Financial Intelligence Centre Act, 2001 (Act No. 38 of 2001)

Notices

Guidance Note 3

Guidance for Banks on Customer Identification and Verification and Related Matters

Politically Exposed Persons (PEPs)

25. Definition of a politically exposed person (PEP) and the measures that need to be put in place when dealing with a PEP
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A politically exposed person or PEP is the term used for an individual who is or has in the past been entrusted with prominent public functions in a particular country. The principles issued by the Wolfsberg Group of leading international financial institutions give an indication of best banking practice guidance on these issues. These principles are applicable to both domestic and international PEPs.

 

The following examples serve as aids in defining PEPs:

•Heads of State, Heads of Government and cabinet ministers;
•influential functionaries in nationalised industries and government administration;
•senior judges;
•senior political party functionaries;
•senior and/or influential officials, functionaries and military leaders and people with similar functions in international or supranational organisations;
•members of ruling or royal families;
•senior and/or influential representatives of religious organisations (if these functions are connected to political, judicial, military or administrative responsibilities).

 

According to the Wolfsberg principles, families and closely associated persons of PEPs should also be given special attention by a bank. The term "families" includes close family members such as spouses, children, parents and siblings and may also include other blood relatives and relatives by marriage. The category of "closely associated persons" includes close business colleagues and personal advisers/consultants to the PEP as well as persons, who obviously benefit significantly from being close to such a person.

 

A bank should conduct proper due diligence on both a PEP and the persons acting on his or her behalf. Similarly, KYC principles should be applied without exception to PEPs, families of PEPs and closely associated persons to the PEP.