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Rapid Response Team: 0800 559 3500
Switchboard: +44 (0)203 947 1539
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Rapid Response Team: 0800 559 3500
Switchboard: +44 (0)203 947 1539
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The FCA Seeks the Experiences of Politically Exposed Persons

Author: Zulfi Meerza  12 September 2023
2 min read

Zulfi Meerza of Rahman Ravelli details the Financial Conduct Authority’s efforts to hear from those affected by the UK’s Politically Exposed Persons (PEPs) regime.

The Financial Conduct Authority (FCA) has recently written to MPs, peers and other interested parties - and set out the issues it will consider - as part of its review to fully understand the impact of the Politically Exposed Persons (PEPs) regime.

Whilst the focus of the FCA’s review will be to look carefully at financial services firms’ arrangements for dealing with domestic PEPs – perhaps largely due to the de-banking fiasco between Coutts & Co and Nigel Farage - there may be scope for the review to extend to wider financial crime systems and controls.

Under the regime, firms are required by law to undertake extra checks on political figures, their families and known close associates. This course of action is the result of international standards that were issued by the Financial Action Taskforce (FATF). The checks are deemed necessary because of the possibility that a PEP may be in a position to abuse their public office for private gain and to use the financial system to launder the proceeds of this activity.

Six years ago, the FCA published guidance for financial services firms to help them apply a proportionate and risk-based approach to PEPs. The FCA is now reviewing how financial services firms have applied the PEPs regime and whether there is a need to make changes to the guidance.

This review is in line with the requirements of the Financial Services and Markets Act 2023. This Act compels the FCA to review its guidance on PEPs, which was given under section 139A of the Financial Services and Markets Act 2000 and in compliance with the requirements under regulation 48 of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (S.I. 2017/692).

The FCA is obliged to include in its review:

  • An assessment of the extent to which the guidance is followed by those persons to whom it is given.
  • Consideration as to whether the guidance remains appropriate or whether it should be revised.

The FCA was given a three-month period to publish an update on its plan for the review and 12 months to publish the conclusions of the review. Where the FCA concludes that the guidance should be revised, it will have to publish draft revised guidance for consultation.

The FCA has stated that it is keen to hear directly from UK PEPs on their experiences, including any problems they or their family members have encountered. It says it is “proactively reaching out’’ to parliamentarians, chairs of the political parties and other UK PEPs (including senior civil servants and the senior ranks of the armed forces) at an early stage. 

The FCA has now published the full terms of reference for the review and will report back by June next year, as set out in the Act. 

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Zulfi Meerza

Senior Associate Solicitor

zulfi.meerza@rahmanravelli.co.uk
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Zulfi’s in-depth expertise in business crime investigations and serious regulatory matters makes him a logical choice to advise and represent corporates, board members, senior business figures and high net worth individuals throughout the life of a case.

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