The review, set to conclude by June 2024, aims to assess how these firms handle PEPs within the country. The FCA's scope includes an examination of how firms define and categorise individuals as PEPs, as well as their methods for conducting risk assessments on UK-based PEPs, their immediate family members, and known close associates.
The review will also evaluate how these firms apply enhanced due diligence and continuous monitoring in alignment with the level of risk. Additionally, the FCA will analyse the criteria firms use to determine whether to accept or terminate accounts for PEPs and their related individuals. Effective communication between financial institutions and their PEP customers is another aspect under scrutiny, along with the ongoing assessment and adjustment of PEP control measures for appropriateness.
In cases where significant deficiencies are identified within a firm's procedures, the FCA commits to taking swift corrective actions. The ultimate goal is to ensure compliance with international standards while avoiding undue obstacles for public servants and their families, as emphasised by FCA officials.
Legislation mandates that financial institutions conduct extra due diligence on political figures, their families, and close associates, aligning with standards established by the Financial Action Task Force, which counts over 200 countries and jurisdictions among its signatories. However, if these rules are misapplied by firms, individuals may inadvertently face restrictions on accessing financial products and services.
To date, the FCA has already taken steps to remind the industry and specific firms about the importance of adhering to its guidance on existing regulations. As a result, some firms have adjusted their practices accordingly. Individuals who encounter issues can also voice their concerns with their financial institution or seek recourse through the Financial Ombudsman Service.
In August 2023, The Financial Conduct Authority has sent an information request to large banks and building societies worldwide in a bid to investigate account closures.
The regulatory body aimed to understand the extent of account closures and the main reasons for them. In addition, the focus of the request was set on recognising the extent of denial, suspension, as well as the termination of accounts by seeking the needed data and information for building a detailed view of the issue.
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