UK higher education institutions must be alert to suspicious financial activity

The reminder follows the release of the 2025 national risk assessment (NRA) (163 pages/2.58 MB PDF), the fourth comprehensive assessment of money laundering and terrorist financing risk in the UK. The latest NRA explicitly comments on risk in the schools and higher education sector.

Stacy Keen, financial crime and money laundering expert at Pinsent Masons, said: “Inclusion in the NRA signals a need for risk mitigation and controls in the higher education sector to avoid inadvertent non-compliance. Ignorance of risk is not a defence.”

The UK is home to some of the world’s leading universities, higher education institutions and private schools. Their strong international reputations make them attractive around the world, including to political and business elites and their families. This also applies to criminals and kleptocrats who may seek to use these institutions to launder their criminal funds and reap the reputational and professional benefits on offer for their children.

A number of reports have highlighted the risks associated with the abuse of the education sector by criminals. For example, one study found six recent incidents where a UK school or university had admitted a child of a West African politically exposed person (PEP) that had been convicted of corruption related crimes or had their assets seized. Other reporting showed that at least 14 leading universities had accepted further funding from Russian sources.

“Given the rise in sanctions against Russian PEPs and nationals since the invasion of Ukraine, as well as other unrelated sanctions, educational institutions should be careful to ensure they are not breaching UK sanctions,” said Keen. The National Crime Agency’s (NCA) first successful prosecution for a breach of the UK’s Russia sanctions included payment of school fees in breach of sanctions.

Keen said: “Institutions need to be alert to suspicious financial activity, especially involving overseas and third party payments. Risk based controls should be implemented.  This first necessitates identifying exposure to risk and the NRA highlights areas of concern.  Institutions should stress test whether existing controls would identify these risks before the materialise, and if the answer is 'no' new controls should be implemented, or existing controls enhanced, to protect the organisation from 'bad actors’.”

It is not just cash that poses financial crime risk. Receiving third party payments also creates risk, particularly if educational institutions fail to conduct additional checks on the payment. Students can also be victims of abuse by criminals by being used as ‘cash couriers’, when a student allows a criminal third party, either willingly or not, to use their student bank account to transfer criminal funds into and out of the country, in return for a proportion of funds laundered. This is often done to add an additional layer of obfuscation and legitimacy to transactions chains. Students can be enticed to do this to earn quick money, facilitate remittances to their home country or by entering a financial arrangement with a third party to settle tuition fees, with the third party potentially using criminal funds to do so. Whilst some students are actively complicit in this criminal activity, others may be completely unaware or may have more limited understanding of the illegality and potential consequences of the activity.

Victoria Goddard, university governance expert at Pinsent Masons, said: “It is important for universities to be vigilant: institutions may potentially be seen as soft targets as there are so many potential points of weakness. Any financial irregularity is bound to be looked at closely by the regulator, the Office for Students.”