He said that the online bank Monzo had refused to open a Monzo account for UK chancellor Jeremy Hunt last year. This is an example of what he believes as the excessive vetting banks must perform on those in public life.
Hunt backed the Financial Conduct Authority’s priority review of the PEPs regime, a set rules that are designed to fight corruption and bribery by public officials.
Recently, in an Interview, the chancellor stated: “We are encouraging people to enter public life.”
If the price you pay for entering public life is that it’s difficult to open a bank, we should remove any barriers that exist. Monzo declined me for a bank account last year.
PEPs are people with “prominent functions” in the public sector who can potentially misuse their position for private gain, and then use the financial system as a way to launder proceeds.
Banks are required to conduct enhanced checks on PEPs and their family members, which can be costly for the bank.
This issue was brought to the forefront this month when Nigel Farage (former leader of the Brexit party) claimed that the PEPs regime could be the reason why the elite bank Coutts closed his long-standing bank account.
Sources close to the matter said Farage did not meet the criteria for holding a bank account, but the ex-MEP claimed that nine other banks turned him down to open a new account.
Hunt, a pro-European, said that he found himself in a similar boat to Farage. The chancellor declared, “I am a political exposed person.”
Andrew Griffith, City Minister, wrote last week to the FCA asking that the regulator prioritise the review of PEPs. He said “some financial institutions might be failing to strike a balance between taking a proportionate and risk-based approach”.
He acknowledged the importance of combating money laundering but said it was “crucial” to strike a balance.
The new Financial Services and Markets Act makes a distinction between the lighter-touch regime for domestic PEPs and a more stringent check for those coming from abroad.
Hunt, who had earlier this year praised Monzo for refusing his account request, appeared to forgive the British bank. He said, “Monzo and Revolut are shining examples of our world-beating Fintech sector.”
Monzo announced on Sunday that: “We do not comment on any application for a Monzo Product or eligibility decisions.”
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