Watchdog Warns Banks On Post Office Money Laundering

Summary of Development

A series of measures designed to reduce the risk of money laundering via the Post Office have today been set out by the FCA.

The regulator brought together partners including the National Economic Crime Centre (NECC), industry and government to strengthen controls while seeking to ensure that legitimate customers can continue to use the Post Office for Everyday Banking.

The measures set out for banks today include:

• A move towards card-based transactions and away from paying-in slips, where possible, to allow enhanced monitoring. 
• Upskilling staff to spot patterns of suspicious activity. 
• Enhancing monitoring capabilities in banks which allow them to identify suspicious activity.
• Reducing cash deposit limits at the Post Office, subject to customer arrangements, to below the existing limit of £20,000 per transaction. Banks should take a data-led approach and consider whether a tailored offer is appropriate.
• Reducing the time taken to submit Suspicious Activity Reports to the National Crime Agency (NCA), enabling them to take timely action.  
• Improving intelligence sharing so that information is passed on to other firms, law enforcement and the FCA on a regular basis.

Post Offices are an important part of protecting access to cash for people and small businesses. FCA research found 6% of adults in the UK used cash to pay for everything over the 12 months from May 2021, with this figure increasing (9%) for those in vulnerable circumstances. While most people have reasonable access to cash, it is vital that any money laundering protections don’t get in the way of legitimate customers and businesses accessing services at the Post Office.  

Sheldon Mills, Executive Director of Consumers and Competition at the FCA, said: ‘We have worked in partnership with law enforcement, industry and government to ensure people and businesses can still draw on the vital cash banking services provided by the Post Office, while addressing gaps that criminals could abuse. This important work is part of the FCA’s three-year strategy on reducing financial crime and increasing consumer protection.’

The NECC estimates that hundreds of millions are laundered each year through the cash deposit channel at the Post Office. While banks have made good progress in improving safeguards, including a 43% drop in the time taken to report suspicious activity at Post Offices, there is still more work to do.

The FCA expects banks and the Post Office to keep their controls, including those newly introduced, under review to ensure they are proportionate to the risk and suitable for their customer base, using data to refine measures where needed as the money laundering risks evolve.  The FCA will test the safeguards put in place and this work will consider whether firms have taken steps to protect access to cash at the Post Office for legitimate customers.

Links:https://www.fca.org.uk/news/press-releases/financial-watchdog-puts-banks-alert-fight-against-money-laundering-post-office