Banks must do more to tackle Post Office cash-based money laundering, warns FCA
The UK’s financial watchdog “put banks on alert” as it announced a series of measures to step up the fight against money laundering through the Post Office.
Tackling financial crime is a key objective for both the Financial Conduct Authority (FCA) and the government. Last month the government announced part two of its Economic Crime Plan, which included a clamp down on money laundering.
The National Economic Crime Centre (NECC) estimates that hundreds of millions of pounds are lost through cash-based money laundering at the Post Office each year.
The FCA said banks have made “good progress” but there was still more work to do.
Banks were asked to reduce the deposit limit at the Post Office to below the existing £20,000 limit per transaction and to upskill staff to spot patterns of suspicious activity and improve intelligence sharing.
The FCA expects banks and the Post Office to keep controls under review. It will also test the safeguards put in place, including whether firms have taken steps to protect access to cash at the Post Office for legitimate customers.
The regulator also asked banks to strike a delicate balance between tightening controls while allowing legitimate customers to use Post Offices for everyday banking.
Why is the Post Office a focus for money laundering?
Post Offices are becoming an increasingly important source of cash as bank branch closures continue in 2023. The FCA said it was “vital” that money laundering protections do not “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.”
A Post Office spokesperson said: “ 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 today, 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.”