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Wednesday, March 29, 2023

Attention: the FIU modified procedures for those who hold political office

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Obligated subjects such as financial and exchange entities, the Central Bank, insurance entities, brokers and stock companies, and automobile, real estate and aircraft registries- are the ones that must submit an affidavit and verify the status of PEP with a risk-based approach and the objective of preventing and detecting money laundering and terrorist financing operationsthus avoiding the “misuse of the financial and non-financial system” by these people.

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They must obtain official approvals to enter into business relationships with these clients and take reasonable steps to establish the source of funds and assets, along with ongoing monitoring.

The figure of PEP includes heads of state, governors, members of parliament, judges, ambassadors, and personnel of the Armed Forces, among other positions, both municipal, provincial, national, and abroad.

As indicated by the FIU, some of these 2018 provisions “do not strictly respond to the risk-based approach” and, therefore, it considered it necessary to modify them to “provide predictability and greater legal certainty.”

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Specific, A term is established for the cessation of the PEP figure, which will be two years after the person ceased to fulfill the function or public office, something that was not previously specified.

However, the obligated subject, after that period, must evaluate the client’s situation taking into account “the relevance of the function performed, the power to dispose or manage funds and the seniority in the public function exercised.”

On the other hand, the links with the PEPs by the reporting entities will now require thecompliance officer approvalfollowing FATF recommendation 12, and will require an affidavit not only at the beginning of the business relationship but also at the time of ceasing to be a PEP.

When does it go into effect?

Today’s regulations will come into effect on 30 days replacing resolution 134/18in which a new regulation regarding the treatment of PEPs by regulated entities was approved with the objective of strengthening the due diligence measures applicable to relations with these persons and basing said measures on a risk-based approach, as indicated in the recitals.

Source: Ambito

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