Treatment of Politically Exposed Persons (PEPs)

24 March 2017 Alistair MacDougall Compliance

The term ‘politically exposed persons’ (PEPs) refers to people who hold high public office. The current Money Laundering Regulations require firms to apply extra measures, called “enhanced due diligence” when dealing with those who are PEPs in a state other than the UK, as well as family members or close associates of those PEPs.

The anti-money laundering regime is being updated by 26 June this year and this will include expanding the definition of a PEP to include those holding a politically exposed position in the UK.

This means that more firms will have PEPs.

We do not intend to repeat the guidance here as the paper is relatively brief and well presented. It provides useful instruction, for example how to differentiate between a higher and lower risk PEP, and who is classified as a family member or a close associate.

It is essential reading though, if only to clarify whether or not your firm has PEPs.

You can find the consultation here.

Don’t forget to check Our View about this article and the Actions Required By You

Important Note: ATEB news is intended to provide general information ONLY. The content, including any views expressed or guidance provided, does not replace the need to comply fully with FCA Rules and Guidance. Unless you have discussed news article content with ATEB, and specifically how it relates to your circumstances, then ATEB disclaims all liability and responsibility and actions arising from any reliance placed upon it. For the avoidance of doubt therefore, any reliance you place on such information without our consultation is at your own risk.

ATEB Compliance offers compliance and regulatory advice.

ATEB Suitability provides report writing software for the financial services market.

Our View

Importantly, the PEP definition is being widened and hence more firms are likely to have such clients.
The consultation includes draft guidance. We cannot see the final guidance changing too much from the proposals here.
For those firms that have PEPs as clients, or now will have PEPs clients under the expanded definition, this is a must read as it will clarify the anti-money laundering requirements.

Action Required By You

Know what constitutes a PEP under the new regulations;
Check if you have any PEPs in your client bank;
Understand the enhanced due diligence requirements;
Ensure that your processes and procedures are up to scratch.

About the Author

Alistair MacDougall

Technical Manager - Often referred to as the Oracle or the Sage, Alistair has a wealth of financial services experience. He is our go-to Technical Manager and enjoys nothing more than a complicated conundrum. Feel free to test his renowned knowledge by getting in touch.

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