The FCA has published its updated finalised guidance on the treatment of PEPs for AML purposes. The update follows its 2024 consultation, which noted that the old 2017 guidance was still basically suitable, but identified a few areas for possible improvement. The changes:
- clarify that non-executive board members of UK civil service departments are not PEPs and should not be treated as such. But the FCA says firms must still follow the risk-based approach and can go beyond its guidance if their analysis suggests they should;
- give firms greater flexibility in who can sign off PEP relationships within firms, by allowing anyone with appropriate knowledge and authority within a firm to be permitted to do so;
- clarify how the FCA expects MLROs to oversee the operation of PEPs controls; and
- align the guidance with changes to the MLRs, including confirming that the treatment of domestic PEPs applies to group wide policies and that foreign groups must also comply with not only the MLRs but also the FCA’s guidance.
The FCA has decided not to include good and poor practice examples from its PEPs review within the guidance, but has included a cross-reference to it.