Politically exposed person
From Wikipedia, the free encyclopedia
Politically exposed person or PEP is a term that defines a person who may be or recently acted in the political arena of a country or has held such a position in the recent past. Such an individual must be tracked by financial institutions as they contain risk to the institution and possibly the country of domicile. Heavy fines have been imposed on financial institutions, that have conducted business with PEPs without following adequate Know Your Customer procedures and enhanced due diligence processes. The focus of such legislation is the link between corrupt policticians to money laundering and financing of terrorism. Since September 11, 2001 more than 100 countries have changed their laws related to financial services, making the fight against political corruption a core piece of the new legislation.
The definition of a PEP is commonly based on the Financial Action Task Force definitions, which are as follows:
- Individuals with prominent public functions, such as chief of states, high ranked politicians, judges, parliament members, military officials.
- Senior Party Members
- Management of government owned corporations
- Immediate family members: spouse, children, siblings, parents, and spouse's parents and siblings
- Close associates, personal or business
