Finalised guidance: The treatment of politically exposed persons for anti-money laundering purposes

Financial Conduct Authority Page 1 of 13
Finalised guidance
1 Executive Summary
Legislative Background
1.1 In March 2017, we consulted on guidance in connection with politically exposed persons
(‘PEPs’) under section 333U of the Financial Services and Markets Act 2000 (section 333U’). Section 333U contained a duty on the FCA to issue guidance in connection with PEPs prior to the coming into force of regulations transposing the fourth money laundering directive or any subsequent EU measures.
1.2 However, as of 6 July 2017, section 333U has yet to be commenced. We now have a
duty under regulation 48(1) of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (‘the Regulations’) to issue guidance about the enhanced customer due diligence measures in respect of PEPs. In addition, under the Regulations it says that “the duty to issue guidance under section 333U does not apply to the extent that that duty is otherwise satisfied as a result of guidance issued by us under the Regulations”.
1.3 Accordingly, we issue this guidance under regulation 48(1) of the Regulations and in
doing so consider that we will have satisfied the duty under section 333U when this provision is commenced. We have decided not to consult again on this guidance as the FG 17/6 The treatment of politically exposed persons for anti-money laundering purposes July 2017

Financial Conduct Authority Page 2 of 13 substance of the guidance has already been consulted on and so no useful purpose would served to consult on it again.
1.4 We have made a number of amendments to the draft during the consultation period. The
EU is currently negotiating targeted amendments to the 4th Money Laundering Directive and the final text may impact this guidance. Alongside the guidance, we are publishing a feedback statement. Summary of the Guidance
1.5 The FCA expects that firms take appropriate but proportionate measures in meeting
their financial crime obligations. The MLRs set out that all firms must apply a risk sensitive approach to identifying PEPs and then applying enhanced due diligence measures. The legislation and guidance clarifies that a case by case basis is required with the risk assessed of individual PEPs rather than applying a generic approach to all PEPs.
1.6 The guidance provides clarity on how firms should apply the definitions of a PEP in the
MLRs in a UK context. This includes providing that firms should only treat those in the UK who hold truly prominent positions as PEPs and not to apply the definition to local government, more junior members of the senior civil service or anyone other than the most senior military officials. As such it is unlikely in practice that a large number of UK customers should be treated as PEPs.
1.7 Even where a UK customer does meet the definition of PEP because of the position they
hold- or another country assessed as having similarly transparent anti-corruption regimes- a firm is required to recognise the lower risk of such customer s and apply the guidance on measures they can take in lower risk situations to meet their EDD obligations.
1.8 The guidance does, however, require firms to apply more stringent approaches where the
customer is assessed as having a greater risk. In those circumstances firms will need to take further steps to verify information about the customer and the proposed business relationship. This is in line with the FCA’s financial crime guidance to date where the focus has been on managing higher risk PEP relationships.

Financial Conduct Authority Page 3 of 13
2 Final guidance
Introduction
2.1 This guidance is aimed at any institution that has its anti-money laundering systems and
controls overseen by the FCA.
1 It discusses how they can meet their obligations when opening new relationships or monitoring existing relationships. It applies only to business relationships undertaken in the course of business in the UK.
2.2 The Financial Ombudsman Service will consider complaints from PEPs, their family
members or close associates – and will take the guidance into account when deciding what is fair and reasonable in all the circumstances of a complaint.
2.3 This guidance has not been approved by Treasury under Regulation 35(4)(b) and
sections 330 & 331 of the Proceeds of Crime Act. However, Regulation 35)(4)(b)(i) states that firms may take into account any guidance that has been issued by the FCA.
2.4 In this guidance, where we are interpreting rather than restating legal obligations, this is
shown in italics.
2.5 Firms should only take additional measures beyond this guidance where:

• this is justified on the basis of their risk assessment
• risk factors are associated with that customer unrelated to their position or
  connection to a PEP
  Why do PEPs, family members of PEPs or known close associates of PEPs pose a risk?
  2.6 PEPs (as well as their families and persons known to be close associates) are required to
  be subject to enhanced scrutiny by firms subject to the Regulations. This is because international standards issued by the Financial Action Taskforce (FATF) recognise that a PEP may be in a position to abuse their public office for private gain and a PEP may use the financial system to launder the proceeds of this abuse of office. As FATF says ‘these requirements are preventive (not criminal) in nature, and should not be interpreted as stigmatising PEPs as such being involved in criminal activity’. 2
  2.7 It is because of their function that a person becomes a PEP and is required to be subject
  to enhanced scrutiny by firms.
  1 Regulation 7(1)(a) of the Regulations sets out who we supervise. 2 www.fatf-gafi.org/media/fatf/documents/recommendations/Guidance-PEP-Rec12-22.pdf

