In the 1960s, Reggie Kray is a former boxer who has become an important part of the criminal underground in London. At the start of the film, his twin brother Ron is locked up in a psychiatric hospital for paranoid schizophrenia. Reggie uses threats to obtain the premature release of his brother. The twins unite their efforts to control a large part of London's criminal underworld, made easier when the head of the south London Richardson Gang (a.k.a. the Torture Gang) is imprisoned. One of their first efforts is to muscle-in on the control of a local nightclub, using extortion and brutal violence.

While Reg is in prison, Ron's mental instability and violent temperament lead to severe financial setbacks at the nightclub. The club is almost forced to close after Ron scares away most of the customers. On the first night after Reg's release from prison, the brothers have an all-out fist fight, but they manage to partially patch things up.

The brothers are approached by Angelo Bruno of the Philadelphia crime family who, on behalf of Meyer Lansky and the American Mafia, wants to engage them in a crime syndicate deal. Bruno agrees to a fifty-fifty deal with Reg to split London's underground gambling profits in exchange for local protection by the brothers. Initially, this system is highly lucrative for the Kray brothers; however, Ron's paranoia and inclination towards violence causes problems for Reg's efforts to maintain control. Ron's barely concealed volatility results in him publicly murdering George Cornell, an associate of the Torture Gang. As a result, Scotland Yard opens a full investigation of the Kray brothers.

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