This PEP definition states that they - “Include individuals whose current or past official position can attract publicity or whose financial action or circumstances may be the subject of increased public scrutiny”.
Politically Exposed Persons (PEPs) are people of honour, fame and repute hence they should be treated as people without risk in financial institutions. But regulatory authorities and compliance professionals think otherwise about PEP customers’ risk classification and believe they should be treated as follows;
There are different types of risks associated with various customers and in relation to Politically Exposed Persons (PEPs), they can be classified in any of the following ways;
The EU Defined Politically Exposed Persons (PEPs) as;
Persons in positions of authority or officeholders (government, government bodies, political parties and traditional institutions – politicians, top government functionaries (public and civil servants, leaders and chieftains of political parties, top traditional rulers)) can generally be classified as what category of PEPs;
Those persons who influence those in positions of authority or office holders who are sometimes in the political space are generally referred to as political godfathers, this category of Politically Exposed Persons are known as;
CBN AML/CFT Manual (as amended) which is also expressed by FATF Classification defined Politically Exposed Persons (PEPs) as;
In addition to FATF definition, Politically Exposed Persons (PEPs) can also be defined as;
Which of these are the risks and reasons why an institution should be cautious and pay special attention to the management of PEP customers?
This PEP definition was given By …………… ‘’...Individuals who are or have been entrusted with prominent public functions in a foreign country, for example heads of state or of government, senior politicians, senior government, judicial or military officials, senior executives of state-owned corporations, important political party officials. Business relationships with family members or close associates of PEPs involve reputational risks similar to those with PEPs themselves. The definition is not intended to cover middle ranking or more junior individuals.