Financial Conduct Authority Page 4 of 13
2.8 Likewise, a PEP’s family or close associates may also benefit from, or be used to
facilitate, abuse of public funds by the PEP. It is as a result of this connection that family and known close associates are required to be subject to greater scrutiny. Family and close associates are not themselves PEPs solely as a result of their connection to a PEP. What are firms’ obligations under the Regulations?
2.9 The Regulations require firms to have in place appropriate risk-management systems and
procedures to determine whether a customer or the beneficial owner of a customer is a PEP (or a family member or a known close associate of a PEP) and to manage the risks arising from the firm’s relationship with those customers. This includes where a PEP, family member or close associate is operating via an intermediary or introducer (this may include others in the regulated sector such as banking staff, lawyers, estate agents etc). There are many legitimate reasons for doing so (eg a solicitor acting in a property transaction). In these situations, and in line with FATF guidance, we expect firms to understand as part of their due diligence why a PEP, family member or close associate is using such an arrangement and use that as part of their assessment of risk.
2.10 The Regulations state3 that in determining whether these systems and procedures are
appropriate, a firm should refer to:

• Its own risk assessment of the money laundering/terrorist financing risks it is
  subject to. The FCA’s financial crime guide4 contains guidance on our expectations of risk assessments in relation to overall financial crime (Box 2.3) and specifically money laundering (Box 3.3).
• An assessment of the extent to which the risk would be increased by a business
  relationship with a PEP, family member or close associate. The FCA would expect that this is a case-by-case assessment and not an automatic assessment that a relationship creates a high risk of money laundering.
• Any information provided by the FCA. This will include the FCA’s publication
  ‘Financial Crime: a guide for firms’, thematic reviews, speeches on financial crime issues or enforcement action and the FCA’s annual AML report.
  2.11 The FCA expects firms to make use of information that is reasonably available to them in
  identifying PEPs, family members or known close associates. This could include the following:
• Public domain information such as websites of parliaments and governments,
  reliable news sources and work by reputable pressure groups focused on corruption risk such as Transparency International or Global Witness. Firms should use a variety of sources where possible.
• Reliable Public Registers – in the UK this includes Companies House’s register of
  companies and persons of significant control (PSC)5 and those maintained by the Electoral Commission. 6 3 Regulation 35(2) 4 www.handbook.fca.org.uk/handbook/FC/link/?view=chapter 5 https://beta.companieshouse.gov.uk/ 6 http://search.electoralcommission.org.uk/

Financial Conduct Authority Page 5 of 13

• In line with the nature and size of the firm, it may choose, but is not required, to
  use commercial databases that contain lists of PEPs, family members and known close associates. A firm choosing to use such lists would need to understand how such databases are populated and will need to ensure that those flagged by the system fall within the definition of a PEP, family member or close associate as set out in the Regulations and this guidance.
  2.12 Where a firm has identified that a customer (or beneficial owner of a customer) does
  meet the definition of a PEP (or a family member or known close associate of a PEP), a firm must7 assess the level of risk associated with that customer and, as a result of that assessment, the extent to which enhanced due diligence measures need to be carried out. 8 The risk factors set out in this guidance will help firms to consider relevant factors when meeting these obligations. A firm’s assessment9 and its decision to apply relevant enhanced due diligence measures10 need to be clearly documented.
  2.13 The FCA expects that a firm will not decline or close a business relationship with a person
  merely because that person meets the definition of a PEP (or of a family member or known close associate of a PEP). A firm may, after collecting appropriate information11 and completing its assessment, 12, conclude the risks posed by a customer are higher than they can effectively mitigate; only in such cases will it be appropriate to decline or close that relationship.
  2.14 If, having assessed the risk associated with the customer and decided on an appropriate
  level of enhanced due diligence measures in line with this guidance, a firm is unable to apply those measures, a firm needs to comply with the requirement13 not to establish, or to terminate, a business relationship.
  2.15 Where a firm proposes to have, or to continue, a business relationship with a PEP, family
  member or known close associate of a PEP, they are required14 to:
• Have approval from senior management for establishing or continuing the
  business relationship with that person. For these purposes, senior management is to be, as a minimum, the person holding the CF11/SMF17 Money Laundering Reporting Officer role. In any case identified as one where there is a high risk of money laundering or terrorist financing, 15, it may be appropriate to seek approval from the person with overall responsibility for the firm’s policies and procedures for countering the risk that the firm might be used to further financial crime; for firms subject to the Senior Management Regime, this will be the person with that prescribed responsibility. But firms should note that in lower risk situations sign￾off may be at a lower level as set out further on in this guidance. 7 See Regulation 35(3) of the MLRs 8 As set out in Regulation 33(4) and (5) 9 See Regulation 35(3)(a) 10 See Regulation 35(3)(b) 11 In accordance with Regulation 35(3)(b) 12 Under Regulation 35(3)(a) 13 See Regulation 31(1) (b) and (c) 14 See Regulation 35(5) 15 Per the assessment in Regulation 35(3)(a)

