Money Laundering Regulations: Politically Exposed Persons

Baroness Hayter of Kentish Town Excerpts

Tuesday 5th July 2022 Lords Chamber

Asked by

[Baroness Hayter of Kentish Town]

To ask Her Majesty’s Government what was the outcome of their review of money laundering regulations in respect of their impact on politically exposed persons.

[Baroness Penn (Con)]

The recent review of the money laundering regulations—MLRs—has concluded that there should be no immediate change to the requirements for domestic politically exposed persons. The review commits to further work to better understand the risk profile of domestic PEPs. If this is sufficiently low, the Government will consider changing the MLRs so that enhanced due diligence is not automatically required but instead triggered only when other high-risk factors are present.

[Baroness Hayter of Kentish Town (Lab)]

My Lords, most—probably all—Members of your Lordships’ House, and indeed their children, have been extraordinarily inconvenienced by the way the banks interpret the PEP rules, demanding to know how many mortgages we have, how many necklaces we wear and things like that. They assume that we are all crooks unless we prove to the contrary, rather than assuming that we are not crooks until something in our bank account— perhaps putting a case of used fivers into the bank—suggests that we are money launderers. Not only does that inconvenience us, but it takes away scarce resources which ought to be looking at the people who are really bringing untoward money into our financial sector. Could the Minister just move a bit faster on this? Can she assure us that the old practice of subjecting us to these sorts of nonsenses will not continue, and that, in future, we will be asked to explain our wealth only if something very untoward is happening in our bank accounts?

[Baroness Penn (Con)]

My Lords, as I set out, the Government are looking at further evidence around changing the money laundering regulations so that enhanced due diligence is not automatically required for domestic politically exposed persons. In the meantime, I know that a round table was held with the noble Baroness and, I believe, the noble Lord, Lord Sharkey, to discuss some of these matters. My honourable friend the Economic Secretary will shortly be writing to all MPs and Peers on this issue to provide increased clarity to parliamentarians on the requirements placed on financial institutions regarding PEPs and the steps they can take to remedy any issues they may have with their banks.