Who is a Politically
Watch this quick 2 minute video on “Who is a PEP?”
Politically Exposed Person (PEP)
A “politically exposed person” or “PEP” is an individual that holds a prominent public position or function. Due to their role, they may be more susceptible to bribery, corruption or other money laundering offences, as a result of this they are of high risk to financial institutions and Designated Non-Financial Businesses and Professions (DNFBPs).
Types of Politically Exposed Persons:
Domestic PEPS: an individual that holds a prominent public position or function domestically. This includes the Head of State or government, senior executives and financial regulators.
Foreign PEPs: an individual that holds a prominent public position or function within a foreign country. This includes the Head of State or government, senior executives and financial regulators of foreign countries.
International PEPs: an individual that holds a prominent public position or function by an international organisation. This can include members of the board in an organisation and senior management positions.
Family members: individuals that are related to a PEP can also be classified as a PEP themselves.
Close associates: an individual who has close relations with a PEP whether it is socially or professionally.
If an individual is identified as a PEP, this does not mean that they are involved in criminal activity, but it means that precautions may need to be taken as they are of higher risk to financial institutions and DNFBPs.
Financial Action Task Force (FATF) Recommendations
The Financial Action Task Force (FATF) is an inter-governmental organisation with the focus of reducing and fighting against money laundering and terrorist financing. The FATF devise a set of recommendations that are of international standard for combating such offences.
The current FATF Recommendations (2012) ensure that financial institutions take the appropriate action to identify whether their customers or beneficial owners are PEPs, or if they are related to, or in connection with a PEP. These measures are taken in the aim of preventing the harm of the financial system, non-financial businesses and professions by PEPs, but to also identify potential misconduct.
For more check out this blog post: Why you need PEP and Sanctions Screening for your business compliance