The FCA’s review will look carefully at firms’ arrangements for dealing with PEPs based in the UK. While the FCA cannot change the law putting in place the PEPs regime, the review will consider how firms are:
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 review will report by the end of June 2024. The FCA will take prompt action if any significant deficiencies are identified in the arrangements of any firm assessed.
Sarah Pritchard, Executive Director of Markets at the FCA, said: 'These rules follow international standards and are designed 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.'
Under legislation adopted by Parliament, financial firms are required to do extra checks on political figures, their families and close associates. More than 200 countries and jurisdictions have signed up to the standards set by the Financial Action Task Force. However, if rules are applied inappropriately by firms, then individuals may find themselves excluded from products or services through no fault of their own.
The FCA has already taken a number of steps to remind the industry and specific firms that they should follow its guidance on implementing current rules, and some firms have already changed their approach as a result. Individuals can also raise concerns with their financial institution or the Financial Ombudsman Service.
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