Financial Conduct Authority Page 6 of 13

• Take adequate measures to establish the customer’s source of wealth and source
  of funds relevant to the proposed business relationship or transaction. Adequate measures will vary according to the risks assessed 16 depending on the nature of the relationship/transaction, with greater measures to clarify source of wealth and source of funds required for unusual or unexpected transactions, while for lower risk products or relationships, reliance might be placed on funds coming from credit or financial institution. 17 We set out our expectations further in this guidance.
• Once the business relationship is entered into, conducting enhanced ongoing
  monitoring of the business relationship with that person. The nature and extent of this monitoring will depend on the risk assessment. 18 Who should be treated as a PEP?
  2.16 PEPs are defined19 as individuals entrusted with prominent public functions, including:
• heads of state, heads of government, ministers and deputy or assistant ministers
• members of parliament or of similar legislative bodies – similar legislative bodies
  include regional governments in federalised systems and devolved administrations, including the Scottish Executive and Welsh Assembly, where such bodies have some form of executive decision-making powers. It does not include local government in the UK but it may, where higher risks are assessed, be appropriate to do so in other countries.
• members of the governing bodies of political parties – the FCA considers that this
  only applies to political parties who have some representation in a national or supranational Parliament or similar legislative body as defined above. The extent of who should be considered a member of a governing body of a political party will vary according to the constitution of the parties, but will generally only apply to the national governing bodies where a member has significant executive power (eg over the selection of candidates or distribution of significant party funds).
• members of supreme courts, of constitutional courts or of any judicial body the
  decisions of which are not subject to further appeal except in exceptional circumstances – in the UK this means only judges of the Supreme Court; firms should not treat any other member of the judiciary as a PEP and only apply EDD measures where they have assessed additional risks. 20
• members of courts of auditors or of the boards of central banks
• ambassadors, charges d’affaires and high-ranking officers in the armed forces –
  the FCA considers this is only necessary where those holding these offices on behalf of the UK government are at Permanent Secretary/Deputy Permanent Secretary level, or hold the equivalent military rank (eg Vice Admiral, Lieutenant General, Air Marshal or senior)
• members of the administrative, management or supervisory bodies of State￾owned enterprises – the FCA considers that this only applies to for profit
  enterprises where the state has ownership of greater than 50% or where information reasonably available points to the state having control over the activities of such enterprises
• directors, deputy directors and members of the board or equivalent function of an
  international organisation – the FCA considers that international organisations 16 In accordance with Regulation 35(3)(a) 17 Where this meets the requirements of Regulation 37(3)(a)(iii) 18 Regulation 35(3) 19 Regulation 35(12)(a) 20 In accordance with Regulation 33

