LONDON—Britain's financial watchdog said it has launched a formal review into how banks conduct mandatory extra checks on "politically exposed" customers and their families for money laundering risks.
“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,” Reuters reported.
The Financial Conduct Authority 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.
The review will report by the end of June 2024.
Prompt Action to be Taken
The watchdog said it would take prompt action if any significant deficiencies were identified in the arrangements of any firm assessed, Reuters noted
"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.
“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,” Reuters said.
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