The Financial Conduct Authority (FCA) has further strengthened Anti-Money Laundering (AML) controls in the UK by introducing at the end of April a series of measures designed to reduce the risk of money laundering via the Post Office.
The move comes as more people and small businesses turn to the Post Office’s banking services as an alternative to traditional banks as the shift to digital banking makes it more difficult to access cash.
The increased reliance on the Post Office for banking purposes has presented increasing opportunities for money launderers and other financial criminals. The National Economic Crime Centre (NECC) estimates that hundreds of millions are laundered each year through the cash deposit channel at the Post Office.
The FCA is keen to strengthen AML controls while seeking to ensure that legitimate customers and businesses can continue to access banking services at the Post Office. 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 to 9% for those in vulnerable circumstances.
The new measures, which are part of the FCA’s three-year strategy on reducing financial crime and increasing consumer protection, 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.
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.”
The FCA says that it expects banks and the Post Office to keep their controls under review to ensure they are proportionate to the risk and suitable for their customer base. The financial regulator will also monitor whether firms have taken appropriate steps to protect access to cash at the Post Office for legitimate customers.
Commenting on the changes, a Post Office spokesperson said: “We welcome the FCA’s announcement seeking to ensure that legitimate customers can continue to benefit from the 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 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.”
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