The phrase politically exposed persons (PEPs) is not one that features frequently in the mainstream media so my ears pricked up when I heard it mentioned on Radio 4 the other day.
The report followed on from a recent House of Commons debate, prompted by Broxbourne MP Charles Walker, about the way that de-risking by banks had led to a somewhat heavy-handed approach towards UK politicians, whom Mr Walker said were specifically excluded from the definition of a PEP in the Money Laundering Regulations 2007.
He cited the case of the 18-year-old daughter of an MP, in which she had been requested by her bank to supply a range of personal information – including her employer’s name and address and how much time she spent at any residential addresses she used – or risk losing her banking facilities.
At the other end of the age range, a fellow backbencher’s 81-year-old father was asked by the bank where he had been a customer for more than 50 years to attend an interview to confirm his details and verify his sources of wealth. Mr Walker also told of a Commons colleague, still in his 40s, who faced questions about his bank account going back 25 years.
Mr Walker added: ‘Members of Parliament are being assessed as high risk in regards to money laundering, but their extended families are, too. On the basis of this Chamber alone, that puts nearly 10,000 people in the frame.’
Describing the rules around money laundering as ‘a mess’, he called for the regulations to be revisited, adding: ‘Their purpose is to target despots and dictators, not law-abiding citizens. They are being disproportionately applied.’
Harriett Baldwin, Economic Secretary to the Treasury, told Mr Walker she was on his side and said the government’s red tape review of the current money anti money laundering (AML) regime would help fine-tune the legislation.
She said that with the UK due to transpose the EU’s Fourth Anti-Money Laundering Directive into UK law by June 2017, banks were choosing to implement early a requirement that domestic PEPs are subject to enhanced due diligence.
But she warned that the new regime should not prevent any MP from gaining or maintaining a UK bank account, adding: ‘My goal is to have a banking system that is hostile to illicit finance and to terrorists, but which allows ordinary law-abiding and law-making citizens to move easily from one bank to another for better rates and better service.’
With the red tape review and the EU directive set to bring more changes to the ever-evolving AML regime, the ICA offers qualifications in anti money laundering, compliance and financial crime prevention for all levels of knowledge and experience.
To stay updated on the latest developments in governance,risk and compliance, anti money laundering and financial crime prevention, please follow us on either LinkedIn, Facebook and Twitter where you are guaranteed to be notified when our next blog post goes live!