FCA Review Of The Treatment Of Domestic PEPs By Financial Services Firms

Written by Thistle Initiatives - Compliance consultancy | Sep 6, 2023 1:28:39 PM

Earlier this month the Financial Conduct Authority (FCA) announced that they would conduct a review of bank account closures following increased concerns from current Politically Exposed Persons (PEPs) such as Nigel Farage and Jeremy Hunt about how fairly they are treated. This was followed by a request from the FCA for the largest banks and building societies to provide data on customer account closures, and an invitation for PEPs and their Relatives and Close Associates (RCAs) to share their experiences with financial services firms.

On 5th September 2023, the FCA set out the issues it will consider as part of its review of the treatment of domestic PEPs. The assessment is being informed by the engagement and feedback of UK PEPs and RCAs, information collected from the relevant firms, and risk-based supervisory reviews of firms, based on information collected from firms and their customers.

As stated in the FCA’s press release, the financial crime 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 resulting report will be published by the end of June 2024.

A proportionate and risk-based approach is encouraged by the FCA when applying anti-money laundering controls. The report centres around concerns that firms may not be treating customers fairly, as certain individuals may be excluded from using certain products or service through no fault of their own.

The review will be prioritising firms where intelligence indicates concerns in their conduct with PEPs. If significant problems are found in the arrangements of any firm, the FCA have stated that they will be taking prompt action with that firm to address and resolve those problems.

If you want to read more about this topic, our Head of Financial Crime, Jessica Cath, has discussed this in a separate article published with the Payments Association. You can find it here:

How can we help you with financial crime compliance?

Thistle Initiatives has supported firms for over 10 years as a trusted financial crime compliance advisor. In addition to assisting you as-and-when, our team of specialists can serve as your right hand in meeting and complying with regulations. We understand the importance of staying up-to-date and compliant and are dedicated to providing the guidance and support needed to do so.

Thistle’s Financial Crime Team has supported clients to build appropriate onboarding and offboarding workflows, and appropriate PEP risk management controls.

Are you looking for help with your PEP controls, or have more general questions about how the FCA review might impact you? Contact our specialist team now to schedule a free consultation. Get in touch with us by calling 0207 436 0630 or send an email to info@thistleinitiatives.co.uk.