Because of the position they occupy or have occupied PEPs are considered high risk customers thus, enhanced due diligence must be conducted.
Inclusion of an individual as a Politically Exposed Person on finshield.net does NOT imply nor suggest this individual is involved in any illegal activity.
As per international agreements, any person taking a public office becomes automatically classified as Politically Exposed Persons and consequently is subject to heighten scrutiny by financial institutions.
You should always follow your internal compliance procedures.
Generally speaking you may want to check a customer identity against theList when:
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A person identified as a senior foreign political figure, any member of their immediate family and any close associate. PEPs are individuals who have or have had positions of public trust. However, some jurisdictions have expanded the definition to include “Domestic” PEPs.
More details about Politically Exposed Persons definition at the Wolfsberg Group website
“Politically Exposed Persons” (PEPs) are individuals who are or have been entrusted with prominent public functions in a foreign country, for example Heads of State or of government, senior politicians, senior government, judicial or military officials, senior executives of state owned corporations, important political party officials. Business relationships with family members or close associates of PEPs involve reputational risks similar to those with PEPs themselves. The definition is not intended to cover middle ranking or more junior individuals in the foregoing categories.
More information at FATF – GAFI website
“A rigorous and robust process of investigation over and above know your customer (KYC) procedures, that seeks with reasonable assurance to verify and validate the customer’s identity; understand and test the customer’s profile, business and account activity; identify relevant adverse information and risk assess the potential for money laundering and / or terrorist financing to support actionable decisions to mitigate against financial, regulatory and reputational risk and ensure regulatory compliance.”
Peter Warrack in the July 2006 edition of ACAMS Today (Association of Certified Anti-Money Laundering Specialists)
Relationships with PEPs may represent increased risks due to the possibility that individuals holding such positions may misuse their power and influence for personal gain and advantage or for the personal gain or advantage of family and close associates. Such individuals may also use their families or close associates to conceal funds or assets that have been misappropriated as a result of abuse of their official position or resulting from bribery and corruption. In addition, they may also seek to use their power and influence to gain representation and/or access to, or control of legal entities for similar purposes.
It is however important to understand that the majority of PEPs do not abuse their position and will not represent any undue additional risk to a Financial Institution solely by virtue of that categorization.