Each year, Hundreds of Millions of pounds are laundered through cash deposits using Post Office as an old-school and safe channel. The Post Office has implemented stringent measures to safeguard the cash deposit system to reduce Money Laundering.
The Financial Conduct Authority said that it has brought the agencies like NECC (National Economic Crime Center), banks, and the Post Office on one common cause and that is “The mitigation of money laundering through Post Office”.
Since there exists a loophole in the Anti-Money Laundering system of the Post Office, it allows cash deposits to be used in all three stages of money laundering. Banks are witnessing a downfall in their system and many world-renowned banks have started shutting down their branches, especially in the UK. So, the Post Office has facilitates people and businesses to keep their financial circle running through their cash deposit services.
However, many banks offer cash deposit services using the Post Office channel themselves. Banks made tireless efforts in improving the AML (Anti-Money Laundering) and CTF (Counter Terrorism Funding) systems but FCA feels there is a lot more to do.
The UK’s banking authorities have addressed the weakness of the Post Office system with a stringent crackdown on the financial industry to combat the growing threat of money laundering and fraud.
Following are some of the focal points of this progress.
- Banks have been directed to adopt more secure payment methods, with a focus on card-based transactions rather than traditional deposit slips.
- FCA’s new strategy is aimed at enhancing monitoring capabilities and reducing the risks of illicit third-party deposits into customer accounts.
- It will significantly improve the transparency and security of financial transactions, and protect the interests of both banks and customers alike.
- The Intel will be shared under the improved plans for secure information sharing to firms, law enforcement, and FCA regularly.
- Staff training will be carried out to enhance Suspicious Activity Reporting.
- The cash deposit limit at the Post Office is reduced. Previously the least limit was £20,000 per transaction.
- For personal accounts, FCA proposed a limit of £1,000 per day (24 hours) and £10,000 per year (12-month period).
- The least limit previously set has been found to be misused by criminals to make multiple deposits of £20,000 each day.
FCA also researched elements related to the cash flow through the Post Office and here are some of the main statistics:
- Nearly 6% of UK adults use cash to pay for everything since May 2021.
- A rise of 9% has been found in vulnerable situations where people prefer cash instead of seamless payments.
- Most people in the UK have easy access to cash so laundering it becomes easy via Post Office deposits.
Sheldon Mills, Director at FCA said:
“We have partnered with law enforcement, industry regulators, and the government to ensure public safety, and business continuity through cash banking services that the Post Office provides. We intend to address all gaps in the system.”
Conclusion
The UK's Post Office is implementing measures to combat money laundering and safeguard cash deposits. Banks are adopting more secure payment methods and reducing the cash deposit limit to prevent multiple transactions by criminals. The FCA is enhancing monitoring capabilities and sharing intel for secure information sharing with firms, law enforcement, and themselves. The new strategy will protect the interests of banks and customers alike.
Stay tuned for more updates on this critical development in the global financial landscape.
Source: Measures to reduce risk of money laundering via Post Office set out | The Independent