FCA cracks down on money laundering via the Post Office
The National Economic Crime Centre (NECC) has estimated that hundreds of millions of pounds is laundered each year through the cash deposit channel at the Post Office.
As a result, the city regulator is aiming to address weaknesses in anti-money laundering controls at Post Office counters.
As more bank branches close, the Post Office is offering personal and business customers a range of banking services, including cash deposit services, via the Everyday Banking facility.
Some banks limit how much cash customers can deposit via the Post Office to £20,000 per transaction. But criminals have been abusing this rule by paying in multiple deposits of £20,000 each day to launder large amounts of cash quickly.
FCA research, which has not been detailed, found it was easier for criminals to use a Post Office branch rather than a bank branch to launder money.
The regulator has set out how it wants banks to tackle money laundering with new guidelines about transaction verification, staff training, transaction monitoring, and deposit limits.
It wants banks to reduce cash deposit limits to below the existing £20,000 per transaction, pointing out that the limit of £20,000 per transaction, with unlimited transactions per day, could not be justified for legitimate businesses or personal customers.
The FCA is proposing a limit of £1,000 per 24-hour period and £10,000 per 12-month period for personal customers. For business accounts, it is asking banks to consider adopting a tailored approach based on “expected business customer activity”.
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.”
‘Legitimate customers should not be unfairly penalised’
A Post Office spokesperson, said: “We welcome the FCA announcement seeking to ensure that legitimate customers can continue to benefit from Post Office’s everyday banking services.
“We have been warning since last December that cash deposit limits were having a detrimental impact on lawful deposits and withdrawals at Post Offices. Legitimate customers should not be unfairly penalised by having to travel many miles to city or town centre bank branches and be excluded from the essential local provision of cash and banking services that Post Offices provide.
“While we are pleased with the measures announced, there remains much more for the industry to consider, including a proper exceptions process to verify customers, as well as individual account checking by banks to further exclude money-launderers, while enabling bank-approved customers to use Post Offices’ vital services.”