What is a Politically Exposed Person (PEP)?

How to identify a PEP

By Caitlyn Buchanan, 29 May 2019

A Politically Exposed Person is a term used to describe someone who has been entrusted with a prominent public function. Commonly referred to as PEPs, these people generally present a higher risk because of their higher potential to become involved in bribery or corruption due to their positions of power and influence. A PEP could also include close business associates or family members of people in a prominent public function.

How to Identify a Politically Exposed Person (PEP)?

A PEP can be identified as having held one of the following a prominent public function within the last 12 months. In addition, a PEP may be a close relative or business associate of the following:

  1. A specified official such as a head of state, head of government, government minister or deputy or assistant government minister.
  2. A member of parliament, a similar legislative body or a member of the governing body of a political party.
  3. A member of a supreme court, constitutional court or another high-level judicial body whose decisions are not typically subject to appeal.
  4. A member of a court of auditors or member of the board of a central bank.
  5. An ambassador, chargé d’affaires (a diplomat who heads an embassy in the absence of the ambassador) or high-ranking officer in the armed forces.
  6. A director, deputy director, member of the board, or person performing the equivalent function in an international organisation.

Domestic PEPs in Ireland AMLD4

The 4th AML Directive (AMLD4) was transposed into Irish law on the 26th June 2017 to further anti money laundering regulations in order to combat money laundering and terrorist financing. AMLD4 has broadened the scope to include domestic PEPs, rather than just foreign PEPs. Domestic PEPs are Irish residents in prominent public functions and close relatives or business associates. The directive also brought enhanced vigilance, obliging entities to review their customer registers to determine if Enhanced Due Diligence needs to be applied ie. reviewing the source of wealth and funds. These enhanced measures also apply when onboarding new customers.

Does my Company need to be Anti Money Laundering Compliant?

The short answer is yes. In order for Ireland to build a strong fraud-prevention system, all companies need to incorporate an effective anti money laundering compliance process. It is important for every company to know how and when to perform AML checks so they are in line with the anti money laundering regulations. Due diligence documentation should be collected to verify a new customer’s personal and business data. Please note, companies should only gather due diligence documentation that is needed to identify customers. AML checks are essential in assisting financial services and other regulated firms to safeguard against white-collar crime such as money laundering, corruption or fraud. If these activities are not identified there can be serious consequences both the business in question and Irish society.

As a Trust and Service Company Provider (TCSP), Company Bureau have strict AML obligations to comply with. Our internally appointed Anti Money Laundering Compliance Officers are responsible in ensuring staff are diligent in collecting Customer Due Diligence documentation to determine if clients (or beneficial owner, family member, etc.) are politically exposed persons in accordance with section 37 of the Companies Act 2014.

Should you have any questions regarding the identification of a politically exposed person or the anti-money laundering regulations for your Irish company please don’t hesitate to contact the experts at Company Bureau on +353 1 6461625 or e-mail formations@companybureau.ie.