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UK Treasury minister Andrew Griffith has urged the UK’s City watchdog to probe whether banks are terminating relationships with clients based solely on whether they are politically exposed persons (PEPs).
“Banks should not be closing people’s accounts solely due to their status as a Politically Exposed Person,” tweeted Andrew Griffith, economic secretary to HM Treasury, as he announced he had contacted the Financial Conduct Authority (FCA).
In a new correspondence to FCA CEO Nikhil Rathi, the Conservative politician has asked the regulator to prioritise its review on this issue.
The Financial Services and Markets Bill, which received royal assent last week, mandated the FCA to review its guidance on the issue.
In financial regulation, a PEP is a public figure that is subject to heightened know your customer (KYC) requirements due to their position.
This could be a political representative, an ambassador or a member of the Supreme Court, for example. PEPs can also be the family members of these figures.
Griffith’s intervention comes after media personality and former politician Nigel Farage announced on social media last week that his bank account was being shut down.
Although sources in the bank Coutts have said that this termination was down to commercial reasons, and that its owner, NatWest, has offered a basic account, Farage argued that it is because he is a PEP and that he has been unable to open a bank account elsewhere.
Farage, who previously served as leader of the eurosceptic UK Independence Party, tweeted that he is prepared to take legal action.
In Griffith’s letter, the minister says that he appreciates the importance of “ensuring appropriate measures are taken to prevent money laundering”, but said a balance must be sought so that measures do not “unduly burden” elected officials and their families from access to essential banking services.
“Some financial institutions may be failing to strike the right balance of taking a proportionate approach based on a careful evaluation of the actual risk,” he wrote, saying that this is why the FCA must review the extent to which this is happening.
Griffith continued that “the government is clear” that domestic PEPs should be treated in a matter that aligns with their risk.
“Given the strength of concern on this issue, I would expect that the FCA will prioritise this important review over the coming months,” he said, adding that if there are “easy wins”, the FCA should implement them “expeditiously”.
Farage is not the first public figure to have raised the alarm about a termination of service. PayPal terminated (but later reinstated) an account belonging to anti-lockdown pressure group the Free Speech Union.
This issue was addressed in the government’s Payment Services Regulation white paper, suggesting that there could be new legislation to tackle potential free speech issues when accessing payments and e-money services.
However, among changes outlined in that white paper, the payments industry may be less enthusiastic, with one fintech insider telling VIXIO that the proposal was “a bit weird”.
