A politically exposed person (PEP) is an individual who is or has been entrusted with a prominent function, such as for example head of state or government, judicial or military officials or senior executives of state owned corporations. Many PEPs hold positions that can be abused for the purpose of laundering illicit funds or other predicate offenses such as corruption or bribery. The PEPs relatives and close associates (RCA) could also be abused and are therefore included in this special area of high risk.
If a customer is considered as a politically exposed person, the firm must take enhanced KYC measures, such as always finding out the origin of the assets processed in a business relationship or in an individual transaction. An approval from senior management is required before establishing a customer relationship with a PEP.
When a politically exposed person has ceased to perform their functions, the enhanced measures shall be applied for a minimum of 18 months and until it is considered that the person no longer poses a risk of money laundering or terrorist financing.