Financial Reporter quotes Rhys Novak on a new FCA review into the treatment of PEPs
min readThe FCA has launched a review of the treatment of domestic Politically Exposed Persons (PEPs) by financial services firms.
Under legislation adopted by UK Parliament, financial firms are required to do extra checks on political figures, their families and close associates. More than 200 countries and jurisdictions have signed up to the standards set by the Financial Action Task Force.
However, if rules are applied inappropriately by firms, there is a risk that individuals may find themselves excluded from products or services through no fault of their own.
Rhys Novak, Partner in our dispute resolution team, provides comment for Financial Reporter:
“When dealing with regulatory risk, extremes are, in theory, relatively straightforward to address.
"The challenge lies in determining the boundary in each specific case. It’s entirely possible for a marginal case to fall one side of the line at one firm but fall on the other at a different firm. The critical factor is whether the decision is objectively defensible based on sound reasoning, whether it disregards irrelevant factors, and whether it has undergone appropriate scrutiny and documentation.
"The starting point is also crucial. Has the firm initiated the analysis using the correct set of questions? It’s worth noting that UK PEPs, unless there are specific aggravating factors, typically fall into the “lower risk” category.”
Read the full article here.
