Fraser Nelson

RBS’s definition of a ‘politically exposed person’

RBS's definition of a 'politically exposed person'
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Are you a "politically exposed person"? This is what RBS wants to know about its prospective clients, this is the question that led me (when posing as a potential client) to be asked if I was a member of a political party. And when a state-controlled bank like RBS asks people if they are "politically exposed" - a phrase with more than a hint of menace - it is no surprise that it sends shivers down so many spines. What on earth could they mean? What were they trying to get at?

I put some questions about this to RBS earlier today. Here are their replies, and my comments.

 

Q1 - What does RBS understand by the term "Politically Exposed Person (PEPs)"

A - A PEP can be defined as an individual who is or has been entrusted with a prominent public function; examples include heads of state, senior politicians, government, judicial or military officials, senior executives of state owned corporations and political party officials. The definition is not intended to cover middle ranking or more junior individuals.

 Comment: So we're talking about a handful of people in the country - less than 0.001% of the population. So why were ordinary members of the public being asked? On the off chance that they could be a head of state? This doesn't stack up.

Q2 - Can you  give an example where this had relevance to services provided by Streamline?

A: For reasons of customer confidentiality we are not at liberty to answer this question.

Comment: ie - there is no reason why RBS would have any reason to believe that the people applying for its accounts were heads of state or ministers. The question is absolutely unjustified.

 

Q3. Has question being asked for opening other accounts and, if so, which ones?

A: As Know Your Customer is an FSA requirement, it is feasible that this question may have been asked during other account opening processes.

Comment: So that's a 'yes''. Understandably, they don't want to say how many customers have been asked about their politics.

Q4. Is it the case that this question is discretionary, and is not mandated by the FSA?

A: The FSA presides over the UK AML Regulatory environment which includes the Joint Money Laundering Steering Group. Within that, firms must evidence that they take all reasonable steps to Know Your Customer; this may feasibly include identifying and recording PEP connections.

Comment: So yes, the question is discretionary. RBS was telling customers (ie, me) that the question of their political affiliation was "thrust upon" them by the FSA. This is flatly untrue: they are simply required to take steps against money laundering. RBS chose to use this as a reason to ask the political question.

Q5.  Why was this question being routinely asked by RBS Streamline?

A: As advised earlier, at the turn of the year our enhancements were made to Streamline’s Know Your Customer process, resulting in the need for our front line sellers to satisfy themselves whether an individual is a Politically Exposed Person or not. As you have mentioned, staff have mistakenly asked about political affiliation in conversations with customers. As confirmed yesterday, staff have since been instructed not to ask this question. However, as part of the FSA guidelines around Anti-Money Laundering, they are required to make a judgement as to whether someone could be a Politically Exposed Person.

Comment: So "at the turn of the year" - about the same time that RBS went into state control - this political question was introduced into the "know your customer" process. Why? There are some things a bank should not know about its customers: mainly, anything about their politics. There are companies who have lists of Politically Exposed Persons - there are only a few thousand of them in the world. RBS should check their customers against that list. RBS had absolutely no excuse for asking customers if they are "politically exposed" - a phrase which can easily be taken the wrong way, especially when asked by a state-controlled bank. 

 

Written byFraser Nelson

Fraser Nelson is the editor of The Spectator. He is also a columnist with The Daily Telegraph, a member of the advisory board of the Centre for Social Justice and the Centre for Policy Studies.

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