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The FCA, the Post Office and Money Laundering

Author: Dr. Angelika Hellweger  9 May 2023
2 min read

Angelika Hellweger of Rahman Ravelli outlines the Financial Conduct Authority’s plans to tackle money laundering conducted via the Post Office

Banks shutting their physical high street branches and making the move towards digital banking has caused issues for those customers that need to access cash. While the Post Office has stepped in to address this need, this has presented opportunities for money launderers and other financial criminals.

In response, the Financial Conduct Authority (FCA) has announced a series of measures aimed at reducing the risk of the Post Office being used to launder money. 

The measures are the result of the FCA working with partners, including the National Economic Crime Centre (NECC), industry and government, to strengthen controls and enable the Post Office to continue to be used for legitimate banking while addressing gaps which “bad actors” could use.

The measures that the FCA has announced include:

  • Moving towards card-based transactions and away from paying-in slips, where possible, in order to enable enhanced monitoring. 
  • Training and upskilling of staff to identify patterns of suspicious activity. 
  • Enhancing the monitoring capabilities of banks that allow them to identify suspicious activity.
  • Reducing cash deposit limits at the Post Office, subject to customer arrangements, to below the current 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), so that it can act promptly. 
  • Improving intelligence sharing so that information is passed on to other firms, law enforcement agencies and the FCA on a regular basis.

In its announcement of the measures, the FCA acknowledged that the Post Office plays an important role in ensuring that people and small businesses have access to cash.

FCA research found that 6% of UK adults used cash to pay for everything from May 2021 to May 2022, with this figure increasing to 9% for those in vulnerable circumstances. It said that it was vital that any money laundering protections introduced do not make it difficult for legitimate customers and businesses to access 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 has estimated that hundreds of millions of pounds are laundered each year through cash deposits made at post offices.

The FCA expects the Post Office to review its controls on an ongoing basis 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 that have been put in place.

In 2020, the UK National Risk Assessment of Money Laundering and Terrorist Financing highlighted an increase in the criminal abuse of cash deposit services, such as those offered at the Post Office. 

Banks offer personal and business customers a range of banking services, including cash deposit services, through the Post Office via the Everyday Banking facility. This is governed by the Banking Framework Agreement, which allows customers of 30 banks to make cash payments and withdrawals into accounts (and small businesses to deposit cash) via the Post Office.

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Dr. Angelika Hellweger

Legal Director

angelika.hellweger@rahmanravelli.co.uk
+44 (0)203 597 9783 vCard

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Angelika is a specialist in international, high-level economic crime investigations and large-scale commercial disputes. She has widely-recognised expertise in representing corporates and conglomerates in Europe, the Middle East, Africa and United States.

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