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Online bank Monzo refused to let UK chancellor Jeremy Hunt open an account last year, he said, illustrating what he regards as the over-onerous vetting that banks must carry out on people in public life.
Hunt has backed a prioritised review by the Financial Conduct Authority into the “politically exposed persons” (PEPs) regime — a set of rules designed to combat corruption and bribery of public officials.
In an interview with the Financial Times recently, the chancellor said: “We want to encourage people to go into public life.
“If the price of going into public life is that you find it really hard to set up a bank account, then we need to make sure that we remove barriers where we can. I think that’s why I was declined by Monzo for an account last year.”
PEPs are individuals around the world with “prominent public functions” who could potentially abuse their positions for private gain and use the financial system to launder the proceeds.
Under the law, banks have to carry out enhanced scrutiny of PEPs, as well as their families and close associates, often at considerable cost to the bank concerned.
The issue hit the headlines this month after Nigel Farage, former Brexit party leader, claimed that the PEPs regime may be the reason the elite bank Coutts decided to close down his longstanding bank account.
Although sources close to the issue said Farage no longer met the criteria for holding an account at the bank, the ex-MEP told the FT that nine other banks had subsequently turned down his requests to open an account.
The pro-European Hunt said he unusually found himself in the same boat as Farage. “I’m a politically exposed person,” the chancellor said.
Andrew Griffith, City minister, wrote to the FCA last week asking the regulator to prioritise its review of the PEPs regime, saying “some financial institutions may be failing to strike the right balance of taking a proportionate approach based on a careful evaluation of the risk”.
He said that while he recognised the importance of tackling money laundering, it was “crucial that an appropriate balance is struck”.
The new Financial Services and Markets Act creates a distinction between a lighter touch regime that should be applied to domestic PEPs and more rigorous checks for those from overseas.
Earlier this year Hunt poured praise on Monzo, apparently forgiving the British bank for turning down his request for an account. “We have Monzo and Revolut, shining examples from our world-beating fintech sector,” he said.
Monzo said on Sunday: “We don’t comment on anyone’s application for a Monzo product or eligibility decisions.”