By Huw Jones for AML Intelligence
Britain’s financial watchdog said today (Tuesday) it has launched a formal review into how banks conduct mandatory extra checks on “politically exposed” customers (PEPs) and their families for money laundering risks.
The Financial Conduct Authority (FCA) said that, while it cannot change the law which requires PEP checks, its review would consider whether banks were being heavy-handed in applying the rules and how they decided to close accounts of PEPs, their family members or close associates.
“We have already persuaded some firms to improve their approach and we will use this review to identify if we need to provide further guidance to firms,” Sarah Pritchard, the FCA’s executive director for markets, said in a statement.
The review will report by the end of June 2024.
This latest review is separate from an urgent data-gathering exercise into the scale of debanking called for by British finance minister Jeremy Hunt
The FCA today said it would take prompt action if any significant deficiencies were identified in the arrangements of any firm assessed.
Britain’s financial services minister Andrew Griffith has already asked the FCA to consider creating a less burdensome domestic PEP regime to reflect the lower category of risk from those that have no international role.
The review of existing guidance on politically exposed persons, or PEPs, is part of a wider look at “debanking”, which recently became a political issue after former Brexit Party leader Nigel Farage said his account at private bank Coutts, part of NatWest, had been closed due to his political views.
The PEP rules were drafted by the international Financial Action Task Force (FATF) on money laundering and are applied in over 200 jurisdictions. The FCA issued guidance in 2017 on how they should be applied.
The review is separate from an urgent data-gathering exercise into the scale of debanking called for by British finance minister Jeremy Hunt, who suggested that any lenders involved in widespread and unjustified debanking should be fined. Initial findings from that review are due later this month.
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