Who Are Politically Exposed People ?
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Who are Politically Exposed People PEP?
- Persons that are entrusted with prominent public functions.
- Some examples are people who hold offices like heads of state, heads of government, ministers, deputy ministers, members of parliament, members of courts, judges and so on.
Types of PEPs?
- The level of risk of a politically exposed person may vary depending on where they are from and the public accountability they are subject to.
- There are two types of PEPs, the one possesses Lower Risk and the other with Higher Risk.
- A lower risk politically exposed person may be one who holds office in a country with:
- low levels of corruption
- political stability and free and fair elections
- strong state institutions where accountability is normal
- credible anti-money laundering measures and similar traits.
- A high risk politically exposed person may be from, or connected to, a country viewed as having a higher risk of corruption that may have:
- high levels of corruption
- political instability
- weak state institutions
- weak state institutions
- armed conflict or similar traits.
How to Identify a PEP?
It is mandatory to apply enhanced due diligence on politically exposed persons, their family members or known close associates. To identify a PEP you have below sources:
- news agencies and sources
- government and parliament websites
- Electoral Commission:
- Companies House Persons of Significant Control: https://beta.companieshouse.gov.uk/
- Transparency International: https://www.transparency.org/
- Global Witness: https://www.globalwitness.org/en-gb/campaigns/corruption-and-money-laundering
Whatever source is used you need to understand how any database is populated, for example how often it is updated. You will need to ensure that those flagged by the system fall within the definition of a politically exposed person, family member or close associate as set out in the Regulations.
Your Responsibilities:
- You (as an organisation) must always apply enhanced due diligence on politically exposed persons, their family members or known close associates.
- You should take account of your own assessment of the risks faced by your business in relation to politically exposed persons
- Cashier or teller must obtain senior management approval before establishing a business relationship with a PEP
Please do read our Training blog to understand your responsibilities while transacting with PEPs, the link is in the description.
