PRA is consulting on new rules aimed at avoiding FSCS eligibility issues arising if a firm has failed to conduct adequate AML checks. It stresses the changes are intended merely to provide a backstop if firms’ have not met their obligations and to ensure eligible depositors and ultimate beneficiaries are not denied compensation because of a firm’s failure to comply with its AML obligations.
The proposals will allow identity verification to be carried out retrospectively if a responsible person has not carried out verification at the compensation date, with compensation payable only when the appropriate verification has been completed. PRA suggests that any post-compensation date verification should be undertaken by the relevant insolvency practitioner.
Consultation is open until 15 February, and PRA wants to introduce the new rules from 24 March.