Money Laundering Regulations: Politically Exposed Persons

Lord Kirkhope of Harrogate Excerpts

Tuesday 5th July 2022 Lords Chamber

[Baroness Penn (Con)]

My Lords, my understanding is that the original measures on PEPs were put into UK law in 2017, so the timescale is slightly different from that set out by the noble Lord, but I absolutely take his point on action that needs to be taken. That is why we have continued to follow up with banks about taking proportionate action under the current regulations and are looking at whether they can be amended, but we need a strong evidence base to take that action.

[Lord Kirkhope of Harrogate (Con)]

My Lords, as one of those involved in the drafting of the anti-money laundering directives—and, unfortunately, often described by colleagues as an expert in money laundering, as opposed to anti-money laundering—I point out to my noble friend that we fought very hard to ensure that the implementation of the directive would be proportionate. That word was as the result of British initiatives. It seems to me that the Financial Conduct Authority, in its further directions to our banking institutions, has failed to carry through the importance of proportionality and has therefore allowed the banks and others to behave in the way they are now, which is utterly unreasonable.

[Baroness Penn (Con)]

My Lords, after the original transposition of the regulations, further guidance was issued by the FCA to emphasise exactly the point my noble friend makes about action being risk-based and proportionate. Clearly, there are still issues in taking that forward. That is why we continue to engage with the FCA and banks on this. We will also be engaging with parliamentarians on the route to contact their banks where they think they are not following the very sensible, proportionate approach for which the UK advocated in the EU.