FCA: New regulations for the "cash deposit channel" at UK post offices
A number of measures targeted at lowering the danger of money laundering through post offices were issued today by the Financial Conduct Authority (FCA) of UK.
The FCA said the move was taken in response to UK police investigations that revealed hundreds of millions are laundered annually through the Post Office's cash deposit route.
Additionally, a thorough investigation into the assets of Colombian drug traffickers operating in the UK revealed they received their payments through post office accounts before putting them into various banks, once more through the post office.
Along with today's actions, Santander Bank was fined £107 million in December for shortcomings related to financial crime.
According to the police and FCA, they wanted "to strengthen controls while seeking to ensure that legitimate customers can continue to use the Post Office for Everyday Banking".
The restrictions imposed on banks today include:
- A shift away from paying-in slips in favor of card-based transactions to enable better monitoring.
- Educating employees to recognize trends of suspicious conduct.
- Improving banks' monitoring tools, which enable them to identify suspicious activity.
- Lowering the Post Office's maximum cash deposits, subject to customer arrangements, to less than the current cap of £20,000 per transaction. Banks should adopt a data-driven strategy and determine whether a tailored offer is necessary.
- Shortening the time it takes for Suspicious Activity Reports to be sent to the National Crime Agency (NCA), allowing them to act promptly.
- Improving intelligence sharing to ensure that data is routinely transmitted to other businesses, law enforcement, and the FCA.
The FCA stated that it anticipates banks and the Post Office to continuously assess their controls, including those that have just been implemented, to make sure they are appropriate for their client base and proportionate to the risk. The FCA further stated that it expects these institutions to use data to adjust their measures when the money laundering risks change.
The FCA will evaluate whether enterprises have taken the necessary precautions to ensure that only authorized consumers can access cash at the Post Office.
Consumers and Competition Executive Director Sheldon Mills of 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 executive director stated that "this important work is part of the FCA’s three-year strategy on reducing financial crime and increasing consumer protection."
Post Offices play a significant role in safeguarding the availability of cash for individuals and small businesses.
According to FCA data, 6% of adults in the UK used cash to pay for everything during the 12 months starting in May 2021, and this percentage rose to 9% for those who were in vulnerable situations.
Although the majority of people have fair access to cash, it is crucial that any anti-money laundering measures do not obstruct legitimate individuals and businesses from using Post Office services.
There is still work to be done, even though banks have made good progress in enhancing security, including a 43% decrease in the time it takes to report suspicious activity at post offices.
By fLEXI tEAM