Financial Conduct Authority Page 7 of 13 only includes international public organisations such as the UN and NATO. The Government made clear in their consultation of 15 March 2017 that they do not intend this definition to extend to international sporting federations.
2.17 The definition of a ‘prominent public function’ will vary according to the nature of the
function held by a person. The FCA would expect firms to understand the nature of the position held and whether the function gives rises to the risk of large-scale abuse of position. If a position is held in a country assessed as being at a lower risk of large-scale corruption (because of the system and checks and balances in place that reduce the threat) then only those with true executive power should be considered to hold a prominent public function. In the UK, it will not normally be necessary to treat public servants below Permanent or Deputy Permanent Secretary as having a prominent public function.
2.18 The regulations exclude from the definition of a PEP those who are ‘junior or mid￾ranking’.
21 In those cases it will normally only be necessary to meet the obligations to undertake customer due diligence. 22 However, a firm should be alive to the potential that middle ranking and more junior officials could act on behalf of a PEP when assessing the overall risks a customer might present; where it assesses there might be a risk, a firm should consider what additional measures it needs to take. 23 This includes any transaction or business relationship established in a high-risk third country. 24
2.19 If a person who is a PEP is no longer entrusted with a prominent public function, that
person should continue to be subject to risk-based enhanced due diligence25 for a period of at least 12 months after the date they ceased to be entrusted with that public function. Firms may apply measures for a longer period to address risks of money laundering or terrorist financing in relation to that person, 26 but the FCA consider this will only be necessary in the cases of PEPs where a firm has assessed that PEP as posing a higher risk.
2.20 Firms should note that the Regulations27 explicitly state that they cannot apply these
measures to those who were not a PEP under the Money Laundering Regulations 2007 (ie those who held a prominent public position in the UK (such as a former MP, retired member of the House of Lords or a former UK ambassador) where they ceased that office prior to 26 June 2017). Who should be considered a family member? 21 Regulation 35(12)(a) 22 As required by Regulation 28 23 Under Regulation 33(1) 24 Regulation 33(1)(b)- ‘high-risk third country’ in this guidance has the same meaning as in that regulation 25 In accordance with the MLRs and this guidance 26 Regulation 35(9)(b) 27 Regulation 35(10)

Financial Conduct Authority Page 8 of 13
2.21 Family members of a PEP are defined as including:28

• spouse, or civil partner
• children and their spouses or civil partner
• parents
  2.22 This is not an exhaustive list. The FCA considers that this definition also includes brothers
  and sisters of a PEP.
  2.23 Firms should take a proportionate and risk-based approach to the treatment of family
  members who do not fall into this definition. A corrupt PEP may use members of their wider family to launder the proceeds of corruption on his/her behalf. It may be appropriate to include a wider circle of family members (such as aunts and uncles) in cases where a firm has assessed a PEP to pose a higher risk. This would not apply in relation to lower risk PEPs. In low-risk situations, a firm should not apply any EDD measures to someone who is not within the definition above and should apply normal customer due diligence measures. 29 A family member of a PEP is not a PEP themselves purely as a consequence of being associated with a PEP.
  2.24 A PEP must 30 be treated as a PEP after he or she leaves office for at least 12 months,
  depending on risk. This does not apply to family members, who should be treated as ordinary customers, subject to customer due diligence obligations31 from the point that the PEP leaves office. The FCA considers a family member of a former PEP should not be subject to enhanced due diligence measures unless this is justified by the firm’s assessment of other risks posed by that customer. The ESA guidelines set out factors that might point to potential higher risk.32 People who are ‘known to be close associates’ of a PEP
  2.25 A ‘known close associate’ of a PEP is defined33 as including:
• an individual known to have joint beneficial ownership of a legal entity or a legal
  arrangement or any other close business relationship with a politically exposed person
• an individual who has sole beneficial ownership of a legal entity or a legal
  arrangement that is known to have been set up for the benefit of a PEP
  2.26 A known close associate of a PEP is not a PEP themselves purely as a consequence of
  being associated with a PEP.
  Do all PEPs pose the same risk?
  28 Regulation 35(12)(b) 29 Regulation 28 30 Regulation 35(9) 31 Regulation 28 32https://www.eba.europa.eu/-/esas-publish-aml-cft-guidelines 33 Regulation 35(12)(c)

Financial Conduct Authority Page 9 of 13
2.27 No – the risk of such corruption will differ between PEPs. We expect firms to take a
differentiated approach that considers the risks an individual PEP poses based on an assessment of:

