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Law360, London (April 1, 2020, 1:03 PM BST ) Banks can use "selfies" to verify the identity of their customers, the Financial Conduct Authority has said as it relaxed retail investment rules in areas including reporting trades and money laundering safeguards.
Responding to the coronavirus crisis, the City watchdog has told chief executives of retail financial services companies that it will allow them leeway when following regulations. It wants them to be able to cope with the economic fallout from the global spread of COVID-19.
But lenders must ensure that they are being transparent with customers, the FCA said late Tuesday in a letter to bosses.
The regulator said that bank staff working remotely can use methods such as accepting scanned documents and "selfies" or videos to check the identity of clients. Banks can take flexible approaches to complying with the 2017 Money Laundering Regulations, which implement the EU's fourth Anti-Money Laundering Directive.
"During this period, we expect firms to continue to comply with their obligations on client identity verification," Christopher Woolard, interim chief executive of the FCA, said in a so-called Dear CEO letter dated Tuesday. "But firms can be flexible."
Europe's Markets in Financial Instruments Directive, known as MiFID II, requires banks to ensure the trades they execute on behalf of clients are the best deals available to the market. Banks must report information on this process, known as best execution, to their national regulators by March 31.
Woolard said on Tuesday that the FCA has "no intention of taking enforcement action" if an investment company does not publish its best execution reports on time - as long as this is done before June 30. This is in line with guidance published by the European Securities and Markets Authority on Tuesday.
Companies offering portfolio management services must update customers if their holdings drop by 10% or more in value since their last statement.
But Woolard said the FCA will not penalize companies for six months, until October, as long as they issue at least one notification in the current reporting period and later provide general updates on social media or their website.
The regulator said it will continue working with banks and consumer organizations to understand how the pandemic is affecting markets.
Britain's financial regulators have worked to ease rules for financial and listed companies during the outbreak. The measures announced so far include extending deadlines for financial results and postponing plans that are not critical to protecting consumers.
--Editing by Ed Harris.
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