House of Lords: Politically Exposed Persons

Viscount Waverley Excerpts

Thursday 25th November 2021 Lords Chamber

[Viscount Younger of Leckie (Con)]

To be upfront about it, the Treasury is responsible for the money laundering regulations but the regulations are not prescriptive in setting out how firms should carry out customer due diligence. Instead, they require firms to take a proportionate approach commensurate with their assessment of the risk. As I said earlier, clearly there is more work to be done. Customer due diligence allows firms to obtain reasonable satisfactions that customers are who they say they are and that there are no legal barriers, but clearly there is more work to be done on PEPs.

[Viscount Waverley (CB)]

My Lords, for curiosity’s sake, is this a UK-wide catch-all? Are Nigerian politicians, for example, with bank accounts in the UK deemed to be politically exposed persons under this arrangement? Many in your Lordships’ House, if not all, appear to be caught up in this classification. Will the Minister kindly accept that the banks are looking for one thing but are not receiving it—the necessary clarity and guidance and, by the by, urgent regulatory reform? Is the FCA at fault? If not, who controls the regulator?

[Viscount Younger of Leckie (Con)]

Of course, what we are talking about today is the behaviour of banks and firms and the proportionate nature of what they should be doing. I say in response to the question from the noble Viscount that the UK remains and must remain at the forefront of international anti-money laundering standards. We have played a leading role in tackling corruption and illicit finance internationally. This is evidenced by the fact that our regime was found to be the strongest out of almost 100 countries. But the other side of the coin is customers, and clearly a more proportionate standard needs to be taken.