Law360 is providing free access to its coronavirus coverage to make sure all members of the legal community have accurate information in this time of uncertainty and change. Use the form below to sign up for any of our weekly newsletters. Signing up for any of our section newsletters will opt you in to the weekly Coronavirus briefing.
Law360, London (April 28, 2020, 2:06 PM BST) -- The Financial Conduct Authority has told banks they do not need to carry out additional financial crime checks on existing customers seeking loans during the COVID-19 crisis, as officials attempt to speed up the rate at which companies can get emergency loans.
The regulator said on Monday that banks must be able to take "fast and efficient lending decisions" because many businesses face financial ruin. Lawmakers have warned that companies have been put at risk by delays in gaining access to credit.
"We recognize that, currently, the need to manage these risks [from financial crime] should be balanced against the need for the fast and efficient release of funds to businesses under the government's schemes," the FCA said.
Rules will mainly be relaxed only for existing bank customers, who are deemed less of a risk for fraud or money laundering. The regulator said that the standard checks should apply to new customers but that lenders should use their discretion.
"If the money laundering and terrorist financing risks associated with the new business relationship are low, an authorized firm may decide simplified due diligence is appropriate," the FCA added.
The regulator told bank chief executives in March to be flexible over requirements for identifying clients, suggesting they allow customers to submit "selfies" or videos where appropriate.
The U.K. launched its coronavirus business interruption loan scheme in March, for which the government would take on 80% of default risk. That was extended on Monday with a program of 100% government-backed "bounce back" loans to small businesses.
Just £2.8 billion ($3.5 billion) from a pot of £330 billion in available government-backed loans has been provided to 16,000 companies in the past month, according to figures from Thursday released by trade group UK Finance.
Mel Stride, chairman of the parliamentary Treasury Committee, said businesses had complained that the lending process was "too complex and too slow."
"The success of the new scheme will still depend on the actions of lenders," he said, in response to the bounce-back loan announcement.
--Editing by Ed Harris.
For a reprint of this article, please contact firstname.lastname@example.org.