Fury as ‘dirty money’ rules hit Post Office cash service
CRISIS talks will take place tomorrow between the banks and the Post Office in an attempt to resolve a dispute that is undermining the ability of some small businesses to bank their cash takings at local post offices.
The Mail on Sunday understands that the Post Office is furious that new rules designed to counter money laundering are being used by the banks to compromise its ability to provide a service to cashgenerative businesses.
They are doing this by imposing strict limits on the amount of cash that a customer can deposit through a post office. Unless the banks adopt a more conciliatory approach, the Post Office fears many small businesses will have no choice but to become cashless, further restricting the ability of households to use cash on the high street.
Figures, to be released tomorrow by the Post Office, will confirm that cash deposits made by both personal and business customers through its network of 11,500 branches fell last month. It directly attributes this decline – at a time of year when business deposits normally surge on the back of Christmas trade – to the overzealous limits that individual banks are applying to customers using post offices to bank cash. Post offices have become more important to many small businesses as a result of their local bank branch being axed.
The discussions, to be chaired by the Financial Conduct Authority, are a result of the regulator’s quest to keep a lid on money being laundered by criminals through banks, building societies and the Post Office. Tackling financial crime is a priority for the FCA.
Last year, it asked banks to review the limits they impose on cash deposits from customers. This resulted in cash transaction limits falling, especially on business accounts. It also caused the banks to review the amount of cash that their customers can deposit via the post office. This resulted in lower limits than if a deposit was made through their own branch network.
This has now prevented some businesses, with big cash takings to bank, being unable to use post offices. On Friday, the Post Office told The Mail on Sunday: ‘Cash deposit limits [applied by the banks] are a blunt instrument – taking a sledgehammer to crack a nut and impacting thousands of legitimate businesses that cannot deposit their cash takings without a long journey to a now distant bank branch.’
It added: ‘This has serious consequences for millions of people who rely on cash – and for whom imminent legislation [the Financial Services and Markets Act] is designed to secure their right to access it.
‘This right will be rendered meaningless by these limits. Many businesses have stated they will simply no longer be able to accept cash, with vulnerable consumers being left behind and businesses losing trade and in some cases their viability.’
Both Barclays and Lloyds declined to provide an on-the-record comment. HSBC said: ‘We support and enable our retail and business customers to use the Post Office network to deposit cash and carry out other day-to-day transactions, while making sure there are appropriate controls in place to address any risks or concerns about financial crime.’ It added: ‘It is a difficult balance to strike, but we believe the limits that are being put in place provide the appropriate balance.’
From the end of the year, HSBC customers with a commercial bank account will be able to deposit a maximum £9,000 a day – subject to a monthly cap of £40,000 – through post offices.
The FCA said: ‘The ability to withdraw and deposit cash continues to be essential for many people and businesses, which is why we remain committed to helping to maintain access to cash.
‘At the same time, combating financial crime is a priority for the FCA. So, we are bringing together the relevant parties in the hope that they can work together to help maintain access to cash for those that really need it and reduce the risk of money laundering.’
UK Finance, the banking industry’s trade organisation, said tomorrow’s meeting will be ‘private’, so it was not prepared to comment.