is involved in black market activity, which would account for 25% of the $1.2 trillion of U.S. currency available for circulation.
Due to changes in U.S. banking regulations between 2007 and 2013, in addition to new Mexican laws on U.S. currency deposits issued in 2010, there has been an increase in the holding and use of drug cash both in the U.S. and abroad.