Скачать или смотреть Understanding PEP and Required AML Measures under IFSCA, AML, CFT, and KYC Guidelines | AML India

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When dealing with Politically Exposed Persons (PEP), the inherent exposure to financial crime increases owing to their power and influence over public funds and national decisions. To manage these risks, the AML regulations, including the #IFSCA (AML, CFT, and KYC) Guidelines, 2022, provide for applying specified measures to manage these risks.

In this video, we shall discuss who shall be treated as PEP per IFCSA Guidelines and the measures to be deployed while establishing a business relationship or executing a transaction with a Politically Exposed Person.

To determine whether the customer is a PEP, it is essential to understand the definition of PEP as provided under the IFSCA Guidelines. It includes any natural person holding a prominent public function in any country, such as –

The head of the government (President or Prime Minister of the country),
Senior politicians or key personnel of the political parties,
Senior government officials including key military or judicial personnel
Senior executives of the body corporate owned by the government
PEP also covers the heads of international organizations like the United Nations.

The IFSCA guidelines clarify that for the purpose of AML measures, the middle-level or junior individuals associated with the government would not be considered as PEP.

The regulated entities must ascertain the PEP status of the customer, their beneficial owners, and the beneficiaries (in case the transaction is related to life insurance). It is also essential to determine whether the person (authorized representative) of the customer is a PEP.

The regulated entities may refer to independent, reliable data sources to check whether a customer is a PEP.

When a person is identified as the PEP, the regulated entities must apply certain stringent checks and measures to assess the ML/FT such #PEP customers may pose to the business and adequately manage this risk. Along with identity verification, the following additional measures are to be deployed for a PEP customer:

Inquiring about the person’s source of income and wealth, using appropriate and reasonable means such as evidence of title, copies of trust deeds, audited accounts, salary details, tax returns, bank statements, etc. This is an important check to understand whether the person has any connection with financial crime or the predicate offense.

No business relationship with the customer identified as PEP can be established without senior management’s approval. In the case of an existing customer who subsequently turns out to be a PEP, senior management approval is mandatory before executing the transaction.

Moreover, business relationships with PEP must be subject to frequent, ongoing monitoring to detect any red flags or suspicion in the course of transactions.

The above measures are not limited to the person identified as PEP but must be applied to PEP's family members and associates. This provision ensures that no financial crime attempts go undetected where the PEP carries out illicit activities in the name of close relatives or business associates.

Trust that this video helps you formulate robust internal policies, procedures, and controls for identification, verification, and continual monitoring of PEPs to manage your business exposure to financial crimes and adhere to the IFSCA’s AML guidelines.

Stay tuned for more informative videos. 

Timestamps:
0:00 Introduction on Understanding PEP and Required AML Measures?
0:41 What is PEP?
1:28 When to determine the PEP status?
1:53 What are the additional measures to be applied for PEP?
3:15 Conclusion and regards

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