Money Laundering Regulations: Politically Exposed Persons

Lord Hunt of Kings Heath Excerpts

Tuesday 5th July 2022 Lords Chamber

[Baroness Penn (Con)]

My Lords, it is for the Select Committees of Parliament to determine what they wish to investigate. However, I agree with my noble friend: he is absolutely right that firms are required to adopt a risk-based approach when deciding whether to apply enhanced due diligence. People who feel that they have been treated unfairly by firms have a route of redress via the Financial Ombudsman Service. However, as I said, my honourable friend the Economic Secretary will also be writing to parliamentarians to set out steps that they can take to remedy any issues that they have had with their banks where they feel that the action taken has been disproportionate.

[Lord Hunt of Kings Heath (Lab)]

My Lords, with the greatest respect to the noble Baroness, it is not for us to have to pursue this; it is for the Government to sort it out. Can she tell us what they are doing to stop the banks not taking the risk-based approach that she suggested they should take? They are acting on a wholly risk-averse basis and it is down to government to sort it out.

[Baroness Penn (Con)]

My Lords, the Government are engaging with banks on this matter. A round table was held on 4 March this year. At that meeting, banks reaffirmed their commitment to following the 2017 FCA guidance, which supports banks in treating most domestic PEPs as lower-risk. Therefore, we have engaged with the banks on this matter and we are committed to doing that further piece of work, an evidence review, to see whether the automatic checks that need to be applied to domestic PEPs could be removed.