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FCA Launches Review of PEPs Compliance in Financial Services

FCA Launches Review of PEPs Compliance in Financial Services
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On 14 August 2023, the FCA published a letter requesting information pertaining to Politically Exposed Persons (PEPs). In light of the Financial Services and Markets Act 2023’s recent Royal Assent on 29 June 2023, the FCA is initiating a review to assess how FCA-regulated firms are complying to their legal and regulatory obligations regarding the risk management and treatment of PEPs, along with their relatives and close associates. This includes evaluating the application of the FCA’s guidance FG17/6 on politically exposed persons for anti-money laundering purposes.

Under the Politically Exposed Persons (PEPs) framework, firms are legally mandated to conduct extra checks on political figures, their families, and known close associates. This requirement is aligned with international standards laid out by the Financial Action Taskforce. It serves as a safeguard against the potential misuse of public office for personal gain and the exploitation of the financial system for money laundering. In 2017, the FCA published guidance aimed at assisting financial services firms in implementing a risk-based approach to PEPs.

The FCA’s letter underscores its interest in gathering direct feedback from UK PEPs, seeking insights into their experiences and any challenges encountered by them or their family members. To support this, the FCA is actively engaging with parliamentarians, political party leaders, and other UK PEPs, including senior civil servants and high-ranking military officials, in the early stages.

The FCA is set to publish the full terms of reference for this review in September, with the final report expected by June of the following year, in accordance with the Act’s provisions. These findings will subsequently inform potential future actions.

For more detailed information, see the official FCA letter here.

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