The FCA has published Guidance Consultation 17/2: Treatment of politically exposed persons under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (GC17/2).
GC17/2 follows the draft Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (the new Regulations), that HM Treasury published earlier this week.
GC17/2 is applicable to any firm that is subject to FCA supervision for anti-money laundering purposes. This includes, but is not limited to: banks, building societies, wealth management firms, e-money institutions and investment managers.
Regulation 35 of the new Regulations obliges firms within scope to have appropriate risk-management systems and procedures to identify when their customer (or the beneficial owner of a customer) is a politically exposed person (PEP) and to manage the enhanced risks arising from having a relationship with that customer. Business relationships with the family and known close associates of a PEP are also subject to greater scrutiny. The draft guidance in GC17/2 discusses this further.
The FCA also states in GC17/2 that in meeting its obligations under the new Regulations and the guidance (when finalised), the regulator expects firms to do so in a proportionate manner. The FCA’s view is that there should be relatively few cases where it is necessary to decline business relationships solely because of anti-money laundering requirements and, in relation to the guidance, this should only happen where PEPs pose a high money laundering risk. The draft guidance also discusses how firms may differentiate between PEPs that represent a lower risk and those that represent a higher risk of money laundering.
The deadline for comments on GC17/2 is 26 June 2017.