Latest news with #PEPs
Finextra
14-07-2025
- Business
- Finextra
FCA Issues Final Guidance on Politically Exposed Persons (FG25
A more proportionate, risk-based approach to AML compliance On 7 July 2025, the Financial Conduct Authority (FCA) published its finalised guidance FG25/3, updating how firms should treat politically exposed persons (PEPs) under the UK Money Laundering Regulations. This update follows a comprehensive multi-firm review, a public consultation (GC24/4), and recent amendments to the 2017 Money Laundering Regulations. The aim is to reinforce a risk-sensitive and proportionate approach to Enhanced Due Diligence (EDD) obligations, particularly when dealing with domestic PEPs, their family members, and close associates. The FCA's new stance reflects changes in UK legislation and encourages firms to reduce unnecessary friction during onboarding, especially for low-risk individuals. What's Changed and Why It Matters The FCA has made several important clarifications in this guidance. Most notably, the starting point for all firms should now be that UK PEPs present a lower risk than foreign PEPs, unless other risk factors are present. This principle should also apply to their family members and known close associates. This shift is intended to ease the experience of low-risk customers and avoid disproportionately burdensome checks, aligning with broader expectations under the Consumer Duty. The FCA also confirmed that non-executive board members (NEBMs) of UK civil service departments are no longer to be treated as PEPs. Similarly, the updated guidance includes a clearer definition of high-ranking military officials and limits judicial PEP classification to Supreme Court judges only. The Northern Ireland Assembly has been added to the list of devolved administrations, making it explicit that its members fall under the scope of national PEP definitions. Importantly, firms now have greater flexibility when approving PEP relationships. While approval from senior management remains mandatory, it no longer has to come from the Money Laundering Reporting Officer (MLRO) specifically. Instead, firms can designate other suitably trained senior staff, provided that the MLRO retains oversight of the process and ensures compliance with the FCA's standards and the firm's internal risk framework. A Smarter Approach to Risk Assessment The FCA reiterates that not all PEPs pose the same level of risk. The revised guidance introduces clear indicators for distinguishing between lower-risk and higher-risk PEPs. For example, UK politicians who hold no ministerial office, or those from countries with low corruption and transparent public institutions, may qualify for less intrusive EDD. In such cases, firms can rely on public records, internal data, or simplified documentation rather than conducting repeated or intensive reviews. In contrast, PEPs from countries with weak governance, high corruption levels, or opaque procurement processes may still warrant more stringent due diligence. These situations will require more detailed verification of source of wealth and funds, senior-level approvals, and ongoing monitoring. The guidance also clarifies that former PEPs must continue to be treated as such for a period of 12 months after leaving office. However, their family members and close associates may be declassified sooner, unless specific risk factors justify further scrutiny. The FCA encourages firms to monitor trigger events, such as elections, and suggests inviting customers to inform them of changes in circumstances to keep records current. Group-Wide Expectations and Cross-Border Challenges Firms headquartered in the UK are now expected to apply this risk-based, proportionate approach across all subsidiaries and branches, including those outside the UK, unless local law prohibits it. For foreign firms operating in the UK, the FCA expects compliance with UK Regulations for all business relationships within the UK. The FCA does not offer guidance on conflicts with non-UK legislation, but stresses that firms should be clear on how they resolve such discrepancies in line with their own risk frameworks. Family Members and Close Associates The updated guidance clarifies the definition of PEP-connected individuals. Spouses, civil partners, parents, children and their partners, and now siblings are all clearly included. Others, such as uncles, aunts or more distant relatives, should only be brought into scope if there's a justifiable reason based on the PEP's risk profile. Close associates remain those with joint business interests or known legal structures set up for a PEP's benefit. However, association alone does not make someone a PEP, and the guidance reinforces that such individuals should not be subject to automatic exclusion or excessive scrutiny. Practical Implications for Firms The finalised guidance emphasises the need for well-documented policies, appropriately trained staff, and clear, consistent risk assessments. Firms should avoid defaulting to a one-size-fits-all approach. Declining a business relationship on the basis of PEP status alone, without evidence of unmanageable risk, is unlikely to be considered appropriate, particularly in light of the FCA's expectations under Consumer Duty. If a firm chooses to apply enhanced measures beyond those required, this must be justified and proportionate, based on an individual's role, jurisdiction, or other contextual factors, not merely their status. This is a welcome recalibration of the FCA's expectations around PEPs. It aims to strike a better balance between financial crime prevention and fair customer treatment. Firms should now ensure that their PEP processes are aligned with the new guidance and consider how these updates impact both onboarding journeys and ongoing monitoring strategies. For those in compliance, legal, operations, or product, this is the time to review internal PEP policies, update delegation frameworks, and train relevant staff accordingly. The FCA's message is clear: proportionality, documentation, and risk-based judgment must be at the heart of your AML controls.
Sky News
13-02-2025
- Business
- Sky News
Farage explores criminal claim over NatWest debanking
The Reform UK leader Nigel Farage is exploring launching private criminal proceedings against NatWest Group over the debanking scandal which resulted in the lender's former chief losing her job. Sky News has learnt that Mr Farage has instructed Chris Daw KC of Lincoln House Chambers to examine whether there are grounds for bringing a criminal case against the high street banking giant. The move appears to be deliberately timed to coincide with the publication of NatWest's annual results on Friday morning, which will come just weeks before the government is expected to sell its last-remaining shares in the company, nearly 17 years after its £45.5bn taxpayer bailout. Mr Farage confirmed to Sky News on Thursday evening that Grosvenor Law, which is acting for him in separate civil proceedings against the bank, had instructed Mr Daw KC to explore a private criminal prosecution, adding: "This is unfinished business." Dan Morrison, a partner at Grosvenor Law, said in a separate statement: "Mr Farage is concerned about possible criminal issues arising out of the bank's conduct. "We do not wish to provide further details. "We have therefore decided to instruct leading criminal counsel." The debanking furore which claimed the scalp of Dame Alison Rose, NatWest's former chief executive, in the summer of 2023 centred on whether the bank's Coutts subsidiary decided to close Mr Farage's accounts for commercial or political reasons. NatWest initially claimed the motivation was commercial before Mr Farage obtained internal evidence from the bank suggesting that his politics had been a pivotal factor in the decision. It sparked a firestorm under the then Conservative government, with Rishi Sunak and Jeremy Hunt, the then prime minister and chancellor respectively, indicating to NatWest's board that they had lost faith in Dame Alison's ability to lead the bank. Since then, the City watchdog has instructed banks and other financial firms to do more to ensure that parliamentarians, senior public servants and their families - known as politically exposed persons, or PEPs - are not treated unfairly. Mr Farage's decision to hire Mr Daw KC threatens a fresh escalation against one of Britain's biggest banks at a time when some argue that he has become the country's most influential politician. He led Reform to a handful of seats at last year's general election, while his party finished in second place in scores of other constituencies. The Reform leader's close ties to Donald Trump, inaugurated last month for the second time as US President, have fuelled the sense that he may play an even more crucial role in shaping the identity of Britain's next government when the country goes to the polls in 2029. A recent opinion poll for Sky News by YouGov put Reform ahead of both Labour and the Tories for the first time. Since the summer of 2023, tentative discussions between Mr Farage's legal representatives and NatWest about a possible settlement have failed to result in any financial agreement. Mr Farage was expected to seek millions of pounds from the company, alleging that the debanking row had damaged his reputation. Despite the threat of a fresh legal barrage from Mr Farage, NatWest - now run by Paul Thwaite - is in its most robust financial health for decades. The government's stake in the bank is now below 8%, and a full exit is expected during the spring.
