House of Lords: Politically Exposed Persons

Lord Stevenson of Balmacara Excerpts

Thursday 25th November 2021 Lords Chamber

[Viscount Younger of Leckie (Con)]

The guidance provides clarity on how firms should apply the definitions of a PEP in the money laundering regulations in the UK context. This includes providing that firms should treat only those in the UK who hold truly prominent positions as PEPs and not apply the definition to local government, more junior members of the senior Civil Service or any military officials other than the most senior. On casinos, my noble friend will know that they are regulated by the Gambling Commission. Again, I offer my sympathy with the points raised.

[Lord Stevenson of Balmacara (Lab)]

My Lords, like many others, I and my family have suffered delays and significant loss of services because of the poor and inconsistent interpretation of this measure, which might be founded on good sense but is being applied poorly. The FCA is currently preparing to introduce a duty of care—a new approach to the way in which financial institutions are meant to deal with their customers. Does the Minister agree that the fundamental change of approach configured by that provides us with another opportunity to get this issue sorted once and for all?

[Viscount Younger of Leckie (Con)]

Again, this is further anecdotal evidence that has come forward. In line with the FCA guidance on PEPs, in lower-risk situations a firm may take measures to simplify the enhanced due diligence checks. This should include seeking to make no inquiries of a PEP’s family or known close associates, or taking less intrusive and less exhaustive steps. The oversight and approval of the relationship takes place at a level less senior than board or director level. I hope that the meeting that has been mooted will iron out these issues, but clearly they are there.