It is as easy as one, two, three to become a currency dealer and take cash from the public in exchange for foreign money. For less than £1,000, you can set up with headed notepaper and a website showing you are approved by both the Financial Services Authority and by HM Revenue & Customs (although neither offers any consumer protection).
All you need is a spare bedroom, a computer, and a broadband connection. You can hide your location behind a maildrop and a non-geographic phone number. Some of Britain's 500-plus small currency dealers operate at this level.
Step one: register with HMRC under the money laundering regulations. This costs £110. There is a "fit and proper" person test but, as this is designed to prevent money laundering, it is easy to pass, although bankrupts, those banned from holding company directorships, and those convicted of certain offences, including money laundering, will fail.
However, critics suggest there is little scrutiny, given the low fee. HMRC is not interested in the business model, only that you won't launder money.
Step two: register as a "small payments institution" with the FSA. This costs £500. It is far less onerous than the full authorisation required for bigger firms, which involves solvency checks, probes on directors and a business model, including segregated accounts.
As an SPI, you won't need any of these. To register, your average monthly transaction turnover must not exceed €3m (£2.4m); the firm must be in the UK; registered for money
laundering; and none of the individuals should have been convicted of financial crimes. The turnover is an average, so you could do €6m one month and nothing the next. Crown was an SPI, so it would have been required to keep below the £3m average.
The form is simplicity. You tick a box to say you are not a criminal and your turnover will stay under the monthly average. The FSA will not say how many checks it makes but, again, the small fee rules out major probes. Those in the business suggest that once registered, you are on your own.
Step three: form a limited company, which costs around £150 for an off-the-shelf firm. This will ensure you have no personal liability if you hit trouble.
That's the formalities over, and you still have some £250 left from your £1,000 budget. Now all you need is a bank, or other currency supplier, plus a website, and you are in business.
Mark Bodega of authorised firm HiFX says: "Over the past decade, the number of currency brokers has multiplied from 15 to over 150, thanks to overseas property buying and migration. A vast number who display the FSA and logos are only registered, and anyone could run a firm like this from home.
"We believe this is all too easy, and that regulation does not go nearly far enough. There may well be other companies collapsing. How many more failures will we need before the rules are tightened?"