FCA Review of PEPs

Key findings on issues faced by firms when treating PEPs for AML purposes include:

• Adopted definitions for PEPs and RCAs being wider than regulatory and guidance terms;
• Ineffective PEP classification processes in instances where the PEP had left public office;
• Non-consideration of customers’ actual risk in their assessment and rating;
• Unclear customer risk rating rationales;
• Communications with PEP and RCA customers lacking clarity and detail;
• Staff training; and
• Policies which had not been updated to reflect recent legislative amendments to treat UK PEPs and RCAs as having a lower level of risk than a foreign PEP, unless they have other risk factors.

All firms are expected to draw relevant lessons from the review’s findings, including the good practices observed by the FCA which can be adopted.

🗓️ The FCA has launched a consultation on proposed updates to its guidance on the treatment of PEPs, which is open for feedback until 18^th October 2024.