FCA finalised guidance on the treatment of PEPs

The UK Financial Conduct Authority (FCA) has published finalised guidance on the treatment of Politically Exposed Persons (PEPs) under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017. The guidance is intended to help firms apply a proportionate and risk-based approach to managing money laundering risks associated with PEPs, their relatives and close associates.

Following a review and consultation, the updated guidance includes, among other things:

• Clarification that non-executive board members of UK civil service departments should not be treated as PEPs.
• Amendments to the definition of a PEP and a reference link to the UK government's list of international organisations, to assist firms in identifying relevant roles such as directors or board members of an international organisation.
• Minor clarifications to terminology, including refining the definition of high-ranking military officers.
• Clarification on the expectations for ongoing monitoring of former PEPs under Regulation 35(9)(b), confirming that where firms apply enhanced measures to former PEPs; they must clearly document their rationale.
• Clarification on the expectations for signing off PEP relationships, requiring firms to document the responsible staff and ensuring they receive appropriate training.
• Clarification of expectations on the Money Laundering Reporting Officer's oversight of PEP controls.

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