This note provides a short guide to the politically exposed persons regime within the general anti money laundering rules in the UK.Jump to full report >>
As part of the general anti-money laundering effort by international agencies there is a separate section on ‘politically exposed persons’ (PEPs).
Due to their position and influence, it is recognised that many PEPs are in positions that can potentially be abused for the purpose of committing money laundering offences and related offences such as corruption and bribery or terrorist financing.
Laws on money laundering are agreed internationally and, in the UK case, promulgated by EU Directive. The Third Money Laundering Directive (effected by secondary legislation) is the main source of UK law, due to be amended by a Fourth Directive.
PEPs face extra scrutiny – customer due diligence – on their financial transactions. The scrutiny extends to a wide range of activities, to their immediate family and associates and can continue beyond their tenure in office.
Evidence suggests that the degree of scrutiny may have increased in recent years reflecting a broader ‘de-risking’ by banks due in part as a response to regulatory sanctions for past failures.
Another Library Paper (Money Laundering Law) deals with the evolution of regulation in more depth and another (Bank Accounts problems of identification) deals with the specific issue of difficulties in opening bank accounts because of a lack of identification.
Commons Briefing papers CBP-7376
Author: Tim Edmonds