Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL)

 
 Politically exposed persons
The FATF defines a politically exposed person (PEP) as “an individual entrusted with a prominent public function”. Studies undertaken by the FATF and other international organisations identified that the positions held by PEPs are vulnerable to abuse for the purposes of corruption, ML and potentially TF. The FATF formulated an approach establishing specific requirements in relation to PEPs, in particular setting a number of additional requirements for the private sector subject to the FATF Recommendations. The measures provided for by the FATF do not aim to inhibit access to services by PEPs or to presume their participation in criminal activities, but to ensure that the private sector subject to the FATF Recommendations treats PEPs according to the risk they represent and undertakes additional measures necessary to mitigate this risk.

The requirements set in the FATF Recommendations apply to PEPs, as well as to their family members and close associates. The 2003 FATF Recommendations contained requirements related only to foreign PEPs (referring to persons undertaking the public function in a foreign jurisdiction, irrespective of their nationality). The current standards have been broadened to also cover domestic PEPs and those of international organisations. The scope of the requirements was broadened with a view to align the FATF Standards with the provisions of the United Nations Convention against Corruption (the Merida Convention, 2003). In accordance with the concept of applying AML/CFT measures on a risk-sensitive basis, the requirements differ between the two groups. Additional measures with regard to domestic and international organisations PEPs are to be undertaken solely when higher risk have been identified, whilst foreign PEPs are considered as representing a higher risk.

An important task of the state authorities is to provide the private sector with sufficient guidance on the possible manners of how to identify whether a person is PEP. This is one of the most recurrent difficulties the private sector encounter. The FATF issued guidance for countries on this matter which proposes different methods which may be applied.
 
Reference documents

FATF Guidance 2013 - FATF Guidance: Politically Exposed Persons (Recommendations 12 and 22)
FATF Guidance 2012 - Specific Risk Factors in Laundering the Proceeds of Corruption: Assistance to Reporting Institutions
World Bank Best Practices 2012 - Using Asset Disclosure for Identifying Politically Exposed Persons
StAR Typologies 2011 - The Puppet Masters: How the Corrupt Use Legal Structures to Hide Stolen Assets and What to Do About It
StAR Guidance 2010 - Politically Exposed Persons: Preventive Measures for the Banking Sector