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<p>The Government’s position is clear that financial institutions must not deny services
to customers who are Politically Exposed Persons (PEPs) solely on the basis of their
PEP status, nor on the basis of their political beliefs.</p><p> </p><p>The Financial
Services and Markets Act 2023 commits the Financial Conduct Authority (FCA) to conduct
a review into financial institutions’ adherence to their guidance on PEPs, and the
appropriateness of that guidance, within twelve months of Royal Assent. This review
will assess the compliance of FCA-regulated firms with their legal and regulatory
obligations regarding the risk management and treatment of PEPs, as well as their
relatives and known close associates, and the FCA will take action where it identifies
serious failures. The FCA has contacted domestic PEPs seeking their input regarding
their own treatment by financial institutions, and will publish the terms of reference
for its review in September.</p><p> </p><p>The Government has also taken action through
the Financial Services and Markets Act to commit the Treasury to amend the Money Laundering
Regulations to distinguish explicitly between domestic and non-domestic PEPs in law.
This amendment will make clear that, in the absence of other high-risk factors, domestic
PEPs must be treated as lower risk than non-domestic PEPs and have a lesser degree
of enhanced due diligence applied to them.</p><p> </p><p>Separately, there are existing
regulations - specifically Regulation 18 of the Payment Accounts Regulations 2015
– which already require banks not to discriminate against any UK consumers based on
their political opinions when accessing a payment account. The Chancellor has written
to the FCA to request an urgent review into the matter of ‘de-banking’ more broadly.
The FCA has agreed to undertake this review, and to share the evidence and findings
with the Treasury.</p>
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