Politically Prominent Person and the Money Laundering Prevention Act (Wwft)

According to the AMLD, a more extensive customer due diligence research must be carried out when a client is a Politically Exposed Person. They are also Politically Exposed Persons are also commenly known as PEP's.

The PEP

A Politically Prominent Person is someone who holds political office. A person who has held such office for up to a year is also a Politically Prominent Person. While officials and bureaucrats are not necessarily corrupt, they are in a vulnerable position because they have the ability to control or divert funds and to award or deny large-scale projects for unjust enrichment. This increases the risk of money laundering and makes it important to find out if someone is a PEP. The measure is designed to deter bribery, fraud, and support for terrorists.

If we take a look at the international statistics it seems that politicians are more prone to being corrupt. Some examples are taking bribes on large tenders. These bribes can be transfert to bank accounts of family members, that's why it is also obligated to conduct an extensive client research on the family members of the PEP. The obligations surrounding a PEP is a product of the countries where corruption is a width spread issue and the "corrupt income" can not be concealed in Western countries.

Heads of state, members of a parliament, members of a supreme court or a director of a state-owned company are all examples of a PEP

Political prominent functions

A full list of all functions that are considered politically prominent.

• Head of state, government leader, minister, deputy minister or secretary of state.
• Member of Parliament or member of a similar legislative body.
• Member of the board of a political party. 
• Member of a Supreme Court, Constitutional Court or other supreme court that delivers judgments against which, except in exceptional circumstances, there is no appeal.
• Member of an audit office or of a board of directors of a central bank.
• Ambassador, Chargé d'affaires or Senior Officer of the Armed Forces.
• Member of the management, supervisory or governing body of a state-owned company.
• Director, deputy director, member of the board of directors or holder of an equivalent position at an international organization.
  • Courts and tribunals 
  • EU organizations 
  • Other international organizations 
  • North Atlantic Treaty Organization (NATO) 
  • Organization for the Prohibition of Chemical Weapons (OPCW)
  • Organization for Security and Cooperation in Europe (OSCE)
  • United Nations (UN) 

If you are dealing with a PEP you need to conduct an extensive client research

Enhanced customer due diligence

When a client is considered to be a PEP it is necessary to conduct an enhanced client research. An extensive research also has to take place when it's believed beforehand that there is a higher risk of money laundering or the financing of terrorism or if the country where the client is a resident is designated by the European Commission as a state with an increased risk of money laundering or financing terrorism. In the case of an intensified client investigation, the measures must be adapted to different situations. This may mean, for example, that additional research must be carried out into the origin of the funds involved in a transaction. 

PEP and monitoring

To effectively identify and check clients, it's necessary to control new accounts and existing customer database with a so called watch list.

• Recently elected to public office;
• Involved in recent criminal or corruption cases; and
• Mentioned in recently issued watch lists or sanctions.

CDD On Demand

The SCOPE CDD On Demand solution checks whether a person belongs to a PEP. If there is a match, this will be indicated in the report, including any sources where this comes from. It is also possible within the CDD On Demand solution to place searches on a so-called watchlist , so that these searches are monitored daily. be aware of any changes. For example, you will immediately receive a notification when someone has recently become a PEP and you must set up a stricter customer due diligence for this. To perform the compliance check , which also screens for PEP, the CDD On Demand solution uses of the Acuris Risk Intelligence database. In addition to the PEP check, other points are also checked, such as sanction lists, negative media, insolvency register and a geographic check. In addition, it is possible to try to find the UBO of a legal entity through the UBO Check.