The update reinforces the regulatory framework on Politically Exposed Persons by incorporating greater flexibility and clear criteria for the cessation of their condition.” As mentioned in the official text, the objective is to optimize the analysis and monitoring by the Obligated Subjects.
The Financial Information Unit (UIF) updated the regulations related to Politically Exposed Persons (PEP)in compliance with international standards established by the International Financial Action Task Forcel (FATF) and its recommendations.
The main points of the document include changes in the definition of PEPs; “with the objective of strengthening due diligence measures to prevent crimes such as money laundering (ML), terrorist financing (TF) and the proliferation of weapons of mass destruction (FP), requiring obligated subjects to identify and mitigate risks associated with PEP”.
Now, obligated entities, such as banks and financial institutions, must require their clients to inform if they are PEPs through sworn declarations. “This applies both at the beginning of contractual relations and when the client’s condition changes,” explains the Official Gazette.
What are PEPs and why are they important?
- Politically Exposed People: They are individuals who hold or have held prominent public positions, which makes them more susceptible to acts of corruption and bribery.
- Importance: By identifying and monitoring PEPs, we seek to prevent these people from using the financial system to launder money resulting from illicit activities.
Key changes introduced by the resolution:
- Expansion of the definition of PEP: The list of people considered PEP has been expanded, including public officials at the national, provincial and municipal levels, as well as their family members and close associates.
- Greater rigor in due diligence: Financial institutions must apply more rigorous due diligence measures when establishing business relationships with PEPs. This involves obtaining more information about the origin of the funds and the purpose of the transactions.
- Sworn declaration: PEPs must declare their status to financial institutions.
- Continuous monitoring: Financial institutions should continually monitor business relationships with PEPs to identify any suspicious activity.
Source: Ambito
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