The collapsed foreign exchange firm founded by the former deputy mayor of London, Rajesh Agrawal, was used in an alleged £365m money-laundering scheme while he was chief executive, City A.M. can reveal.
RationalFX, co-founded in 2005 by Agrawal, the former deputy mayor of London for business and current Labour candidate for Leicester East, claimed to have handled over $12bn worth of international payments before it folded into administration in November last year.
However, previously unreported court documents reveal the payments outfit was linked to an alleged money-laundering operation orchestrated by Bradford-based gold firm called Fowler Oldfield.
The documents relate to a landmark criminal case brought by the Financial Conduct Authority against Natwest over its failure to properly monitor the activity of Fowler Oldfield, which deposited around £365m into the bank between 2012 and 2016, including £264m in cash.
According to a suspicious activity report, filed as evidence by the prosecution in the case in 2021, millions of pounds deposited by the gold merchant were whisked out of Natwest bank accounts and onto RationalFX.
“By the time of [one suspicious activity report], around £12.7m had already been paid from this account to RationalFX, an [money services business] providing foreign exchange services,” the document read.
After suspicions were raised over deposits by Fowler Oldfield into Natwest accounts on a separate occasion, a reviewer of the complaint flagged payments on to RationalFX’s platform.
“The reviewer also noted payments to numerous beneficiaries including recurring credits to businesses in the gold and jewellery trades. She also notes payments to MZ Personnel, Place Trading and Rational FX,” the Suspicious Activity Report read.
A third review of one suspicious activity report read “payments to […] Rational FX are noted”.
The reports were submitted between 2014 and 2015. Agrawal was chief executive of the company at the time but stepped into a non-executive director role in 2016 when he was appointed deputy mayor of London for business. He resigned from that position in 2022 a year before RationalFX’s collapse, and he is now standing as a Labour candidate in Leicester East.
The revelations raise questions over the anti-money laundering controls at Rational FX and the leadership of Agrawal, who won plaudits for building the company from scratch prior to its collapse last November.
He has made his entrepreneurial background a key pillar of his campaign for the safe seat of Leicester East.
“As a fintech entrepreneur, I built a team that challenged the status quo by lowering the cost of moving money for migrant workers and businesses alike,” he writes on his campaign website.
Customers of the company are awaiting a crunch report from administrators in the coming weeks which could shed light on how much cash they are able to claw back from the company. According to a report in January, they have been left £14.9m out of pocket due to a “shortfall in safeguarded funds” and lacklustre tracking of its trading book.
Former clients of the firm demanded answers from Agrawal earlier this week over his role in running the company and what he knew about its mismanagement. He stood down the year before it filed for administration.
After City A.M. contacted Agrawal for comment, a Labour Party spokesperson replied: “Rajesh Agrawal stood down as CEO in 2016 and took up a role as non-executive director and was not active within the business. He stood down as a non-executive director in 2022.”
Agrawal has not been investigated by police, City A.M. understands. A spokesperson for Agrawal claimed the company complied with all anti-money laundering regulations while he was in charge.
The FCA said it cannot comment on individual companies. However, its inquiries into the circumstances surrounding the company’s collapse are ongoing.