UK Financial Conduct Authority Set to Review Actions Taken Against “Politically Exposed Persons”

The UK Financial Conduct Authority (FCA) indicated it is moving forward with a review of the treatment of “politically exposed persons” (PEPs).

The FCA distributed today a list of areas it will review in regard to the treatment of accounts at financial services firms, including:

  • Applying the definition of PEPs to individuals
  • conducting proportionate risk assessments of UK PEPs, their family members, and known close associates
  • applying enhanced due diligence and ongoing monitoring proportionately and in line with risk
  • deciding to reject or close accounts for PEPs, their family members, and known close associates
  • effectively communicating with their PEP customers
  • keeping their PEP controls under review to ensure they remain appropriate

The FCA will conclude the review by June 2024.

The FCA Executive Director of Markets Sara Pritchard commented on the action, stating they are aiming to keep the financial system “clean, free from corruption and guard against financial crime.”

“It’s important that they are implemented proportionately and don’t create unnecessary barriers for public servants and their families. 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.”

The FCA noted that financial firms are currently required to do extra checks on political individuals as well as related individuals. At the same time, the FCA noted that if applied incorrectly, some individuals may find themselves excluded from products and services at no fault of their own.

The announcement follows the cancellation of an account at Coutts held by Nigel Farage, a UK political leader who was a Brexit supporter. It was revealed that Farage’s account was closed due to his personal political beliefs. The bigotry displayed by Coutts caused the firm to see its Chief Executive “retire” along with the Chief Executive of NatWest, the owner of Coutts, as outrage grew due to the bigotry.

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