About a-team Marketing Services
The knowledge platform for the financial technology industry
The knowledge platform for the financial technology industry

A-Team Insight Blogs

Ex-BoFE Haldane’s Headache Amplifies Banking’s PEPplexity

Subscribe to our newsletter

By Rory Doyle, Head of Financial Crime Policy at Fenergo.

Just when you thought the drama was over after the Nigel Farage-Coutts saga, along comes another high-profile figure to re-shine a spotlight on a problem that refuses to disappear.

Andy Haldane, a former bigwig at the Bank of England, is the latest to be denied a bank account due to his perceived political affiliations, despite no longer being employed by the Bank. It’s like déjà vu, but instead of a Brexiteer, it’s an ex-central banker taking centre stage.

Haldane, who would have spent more time crunching numbers than shaking hands with politicians, appears to have found himself in hot water simply for his past Threadneedle Street gig. But the Bank of England isn’t exactly known for its political shindigs – so why the snub? Turns out, it was a simple case of mistaken identity, courtesy of a computer glitch. Sound familiar?

The incident underscores the complexities inherent in politically exposed persons (PEPs) identification and the potential consequences of misclassification. PEPs aren’t just your run-of-the-mill VIPs; we’re talking presidents, prime ministers – those who really call the shots. But it doesn’t stop there. Royal families, leaders at state-owned companies, and even the top dogs at international organisations like the UN are fair game. The idea is simple: where there’s power, there’s potential for corruption.

The issue is there is no one-size-fits-all description of a PEP, with every jurisdiction playing by its own rules. The US has one definition, the EU another, and let’s not get started on the rest of the world. So, what’s a bank to do?

Well, for starters, they need to up their game when it comes to due diligence. We’re talking Sherlock Holmes levels of sleuthing here. Banks must dig deep, not just into the pockets of PEPs, but into their entire financial history. Who’s giving them money? Where’s it coming from? And most importantly, is it clean?

But there’s a deeper issue at the heart of this longstanding predicament: many banks still rely on antiquated systems and processes when it comes to onboarding and managing clients who are categorised as PEPs, leaving them drowning in a sea of paperwork and red tape. Or as in the case of Haldane, fall foul of human error.

Thankfully, though, a life raft may be within reaching distance.

Advancements in client lifecycle management (CLM) software can enable banks to finally untangle the mess of corporate hierarchies and more accurately understand who’s really pulling the strings – or perhaps more fittingly, the purse strings. It can help banks deal with the complexities of identifying and understanding the potential risk of PEPs by enabling them to sift through complicated company setups more easily – meaning they can pinpoint the real decision-makers much faster. Tech solutions can also make it easier to gather all the extra info needed to meet the regulatory rules, in theory making PEP onboarding and management smoother than ever.

Considering the Haldane case, it’s evident the challenges surrounding PEP identification and management persist, with real-world implications for individuals and institutions alike. As financial institutions navigate this problematic issue, a proactive approach, bolstered by technological innovation and regulatory collaboration, seems essential.

By learning from incidents like Haldane’s, financial institutions can enhance their ability to effectively onboard  and manage PEPs, thereby mitigating risks and safeguarding the integrity of the financial system. As we move forward, let’s heed the lessons of the past and work together to ensure PEP management remains a top priority for the industry.

Subscribe to our newsletter

Related content

WEBINAR

Recorded Webinar: Best practices for compliance with EU Market Abuse Regulation

EU Market Abuse Regulation (MAR) came into force in July 2016, rescinding the previous Market Abuse Directive and replacing it with a significantly extended scope of regulatory obligations. Eight years later, and amid constant change in capital markets regulation, technology and culture, financial institutions continue to struggle to stay on the right side of the...

BLOG

A-Team Group Announces Winners of RegTech Insight Awards APAC 2024

A-Team Group has announced the winners of its RegTech Insight Awards APAC 2024. The awards are designed to recognise excellence in RegTech solutions and services, and focus on vendors providing exceptional offerings to capital markets participants in APAC. The winners of the awards were announced on 6 March 2024. This year’s RegTech Insight Awards APAC...

EVENT

TradingTech Briefing New York

Our TradingTech Briefing in New York is aimed at senior-level decision makers in trading technology, electronic execution, trading architecture and offers a day packed with insight from practitioners and from innovative suppliers happy to share their experiences in dealing with the enterprise challenges facing our marketplace.

GUIDE

Trading Regulations Handbook 2021

In these unprecedented times, a carefully crafted trading infrastructure is crucial for capital markets participants. Yet, the impact of trading regulations on infrastructure can be difficult to manage. The Trading Regulations Handbook 2021 can help. It provides all the essentials you need to know about regulations impacting trading operations, data and technology. A-Team Group’s Trading...