Tag: tread

Explainer: Banks tread tricky tightrope with politically exposed clients

LONDON, July 26 (Reuters) – The war of words between NatWest (NWG.L) and erstwhile customer Nigel Farage has underscored the challenges global banks face in handling clients who could be defined as a politically exposed person, or PEP.

Banks are obliged to deny services to individuals subject to international sanctions or who are suspected of money-laundering or financing terrorists.

Lenders are obliged to apply extra scrutiny to customers identified as PEPs under international standards, but they are prohibited from ceasing business with customers who clash with their self-proclaimed institutional values.

Top UK regulators and government ministers have spoken out in defence of freedom of expression, and have said banks should not bar non-sanctioned customers on political grounds.


Banks are prevented by law from discriminating against customers on the basis of their political views. The UK government is seeking to tighten supervision of banks suspected of making politically motivated decisions to deny services to customers who hold lawful opinions.

But expressing views on race that may be construed as inciting racial hatred could serve as justification for jettisoning a customer, as this is considered an offence under UK law.

Banking lobby group UK Finance said last week that lenders could close an account for several reasons but must treat customers fairly.

Closing accounts for commercial reasons is permitted, such as when an private banking or wealth management account falls below a certain threshold in size.

In 2017, French far-right politician and former presidential runner Marine Le Pen accused HSBC (HSBA.L) and Societe Generale of a “banking fatwa” after her accounts and accounts linked to her party were shuttered by the lenders.

Commenting at the time, HSBC said its relationships with customers were “governed by a set of regulatory obligations

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