On Thursday 29 June 2023, the politician and broadcaster Nigel Farage announced that his bank (not named) had closed his bank accounts. He said that the bank simply stated that it was for 'commercial reasons' but, in his announcement, he went on to suggest that it may have been because he was a "Politically-Exposed Person" (or PEP). He had approached several other banks but had not been able to open new accounts
Farage is a particularly high profile individual and was a leading campaigner for Brexit - (the UK's departure from the EU). He was a Member of the European Parliament (MEP) from 1999 to 2020. In 2021, Farage relinquished his leadership of the political party Reform UK but, at the same time, became its honorary President.
The Financial Conduct Authority (FCA) has a clear explanation of Enhanced Due Diligence for High-risk Customers. This notes that - 'Politically exposed persons (PEPs) are individuals whose prominent position in public life may make them vulnerable to corruption. The definition extends to immediate family members and known close associates.'
The full definition of a PEP
is set out in the The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (legislation.gov.uk) - see, in particular, Regulations 35(12) to 35(15). An individual who is a member of the governing body of a political party comes within the definition of PEP.The 2017 Regulations were "made" on 22 June by two of the "Lords Commissioners of the Treasury" and "laid before Parliament" the same day. They replaced earlier Regulations and came into force on 26 June 2017.
The original legal authority for the 2017 Regulations was, in part, the now repealed European Communities Act 1972 - the "conduit" by which much EU law was implemented in the UK's domestic legal systems.
On Exit Day from the EU, additional Regulations made under the European Union (Withdrawal) Act 2018 came into force - The Money Laundering and Transfer of Funds (Information) (Amendment) (EU Exit) Regulations 2019 (legislation.gov.uk).
Whilst a bank has to apply enhanced due diligence to accounts held by PEPs it does not follow that such accounts must necessarily be closed. More information about Mr Farage's relationship to these legally complex Regulations will doubtless appear over the coming weeks.
Notes:
Politically Exposed Persons Regime - House of Commons Library (parliament.uk)
Quick guide to the Money Laundering Regulations 2017 | The Law Society
For the closure of bank accounts see - Bank account closures (financial-ombudsman.org.uk)
Retained EU law | The Law Society
Schedule of retained EU law - GOV.UK (www.gov.uk)
The Lords Commissioners of the Treasury are officially appointed by HM The King and the list from 3 May 2023 is shown in the London Gazette - Crown Office | The Gazette. The Prime Minister is First Lord of the Treasury and the Chancellor of the Exchequer is second Lord. A number of others - usually government Whips - are appointed.
Media:
Update 4 July 2023:
The BBC reported that - Nigel Farage bank account shut for falling below wealth limit - BBC News. The report notes - 'Nigel Farage fell below the financial threshold required to hold an account at Coutts, the prestigious private bank for the wealthy, the BBC has been told.
It is understood he was subsequently offered a standard account at NatWest which owns Coutts.
Mr Farage has said he believes his account is being shut for political reasons and he has since been turned down by nine other lenders.
But people familiar with Coutts' move said it was a "commercial" decision.'
Update 23 July 2023:
City minister summons UK bank bosses to discuss Farage account closure | Politics | The Guardian
Update 26 July 2023:
NatWest boss Alison Rose resigns over Nigel Farage Coutts account row | NatWest Group | The Guardian
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