10.1. Definition of politically exposed persons

Politically exposed persons (PEPs), General glossary

Individuals who are (have been) entrusted with prominent public functions such as

It covers family members and close associates of pePs

Entrusted by a foreign country

(1) Foreign PEPs

Heads of State

Heads of government

Senior politicians

Important political party officials

Senior government, judicial and military officials

Entrusted domestically

Executives of state owned corporations

Senior management of an international organization

(2) Domestic PEPs

E.g. directors, deputy directors, members of the board

(3) Persons who are or have been entrusted with a prominent function by an international organization

It does not cover middle ranking or more junior individuals

10.2. Additional measures for politically exposed persons

Financial institutions should be required to take action in relation to the following types of PEPs, R. 12

Should occur, at the latest, at the time of the payout

Where there are higher risks identified

Take reasonable measures to determine whether the beneficiaries of life insurance policy are PEPs, R. 12, IN

Inform senior management before the payout of the policy proceeds

The beneficial owner of the beneficiary is a PEP (where required)

Conduct enhanced scrutiny of the business relationship

Consider making an STR

Persons who are or have been entrusted with a prominent function by an international organization

Foreign PEPs

Domestic PEPs

Whether PEPs are customers or beneficial owners the following must be performed in addition to normal CDD measures

Take reasonable measures to determine whether the customer or the beneficial owner is a PEP

(a) To have appropriate risk-management systems to determine whether the customer or the beneficial owner is a foreign PEP

In case of a higher risk

(b) To obtain senior management approval for establishing (or continuing, for existing customers) such business relationship

These measures should be applied

(c) To take reasonable measures to establish the source of wealth and source of funds

(d) To conduct enhance ongoing monitoring of the business relationship

10.3. Aml/cft requirements for financial institutions with foreign operations

Financial institution that has foreign operations (R. 18, IN)

There has to be the group-level AML/CFT program

Foreign branches

Foreign majority-owned subsidiaries

Home country operations

AML/CFT measures applied to these operations have to be consistent with the home country requirements

AML/CFT requirements of the home country

To the extent the host country AML/CFT regulations permit

Should apply additional measures to manage the ML/TF risks