• the prominent public functions the PEP holds
• the nature of the proposed business relationship
• the potential for the product to be misused for the purposes of corruption
• any other relevant factors the firm has considered in its risk assessment.
  34
  2.28 This guidance discusses how firms may differentiate between PEPs. In this guidance, we
  use the terms ‘lower risk’ and ‘higher risk’ to recognise that firms are required to apply Enhanced Due Diligence on a risk-sensitive basis.35 An overall risk assessment will consider all risk factors that a customer may present and come to a holistic view of what measures should be taken to comply. No one risk factor set out below means a customer should automatically be treated as posing a higher risk; it is necessary to consider all features of the customer. What are some indicators that a PEP might pose a lower risk?
  2.29 In the FCA’s view, the following indicators suggest a PEP poses a lower risk:
  Lower risk indicators – product
  The customer is seeking access to a product the firm has assessed to pose a lower risk. This will include products assessed as low risk by the firm to which it applies simplified due diligence measures.36 Lower risk indicators – geographical A PEP who is entrusted with a prominent public function in the UK should be treated as low risk, unless a firm has assessed that other risk factors not linked to their position as a PEP mean they pose a higher risk. Regulation 18 and the risk factors guidance produced by the European Supervisory Authorities set out factors that might point to potential higher risk. A PEP may also pose a lower risk if they are entrusted with a prominent public function by a country where information available to the firm shows that it has the following characteristics:
• associated with low levels of corruption
• political stability, and free and fair elections
• strong state institutions
• credible anti-money laundering defences
• a free press with a track record for probing official misconduct
• an independent judiciary and a criminal justice system free from political
  interference
• a track record for investigating political corruption and taking action against
  wrongdoers
  34 Required by regulation 18 35 Regulation 35 36 Regulation 37

Financial Conduct Authority Page 10 of 13

• strong traditions of audit within the public sector
• legal protections for whistleblowers
• well-developed registries for ownership of land, companies and equities
  Lower risk indicators – personal and professional A PEP may pose a lower risk if they:
• are subject to rigorous disclosures requirements (such as registers of interests,
  independent oversight of expenses)
• does not have executive decision-making responsibilities (eg an opposition MP or
  an MP of the party in government but with no ministerial office) What are indicators that a PEP might pose a higher risk?
  2.30 In the FCA’s view, the following indicators suggest a PEP poses a higher risk:
  Higher risk indicator – product
  The firm’s risk assessment finds the product or relationship a PEP is seeking is capable of being misused to launder the proceeds of large-scale corruption. Higher risk indicators – geographical A PEP may pose a greater risk if they are entrusted with a prominent public function in a country that is considered to have a higher risk of corruption. In coming to this conclusion, a firm should have regard to whether, based on information available, the country has the following characteristics:
• associated with high levels of corruption
• political instability
• weak state institutions
• weak anti-money laundering defences
• armed conflict
• non-democratic forms of government
• widespread organised criminality
• a political economy dominated by a small number of people/entities with close
  links to the state
• lacking a free press and where legal or other measures constrain journalistic
  investigation
• a criminal justice system vulnerable to political interference
• lacking expertise and skills related to book-keeping, accountancy and audit,
  particularly in the public sector
• law and culture antagonistic to the interests of whistleblowers
• weaknesses in the transparency of registries of ownership for companies, land and
  equities
• human rights abuses
  Higher risk indicators – personal and professional The following characteristics might suggest a PEP is higher risk:

Financial Conduct Authority Page 11 of 13

• personal wealth or lifestyle inconsistent with known legitimate sources of income
  or wealth; if a country has laws that do not generally permit the holding of a foreign bank account, a bank should satisfy itself that the customer has authority to do so before opening an account
• credible allegations of financial misconduct (eg facilitated, made, or accepted
  bribes)
• responsibility for, or able to influence, large public procurement exercises,
  particularly where procurement is not subject to competitive tender, or otherwise lacks transparency
• is responsible for, or able to influence, allocation of scarce government licenses
  such as mineral extraction concessions or permission for significant construction projects. What are some indicators that a PEP’s family or known close associates pose a lower risk?
  2.31 A family member or close associate of a politically exposed person may pose a lower risk
  if the PEP themselves poses a lower risk. To clarify, the FCA expects family or known close associates of UK PEPs to be treated as lower risk unless there are circumstances to suggest otherwise. What are some indicators that a PEP’s family or known close associates pose a higher risk?
  2.32 The following characteristics might suggest a family member or close associates of a
  politically exposed person poses a higher risk:
• wealth derived from the granting of government licences (such as mineral
  extraction concessions, licence to act as a monopoly provider of services, or permission for significant construction projects)
• wealth derived from preferential access to the privatisation of former state assets
• wealth derived from commerce in industry sectors associated with high-barriers to
  entry or a lack of competition, particularly where these barriers stem from law, regulation or other government policy
• wealth or lifestyle inconsistent with known legitimate sources of income or wealth
• credible allegations of financial misconduct (eg facilitated, made, or accepted
  bribes)
• appointment to a public office that appears inconsistent with personal merit
  What measures should firms take when they identify a customer is a PEP, or a family member or known close associate of a PEP?
  2.33 The following measures are taken where a customer meets the definition of a PEP, or a
  family member or known close associate of a PEP:37
• obtain senior management approval for establishing or continuing business
  relationships with such persons
• take adequate measures to establish the source of wealth and source of funds
  that are involved in business relationships or transactions with such persons
• conduct enhanced, ongoing monitoring of those business relationships
  37 See Regulation 35

