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Politically Exposed Person and the Anti Money Laundering Directive (AMLD)

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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/exposed person is often someone with a political function. A person who has held such a position until a year ago is also considered a politically prominent person. Although bureaucrats are not necessarily corrupt, they are in a vulnerable position because they have the ability to control or divert funds and to grant or refuse large-scale illicit enrichment projects. Given this, the chance of money laundering is significantly higher and makes it really important to find out if someone is a PEP. The measure is ment to counter bribery, fraud and support of terrorist organizations.

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.

  • Recentelijk verkozen tot openbaar ambt;
  • Betrokken bij recente strafzaken of corruptiezaken; en
  • Genoemd in recent uitgegeven watchlists of sancties.

CDD On Demand

De oplossing van SCOPE CDD On Demand controleert of een persoon behoort tot een PEP. Indien er een match is zal dit in het rapport worden aangegeven, incl. eventuele bronnen waar dit vandaan komt. Tevens is het binnen de CDD On Demand oplossing mogelijk om zoekopdrachten op een zogenaamde Watch list te plaatsen, waardoor deze zoekopdrachten dagelijks gemonitord worden op eventuele wijzigingen. Zo krijgt u direct een melding wanneer iemand recentelijk een PEP is geworden en dient u hier een verscherpt cliëntenonderzoek voor in te stellen. Voor het uitvoeren van de compliance check, waarin tevens op PEP wordt gescreend, maakt de CDD On Demand oplossing gebruik van de database van Acuris Risk Intelligence. Naast de PEP-controle wordt er ook gecontroleerd op andere punten, zoals sanctielijsten, negatieve media, insolventieregister en is er een geografische check. Daarnaast is het mogelijk om te trachten de UBO van een rechtspersoon te achterhalen middels de UBO Check.

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