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FCA PEPs Next 3 months + US Sanctions HK, Mex, UAE, China

Author

Paul Huston
April 02, 2025

Mon-Wed-Fri

Good morning ,

  1. Main Story: FCA PEP Guidance coming into effect in next three months

  2. Regulatory Updates: US sanctions for undermining Hong Kong Autonomy

  3. Enforcement Actions & Fines: EU parliament embezzlement case investigated by OLAF

  4. One More Thing: VPN Sanctions Loophole?

1. Main Story: PEP Guidance coming into effect in Q2

🇬🇧 United Kingdom | FCA

This has gone under the radar but the UK Government has recently confirmed that UK PEP guidance will be published and come into effect in the next three months. (UK Parliament)

What does that mean for you?

Here’s a summary of the FCA’s proposed changes to its PEP guidance from 18 July 2024, as a refresher (FCA):

  • NEBMs of Civil Service Departments:
    Non-Executive Board Members (NEBMs) of UK government departments should not be treated as PEPs, as they have no executive authority.

  • Senior Management Approval for PEPs:
    FCA will allow greater flexibility in how firms gain senior management sign-off for PEP relationships. The MLRO must retain oversight, but sign-off processes may vary to avoid compromising their independence.

  • Treatment of Domestic vs. Foreign PEPs:
    Firms to start from the assumption that domestic PEPs (and their family/associates) pose lower risk than foreign PEPs, unless other risk factors are present.

  • Minor Technical Updates:
    Removal of outdated references, such as to EU guidance, and clarification updates to improve consistency and compliance ease.

  • Reinforcement of Proportionality:
    Emphasis on risk-based, differentiated treatment—not all PEPs or associates are high-risk. Firms should calibrate due diligence accordingly, especially to avoid unnecessary financial exclusion.

This last bullet is something I see more experienced, savvier AML leaders already adopt in practice today - let me know if you see differently.

2. Regulatory Updates: US designates China, Hong Kong, Iran, Mexico entities

🇺🇸 United States

US Treasury/DoJ/OFAC/US State Department

New Mexico & Iran designations highlight continued US Government focus - also designates six Hong Kong individuals “for undermining Hong Kong’s autonomy”

  • US designates China, Iran & UAE UAV procurement network with six new designations - the DoJ also brought criminal charges against two of the designated individuals and one org (US Treasury & DoJ)

  • OFAC declared the Sinaloa cartel a terrorist organization and designated six individuals and seven entities - chart below (US Treasury)

  • US designates six Beijing and Hong Kong authorities for “undermining Hong Kong’s autonomy” (US State Dept.)

  • US State Department also published their latest Hong Kong Policy Act report saying:

    “Hong Kong does not warrant differential treatment under U.S. laws as it did before its July 1997 handover” (US State Dept.)

FinCEN

  • FinCEN Alert on Bulk Cash Smuggling and Repatriation by Mexico-Based Transnational Criminal Organizations (FinCEN)

  • FinCEN released an advisory highlighting “how ISIS and its global affiliates fund themselves… and several typologies ISIS uses to transfer money between its affiliates” (FinCEN)

🇬🇧 UK

UK Government

  • In response to an MP question in Parliament, the UK Government’s FCDO Minister of State stated its current support for Poland and gave insights into the measures its currently taking alongside Sanctions “in countering Russian pressure”: (UK Parliament)

“We are taking coordinated action with allies to respond to the growing threat to Europe from Russian hybrid activity. This includes exposing the activities of the Russian Intelligence Services, expelling intelligence officers, and sanctioning individuals. We will continue to work at pace, including through the North Atlantic Treaty Organisation (NATO), to hold Russia accountable, to counter the threat posed by Putin's regime and to increase our resilience to Russian malign activity. As set out in the Prime Minister's joint statement with Prime Minister Tusk following his visit to Warsaw on 17 January, the UK and Poland co-operate closely on defence and security, including on the joint training of Ukrainian troops and the development of integrated air defence.

There is currently a squadron from the UK deployed to Poland as part of the US-led NATO battle group. In addition to this, the UK is providing 4-6 Eurofighter Typhoon jets for Air Policing missions in Polish airspace and a new Polish-British Joint Programme Office in the UK will be established later this year to support greater defence industrial co-operation. The UK is also offering support to Poland's East Shield project to further strengthen its border through a number of infrastructure and security tasks.”

Stephen Doughty - Minister of State (FCDO)

UK Banks agree to anti-fraud Data Sharing with Tech firms

  • UK Banks: Barclays, HSBC, Lloyds, Nationwide, NatWest, Monzo and Santander signed joint statement with Amazon, BT, Google, Match Group, Meta and Three to support Stop Scams UK’s intelligence sharing pilots (Stop Scams UK)

🇪🇺 Europe

EBA

  • François-Louis Michaud to continue as European Banking Authority Executive Director for another five years (he previously held senior positions at the European Central Bank, the Bank for International Settlements and Banque de France) (EBA)

🇨🇭Switzerland

FINMA

  • FINMA reorganizes to “be ready for challenges for the entire Swiss financial centre such as non-financial risks and conduct issues, money laundering and cybercrime” - will have separate divisions for:

    • Enforcement

    • Integrated Risk Expertise (FINMA)

3. Enforcement Actions, Legal Action & Fines

🇪🇺 Europe

  • Paris Correctional Court found nine Members or former Members of European Parliament and several parliamentary assistants guilty of embezzling European Union funds (OLAF)

    • “Marine Le Pen and other members of the same political party were persons concerned in these investigations”

    • Two investigations closed by the European Anti-Fraud Office (OLAF) in cooperation with the French judicial authorities fed into the verdict

🇸🇬 Singapore

  • MAS released their Q1 2025 Enforcement Actions - three actions in total, two for false & unauthorised trading and one for forgery (MAS)

  • Integrated Risk Expertise (FINMA)

4. Sanctions VPN loophole?

The Tech Transparency Project reported that “millions of Americans are inadvertently sending their internet traffic to Chinese companies—including several tied to the People’s Liberation Army.” (Tech Transparency Project)

Detailed investigation including the claim “One in five of the top 100 free virtual private networks in the U.S. App Store during 2024 were surreptitiously owned by Chinese companies, which are obliged to hand over their users’ browsing data to the Chinese government under the country’s national security laws.”

Have a great Wednesday.

Paul