A politically exposed person (PEP) is an individual who is or has been entrusted with a prominent function. Many PEPs hold positions that can be abused for the purpose of laundering illicit funds or other predicate offences such as corruption or bribery. Because of the risks associated with PEPs, the FATF Recommendations require the application of additional AML/CFT measures to business relationships with PEPs.
These requirements are preventive (not criminal) in nature, and should not be interpreted as meaning that all PEPs are involved in criminal activity.
Politically exposed person shall mean:
(A) a natural person in a prominent public position and with nation-wide responsibilities, such as a head of state, a head of government, a minister and deputy or assistant minister, a member of the parliament, a member of a supreme court, a constitutional court or another high-level judicial body, decisions of which are not subject to further appeal, except in exceptional circumstances, a member of a court of auditors or a central bank board, a high-ranking military officer, a member of an administrative, supervisory, or management board of a state-owned business, an ambassador or chargé d’affaires, or a natural person, having similar responsibilities on a Community or international level; all the above for the entire period of the position and for one year after the termination of such position, and provided the person:
- has residence outside the territory of the EU, or
- holds such important public position outside the EU,
(B) a natural person, who:
- is the spouse, partner equivalent to the spouse or a parent of the person under
letter a), - is a son or a daughter of the person under letter a) or a spouse or a partner of such son or daughter (a son or daughter in law),
- is a business partner or a beneficial owner of the same legal person, a trust, or any other business entity under a foreign law, as the person under letter a) or is known to the obliged entity as a person in a close business relationship with a person under letter a), or
- is a business partner or a beneficial owner of the same legal person, a trust, or any other business entity under a foreign law known to have been established in benefit of a person under letter a).