Proposed Amendments
The FCA’s latest Guidance Consultation paper GC24/4 outlines proposed changes to its guidance (FG17/6) regarding the treatment of politically exposed persons (PEPs) under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017.
This latest consultation comes to enhance the guidance published in July 2017, FG17/6 to support supervised firms under the MLRs 2017 in applying a proportionate and risk-based approach to PEPs. Whilst the FCA has found that the FG17/6 guidance remains appropriate, it stresses that certain areas can be enhanced for firms to ensure compliance in their treatment of PEPs.
GC24/4 scope and focus
This Guidance Consultation concerns all firms regulated by the FCA under the MRLs 2017. The following entities should also consider this Consultation:
- Financial services sector trade associations
- Individuals and organizations working with regulated firms
- NGOs and academics involved in financial crime prevention
- Customers who qualify as PEPs, their family members, or known close associates
The Guidance focuses on four areas that the FCA is looking to support firm’s understanding of:
- Non-Executive Board Members (NEBMs) of Civil Service Departments and their classification
- Sign-Off for PEP relationships by the appropriate function
- Reflecting Legislative Changes regarding PEP risk status and risk assessments
- Removing outdated references to EU guidance
The FCA has outlined that the proposed changes are aligned with the FCA’s strategy (2022-2025) to reduce and prevent financial crime whilst also supporting firms in balancing resources more effectively and acting proportionately towards lower risk customers. The FCA also highlights the significance of fair treatment of PEPs, in alignment with the Consumer Duty principles.
Deadline for firms
The FCA has requested for firms and stakeholders to provide feedback on the proposed amendments by October 18, 2024. This feedback will inform the final version of the guidance, which will be published after considering the comments received.
Next steps
Firms should:
- Review the proposed amendments to the guidance to understand how these changes may affect their AML practices;
- Provide feedback to the FCA by the October 18, 2024 deadline; and
- Prepare to implement any necessary changes in their procedures once the final Guidance is published.
How Complyport can help
A risk-sensitive approach to identifying PEPs and applying enhanced due diligence measures is vital in developing an appropriate AML framework. Managing higher risk clients and higher risk PEP relationships can be a challenge. Complyport’s specialised team can ensure your company meets the latest regulatory standards and best practices. The services we offer include:
- Comprehensive AML and CTF Framework Assessments: Evaluate your current AML and CTF governance and controls against legal standards and industry best practices, and your firm’s treatment of PEPs
- AML Audits: Conduct a thorough review of your AML policies, risk assessments, CDD and EDD procedures to assess the effectiveness of your company’s measures in addressing the risk of dealing with PEPs
- Business-Wide Risk Assessments
- KYC remediation and periodic review of client records and documentation
- Training: Design a comprehensive training and assessment programme to ensure your teams understand the implications of dealing with PEPs and how to deal with PEPs
Complete the form below to book a FREE consultation.
Ask ViCA, your Virtual Compliance Assistant. Claim your complimentary 20 queries today!
