Politically Exposed PersonPEP 1 Definition of Politically Exposed

Politically Exposed Person(PEP)

1. Definition of Politically Exposed Person? • Rec. 12 (Politically Exposed Persons) “In relation to PEPs, obliged entities(financial institutions and DNFBPs) should adopt additional measures in addition to performing normal CDD measures. ” • Definition of Political Exposed Person(PEP) “a natural person who is or who has been entrusted with prominent public functions in countries or international organizations”

2. Who are PEPs? • Specifically, who are PEPs? Ø Depends on. Each countries may have different scope, but it needs reasonable grounds. Ø EU directive; (a) heads of State, heads of government, ministers and deputy or assistant ministers; (b) members of parliament or of similar legislative bodies; (c) members of the governing bodies of political parties; (d) members of supreme courts, of constitutional courts or of other high-level judicial bodies, the decisions of which are not subject to further appeal, except in exceptional circumstances; (e) members of courts of auditors or of the boards of central banks; (f) ambassadors, chargés d'affaires and high-ranking officers in the armed forces; (g) members of the administrative, management or supervisory bodies of Stateowned enterprises; (h) directors, deputy directors and members of the board or equivalent function of an international organisation.

3. What needed to do? 1) Foreign PEPs In addition to CDD measures by Rec 10, obliged entities should: a) Put in place risk management systems to determine whether a customer or the beneficial owner is a PEP; b) Obtain senior management approval before establishing(or continuing, for existing customers) such business relationships; c) Take reasonable measures to establish source of wealth and source of funds of customers and beneficial owners; d) Conduct enhanced ongoing monitoring

3. What needed to do? 2) Domestic and international organization PEPs In addition to CDD measures by Rec 10, obliged entities should: a) Take reasonable measures to determine whether a customer or the beneficial owner is a PEP; b) In cases when there is a higher risk business relationship, adopt the measures in above 1) b to d.

3. What needed to do? 3) Obliged entities should: • apply above requirement to family members or close associates of all types of PEP • EU directive – Family member : spouse, children and their spouses, and parents – Close associates : natural persons who are known to have joint beneficial ownership of legal entities or any close business relations with a PEP

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