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House of Lords Library

Politically Exposed Persons: Current Regime and Reforms

Published Wednesday, February 8, 2017

This House of Lords Library briefing outlines the current anti-money regulations in regards to Politically Exposed Persons (PEPs), and proposed reforms.

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Banks and other financial institutions are required to conduct enhanced customer due diligence when dealing with people identified as PEPs. This is intended to help trace and put a stop to the financing of terrorism. It has been argued that, in some cases, financial institutions have declined to handle accounts of UK PEPs as a result. This process of withdrawing financial services for PEP’s has been described as ‘de-risking’.

The current anti-money laundering rules are set out in Money Laundering Regulations 2007, which implement the EU’s Third Money Laundering Directive in the UK. The Fourth Money Laundering Directive states that the enhanced due diligence measures, current required for foreign PEPs, should be extended to domestic PEPs. This directive has yet to be agreed in the European Parliament. The UK Government has stated its intention to implement new money-laundering regulations by June 2017.

Lords In Focus LIF-2017-0015

Author: Edward Scott

Topics: Financial institutions, Financial services, Regulation

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House of Lords Library

The House of Lords Library delivers research and information services to Members and staff of the House in support of parliamentary business.