In our blog post published on 15 August, we indicated that in accordance with the EU Third AML Directive and the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010, Enhanced Customer Due Diligence (ECDD) should be applied in respect of a business relationship, or occasional transaction, with a Politically Exposed Person, or PEP.
But who exactly is a pep
Irish anti-money laundering legislation defines a PEP as a person who holds, or has held at any time in the last year, a prominent public function including:-
- A specified official including any of the following:
- A head of state, head of Government, Government minister, deputy or assistant Government minister;
- A member of parliament;
- A member of a supreme court, constitutional court or other high level judicial body whose decisions, other than in exceptional circumstances, are not subject to further appeal;
- A member of a court of auditors or the board of a central bank;
- An ambassador, chargé d’affairs or high-ranking officer in the armed forces.
2. A member of the administrative, management, or supervisory body of a state-owned enterprise.
PEP Close Associates & Family
The legislation extends the requirement to apply ECDD to an immediate family member, or a close associate, of a PEP
A “close associate” is defined by the Irish legislation to include any of the following persons:-
- Any individual who has joint beneficial ownership of a legal entity, or a legal arrangement, or close business relationship, with a PEP;
- Any individual who has sole beneficial ownership of a legal entity, or legal arrangement set up for the actual benefit of a PEP.
An “immediate family member” of a PEP includes any of the following persons:-
- Any spouse of the PEP;
- Any person who is considered to be the equivalent to a spouse of the PEP;
- Any cohabitant of the PEP;
- Any child of the PEP;
- Any spouse of the child of a PEP;
- Any person who is considered to be the equivalent to a spouse of a child of the PEP;
- Any cohabitant of a child of the PEP;
- Any parent of the PEP;
- Any other family member of the PEP who is of a prescribed class.
Identifying PEPs Not Straightforward
The Guidance notes, which have been drafted to provide assistance in understanding the anti-money laundering legislation, suggest that establishing whether individuals are PEPs is not a straightforward process.
It may be necessary to carry out specific checks using specialist PEP databases, where there is a high risk of having a PEP as a customer.
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