Financial Conduct Authority Page 12 of 13
2.34 The nature and extent of this due diligence should be appropriate to the risk that the firm
has assessed in relation to the customer. A firm should apply more extensive measures for relationships assessed as high risk and less extensive measures for lower risk customers. What measures may firms take in lower risk situations?
2.35 In the FCA’s view, in lower risk situations a firm may take the following measures:

• Seek to make no enquiries of a PEP’s family or known close associates except
  those necessary to establish whether such a relationship does exist.
• Take less intrusive and less exhaustive steps to establish the source of wealth and
  source of funds of PEPs, family members or known close associates of a PEP; for example, only use information already available to the institution (such as transaction records or publicly available information) and do not make further inquiries of the individual unless anomalies arise. It is necessary to seek source of wealth information but in all lower risk cases, especially when dealing with products that carry a lower risk of laundering the proceeds of corruption, firms should minimise the amount of information they collect and how they verify the information provided (for example, via information sources it has available).
• Oversight and approval of the relationship takes place at a level less senior than
  board of director level. For lower risk situations, this can be the MLRO.
• A business relationship with a PEP or a PEP’s family and close associates is subject
  to less frequent formal review than if was considered high risk(for example, only where it is necessary to update customer due diligence information or where the customer requests a new service or product). What measures may firms take in higher risk situations?
  2.36 In the FCA’s view, in higher risk situations a firm may take the following measures:
• take more intrusive and exhaustive steps to establish the source of wealth and
  source of funds of PEPs, family members or known close associates of a PEP
• oversight and approval of the relationship takes place at a more senior level of
  management
• a business relationship with a PEP (or a PEP’s family and close associates) is
  subject to more frequent and thorough formal review as to whether the business relationship should be maintained Long-term insurance contracts
  2.37 Firms that provide a customer with a contract of long-term insurance are required to
  have reasonable measures to determine whether the beneficiaries of the insurance policy or the beneficial owner of a beneficiary of such an insurance policy are a PEP or family members/known close associates of a PEP. This needs to be done before any payment is made under the insurance policy whether the benefit of the insurance policy is assigned in whole or in part from a PEP or a family member or known close associate of a PEP to another person (and vice versa). 38
  2.38 As with other measures, the nature and extent of the reasonable measures a firm should
  take will be driven by the overall money laundering or terrorist financing risks a firms 38 See Regulation 35(6) and (7)

Financial Conduct Authority Page 13 of 13 who offers this type of product has assessed in its risk assessment39and the extent to which a PEP or known close associate/family using such a product raises the risk. Information on the nature of ML/TF risk is available via the UK’s National Risk Assessment, ESA guidelines and other information sources. It will also depend on the nature of the life insurance product (for example, the cost of the premiums for the product, or if it can be redeemed or cashed out). Beneficial owners of legal entities who are PEPs
2.39 Firms should identify when a PEP is a beneficial owner40 of a customer. It does not
require that a legal entity should be treated as a PEP just because a PEP might be a beneficial owner.
2.40 Once a firm is satisfied that a PEP is a beneficial owner then, in line with the risk-based
approach, they should assess the risks posed by the involvement of that PEP and, after making this assessment, firms should apply appropriate measures in accordance with this guidance. These could range from applying customer due diligence measures in cases where the PEP is just a figurehead for an organisation (this will vary according to the circumstances of each entity but could be the case even if they sit on the board, including as a non-executive director) through to applying EDD measures, according to the risk assessed in line with this guidance where it is apparent the PEP has significant control or the ability to use their own funds in relation to the entity.
2.41 Where a PEP is a beneficial owner of a corporate customer, then a firm should not
automatically treat other beneficial owners/shareholders of the customer as a PEP or known close associate under the Regulations, but may do so having assessed the relationship based on information available to the firm. 39 Required by Regulation 18 40 ‘beneficial owner’ has the meaning set out in Regulation 5(1)