Cash-based money laundering

In 2020, the UK National Risk Assessment of Money Laundering and Terrorist Financing highlighted 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 facility, governed by the Banking Framework Agreement. 

Our work brought together agencies including the National Economic Crime Command (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 they need. 

Access to cash

For many consumers and businesses, access to cash is an ongoing necessity. 

In September 2024, we introduced a new regime to protect access to cash. Our rules require firms designated by Treasury to assess and fill gaps, or potential gaps, in cash access provision that significantly impact consumers and businesses. 

It is important that reasonable provision of cash deposit and withdrawal services is maintained. With firms closing branches, there is pressure on remaining cash services, such as the Post Office, to meet the cash needs of communities. Our access to cash rules help ensure that the right services are in place to meet these communities’ needs. 

In addition, it is essential that the additional controls for cash deposits at the Post Office do not disproportionately impact legitimate customers. We stressed the importance of firms considering a tailored approach to cash deposit limits, particularly for business customers. 

Financial crime controls

Reducing and preventing financial crime remains a priority for the FCA in our 5-year strategy from 2025. It was also one of the public commitments in our 3-year strategy from 2022 to 2025.

This is a key strategic theme as part of the FCA’s commitment to fight 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 a key part of this, and one of the most effective ways to mitigate that risk is to make sure our defences against financial crime are as strong as possible.  

Before we started the work, banks had limited controls specific to their cash deposit services through the Post Office. Some placed over-reliance on the limit of £20,000 per transaction, set out in the Banking Framework Agreement. We know this was abused by criminals who were carrying out multiple deposits of £20,000 each day to launder large amounts of cash quickly. 

Our expectations

We engaged with the Post Office, banks, government and the NECC to improve controls on cash deposits at the Post Office, whilst seeking to limit the unintended consequences for legitimate customers. As part of this, we published a series of measures designed 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, where possible, to reduce the opportunity for third party deposits being made into accounts, and to allow for enhanced monitoring.
• Staff training: to include typologies and patterns of suspicious activity identified through Post Office cash deposits.
• Transaction monitoring (TM): banks need to have effective TM capabilities to identify suspicious activity in non-branch cash deposits and to detect divergence 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.  Firms 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 deemed 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 acknowledge that introducing deposit limits posed a challenge for some customers, particularly some businesses, who have a legitimate requirement to deposit higher amounts than the limits set by their bank would allow. Therefore, we carried out a data-driven review to assess cash deposit rejections at selected urban and rural post offices, as well as looking at any resulting impact on customers. This work and analysis did not identify any significant concerns regarding any adverse customer impact. 

We strongly encouraged banks to work with the Post Office and their customers to understand their customer needs and to create a tailored approach that will help 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 customers to deposit additional cash while others were keeping their approach under review.

Next steps

Our expectations apply to all firms who are part of the Banking Framework Agreement.  

We expect firms to keep their controls under review to help ensure they remain proportionate to the risk and suitable for the firm’s own customer base.  

It is important to keep the impact of the controls under ongoing review to ensure the balance between effective money laundering controls and the impact on legitimate customers is right. We expect firms to use their data to continue to refine these controls, where needed, as the money laundering risks evolve.

We also expect firms to continue to focus on effective communication with their customers. Legitimate customers, in particular businesses, need to understand where they can deposit and withdraw the cash they need. 

As part of our strategy for 2025 to 2030, we will continue to focus on this area. Further reducing the threat from cash deposits, including those at the Post Office, will remain a priority.  

We are planning to undertake a proactive multi-firm review in the financial year 2025/26, looking at the financial crime risks from cash-based money laundering. This will include but not be limited to the Post Office, and we will also consider and assess the risk posed by other routes through which cash can enter the financial system, and how these channels might be abused by criminals.