Cash-based money laundering

In 2020, the UK National Risk Assessment of Money Laundering and Terrorist Financing[2] reported an increase in criminal abuse of cash deposit services such as those offered at the Post Office. 

The National Economic Crime Centre (NECC) has estimated that hundreds of millions of pounds are laundered each year through the cash deposit channel 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[3] facility, governed by the Banking Framework Agreement[4]. 

Our work brought together agencies including the NECC, industry, banks and the Post Office, to address an identified vulnerability in anti-money laundering controls relating to cash deposits.

We focused on the joint aims of reducing the money laundering risk associated with cash deposits at the Post Office, whilst recognising the importance of the role of the Post Office in ensuring that legitimate customers, both personal and business, can still access the cash[5] they need. 

Access to cash

For many consumers and businesses, access to cash remains essential.

In September 2024, we introduced rules[6] to protect this access. Banks and building societies designated by the Treasury must assess and fill gaps, or potential gaps, in cash access provision that significantly impact consumers and businesses.

It is important to maintain reasonable cash deposit and withdrawal services. With branches closing, there is increased pressure on remaining cash services, like the Post Office, to meet community needs. Our rules help ensure that the right services are in place.

In addition, it is important that the additional controls for cash deposits at the Post Office do not unfairly impact legitimate customers. We emphasised the need for banks to consider tailored cash deposit limits, especially for business customers. 

Financial crime controls

Reducing and preventing financial crime remains a key priority for the FCA in our 5-year strategy[7] from 2025.

We are committed to fighting crime, which includes partnering effectively with the UK’s whole system approach to tackling fraud and financial crime more widely.

Reducing the risk of money laundering is crucial, and one of the most effective ways to mitigate this risk is to make sure our defences against financial crime are as strong as possible.  

Before we started this work, banks had limited controls for their cash deposit services through the Post Office. Some relied too heavily on the £20,000 per transaction limit set by the Banking Framework Agreement. This limit was abused by criminals who made multiple £20,000 deposits each day to launder large amounts of cash quickly. 

Our expectations

We worked with the Post Office, banks, government and the NECC to improve controls on cash deposits at the Post Office, while minimising the impact on legitimate customers. We introduced several measures to reduce the risk of money laundering via the Post Office, including:  

• Transaction verification: a move towards card-based transactions and away from paper paying-in slips to reduce third party deposits and enhance monitoring.
   
• Staff training: to include typologies and patterns of suspicious activity identified through Post Office cash deposits.
   
• Transaction monitoring (TM): banks need effective TM capabilities to identify suspicious activity in non-branch cash deposits and detect discrepancies between expected and actual activity.
   
• Deposit limits: banks to reduce cash deposit limits, subject to their customer arrangements, to below £20,000 per transaction. The limit of £20,000 per transaction, with unlimited transactions per day, could not be justified for legitimate businesses or personal customers and presented a material risk for money laundering.  
   
  • For personal accounts we proposed a limit of £1,000 per 24-hour period (which is the minimum amount law enforcement are allowed to seize under the Proceeds of Crime Act) and £10,000 per 12-month period. Banks should also have considered whether a tailored approach for personal customers was appropriate.  
     
  • For business accounts, we asked banks to consider adopting a tailored approach based on expected business customer activity. Recognising that business customer profiles differ between banks, it was not appropriate to set a single specific limit or approach but to ask banks to take a data-led approach using their own customer information.
• Suspicious activity reporting (SARs): banks to reduce the time taken to submit SARs to the National Crime Agency (NCA), as some maximum service level agreements were considered too high and could reduce the opportunity for law enforcement to take timely action.  
   
• Intelligence sharing: banks to use intelligence to identify Post Office locations where large amounts of cash are being laundered and to share intelligence on a regular basis with other firms, law enforcement and us. 

Systems and controls – mitigating the risk

We reviewed the revised controls implemented and found that banks had made significant progress in designing and implementing controls to respond to the threat.

We recognise that introducing deposit limits posed challenges for some customers, especially businesses, needing to deposit higher amounts than the limits set by their bank would allow. So, we conducted a data-driven review of cash deposit rejections at selected urban and rural post offices and assessed the impact on customers. This analysis did not identify any significant concerns about adverse customer impact.

We strongly encourage banks to work with the Post Office and their customers to understand their needs and create a tailored approach to ensure legitimate customers have access to the cash services they need. 

This is particularly important for business customers. Some banks implemented exceptions processes to allow additional cash deposits, while others continued to review their approach.

Next steps

Actions for banks and building societies

Our expectations apply to all banks and building societies which are part of the Banking Framework Agreement[4].