UK Chancellor Jeremy Hunt has this week (9 July 2023) backed calls to relax money laundering rules for those with a career in public life after revealing he was refused a bank account with online provider Monzo due to being classified as a Politically Exposed Person (PEP).
Hunt says the challenger bank refused his application to open a bank account last year when he was a backbencher.
“If the price of going into public life is that you find it really hard to set up a bank account, then we need to make sure that we remove barriers where we can,” said Hunt. “I think that’s why I was declined by Monzo for an account last year.”
A PEP is an individual appointed by a community institution to a high-profile position and undertakes a ‘prominent public function’, such as government ministers and MPs. Under the Money Laundering Regulations, PEPs are believed to be more vulnerable to corruption.
As a result, PEPs, as well as their families and close associates, must go through enhanced due diligence procedures when using the services of certain firms that act as ‘gatekeepers’ to the financial system, including banks.
Monzo refused to say whether Hunt’s status as a PEP was behind the refusal to open an account. “We don’t comment on anyone’s application for a Monzo product or eligibility decisions,” said the bank.
The announcement is the latest in a series of revelations from politicians about the added difficulties they have experienced in accessing financial services.
Last month, during a debate in the House of Lords, Lord Forsyth of Drumlean said: “I have had an American Express card since 1979 and yet, only recently, I got an email which I assumed was a spoof that said I had to provide copies of my passport and bank statements, details of my investments and income, and my payslips – such as they are – to American Express within a certain number of days.
“I assumed this was some fraudster. Then I got another email telling me that my card had been suspended because I had failed to produce this material.
“When I rang American Express and said, ‘What is going on here’, they said, ‘Unless you produce it, your card will remain suspended’.”
Former Chancellor Kenneth Clarke has also previously accused American Express of excessive demands for documentation in what politicians believe to be an overzealous application of the Financial Conduct Authority’s (FCA) rules for dealing with PEPs.
An American Express spokesman said: “As a regulated financial institution, we request information from our card members to meet our regulatory and legal obligations, and enhanced checks are required for certain individuals.
“We continuously review our approach in line with the applicable guidance to remove any unnecessary requests of our card members while ensuring we continue to meet our obligations.”
Current guidance from the FCA says that it expects regulated firms to take “appropriate but proportionate measures” in meeting their financial crime obligations. The Money Laundering Regulations state that firms must apply a risk-based approach to customer diligence and ongoing monitoring.
Contact AML & Compliance for your PEPs Requirements
Businesses that believe they are dealing with PEPs must apply additional AML measures to the interaction, ensuring they do not find their reputation being put in a precarious position. At AML & Compliance, we can provide you with the relevant guidance and information regarding this.
Businesses must ensure they are doing the following to handle PEPs appropriately:
Internal Controls or Monitoring: A business should have the appropriate and relevant internal controls and monitoring systems to notify people if criminals are attempting to use the organisation or company for laundering money. It allows them to act quickly and efficiently.
Customer Due Diligence: This ensures that you are carrying background checks on individuals before going into business with them. Apathy or failure to perform these checks of due diligence could allow money launderers to take advantage of your business through a PEP figure, and you could be involved in criminal activity without knowing it.
For any questions or concerns surrounding your overall AML policy, or potential further PEPs concerns, get in touch with our team today by calling us on 0203 985 8553 or emailing us at firstname.lastname@example.org.
Alternatively, you can complete an online enquiry form by clicking here.