Guidelines for Working with Politically Exposed Persons

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Date of creation: 2026-06-10

Approved by Resolution

of the Supervisory Committee

of the National Bank

of the Kyrgyz Republic

dated May 22, 2026 No. 22/1

METHODOLOGICAL RECOMMENDATIONS

for working with Politically Exposed Persons

1. General Provisions

2. These Methodological Recommendations for working with Politically Exposed Persons (hereinafter – the Methodological Recommendations) have been developed to increase the effectiveness of financial organizations supervised by the National Bank of the Kyrgyz Republic (commercial banks, credit unions, microfinance organizations, specialized financial and credit organizations, exchange offices, payment organizations, operators of electronic money settlement systems, hereinafter – FIs) in working with Politically Exposed Persons (hereinafter – PEPs), to assist FIs in identifying PEPs, as well as persons associated with them, taking into account the increased level of risks inherent in this category of clients, and to ensure the analysis and monitoring of their financial operations in accordance with the requirements of the legislation of the Kyrgyz Republic in the field of combating the financing of criminal activity and the legalization (laundering) of criminal proceeds (hereinafter – CFT/AML), regulatory legal acts of the National Bank of the Kyrgyz Republic (hereinafter – the National Bank), as well as the recommendations of the Financial Action Task Force (hereinafter – FATF) concerning PEPs.

The purpose of these Methodological Recommendations is to define the minimum requirements for the formation of an adequate risk management system in FIs and the requirements for the organization of internal control, providing for the application by FIs of risk control methods that ensure effective identification, assessment, and limitation of FI risks, taking into account the type and volume of operations they conduct.

These Methodological Recommendations are used in the development and updating of internal policies, FI procedures, employee training, as well as in preparing FIs for inspections and audits. The Methodological Recommendations are intended for practical application by FIs in their daily activities when establishing and maintaining business relationships with PEPs and their associated persons.

2. For the purposes of these Methodological Recommendations, the terms and definitions provided in the Law of the Kyrgyz Republic "On Combating the Financing of Criminal Activity and the Legalization (Laundering) of Criminal Proceeds" (hereinafter – the Law) and the Regulation "On the Procedure for Conducting Customer Due Diligence", approved by Appendix 12 to Resolution of the Cabinet of Ministers of the Kyrgyz Republic dated November 14, 2025 No. 739, are used.

3. Politically Exposed Persons (PEPs) – one of the following natural persons:

1. foreign PEP

– a person who performs or has performed significant state or political functions (public functions) in a foreign state (heads of states or governments, senior officials in government and other state bodies, courts, armed forces, state enterprises, as well as prominent political figures, including prominent figures of political parties);

2. national PEP

– a person who holds or has held a political and special state position or a political municipal position in the Kyrgyz Republic, as provided for in the Register of State and Municipal Positions of the Kyrgyz Republic, approved by Presidential Decree of January 31, 2017 UP No. 17, as well as senior management of state-owned companies (joint-stock companies, business entities, etc. with a state share), prominent political figures, including prominent figures of political parties;

3. PEP of an international organization

– a person who is or has been a senior official of an international organization (heads, deputy heads, and board members of an international organization or persons holding equivalent positions in an international organization);

4. Close persons to PEPs include close relatives, business partners, and official representatives of PEPs.

5. Close relatives of PEPs include parents, adoptive parents, adopted children, full and half-siblings, grandparents, grandchildren, for whom the PEP bears financial costs in covering living expenses, education, healthcare, and other necessary expenses.

6. Family members of PEPs include spouses and children, including adopted children.

7. International Standards and Best Practices regarding PEPs

8. FATF establishes international standards concerning relationships with PEPs.

According to FATF recommendations, a PEP is a person entrusted with significant/prominent/important functions. FATF recognizes that due to their status and influence, many high-ranking officials hold positions that provide opportunities for the legalization (laundering) of proceeds from crimes and the commission of crimes, in particular, those related to corruption. These include corruption and bribery, as well as activities related to terrorist financing.

Therefore, FATF recommendations require the application of additional customer due diligence in business relationships with public figures due to potential CFT/AML risks. It should be emphasized that these measures are preventive. FATF stresses that this should not mean that all public figures are involved in criminal activity or that they are, by default, corrupt.

Due to the risks associated with public figures, it is recommended to effectively implement, among others, FATF Recommendations 10, 12, and 22.

FATF Recommendation 12 concerns PEPs and establishes anti-money laundering/counter-terrorist financing measures that apply to key financial monitoring organizations entering into business relationships with PEPs.

FATF Recommendations 10 and 22 are general due diligence requirements for clients of key financial monitoring organizations.

8. In defining PEPs, FATF divides them into international, national, and PEPs of international organizations.

Foreign PEPs – individuals entrusted with a prominent public position in a foreign country, such as heads of states or governments, prominent politicians, officials of judicial or military institutions, heads of state-owned corporations, prominent figures of political parties.

National PEPs

–

individuals entrusted with a prominent public position in their own country, such as heads of states or governments, prominent (well-known) politicians, officials of judicial or military institutions, heads of state-owned corporations, prominent figures of political parties. As a rule, the definitions of "national PEPs" applicable in different countries as a guide for key financial monitoring organizations should include the following positions:

• head of state – president;

• head of government – prime minister;

• senior members of the legislative branch – speaker, deputy speakers of parliament;

• government officials – members of parliament, ministers, mayors or governors, opposition leaders, parliamentary secretaries;

• high-ranking government officials – permanent secretaries, chief technical officers, ambassador or high commissioner, assistant commissioner of police or higher rank;

• judicial officials – magistrates or judges of courts of first and second instance, judges of higher courts, prosecutor general and senior officials of the prosecutor's office;

• high-ranking military officials – colonels or higher;

• heads of state-owned companies (joint-stock and business entities with a state share), members of the boards of all state bodies and state enterprises, including those bodies in which the state has a controlling interest;

• senior officials of political parties, such as chairman/leader/deputy of a political party.

The above list is not exhaustive and may vary significantly depending on the jurisdiction.

9. Close relatives of PEPs include persons related to PEPs by birth, marriage, or other types of family relationships.

Definitions of "closest family members" generally include:

• spouses (including former);

• parents;

• siblings (full and half);

• children (including adopted);

• siblings of parents, spouses' children of PEPs.

Close persons to PEPs

– persons connected to PEPs by personal (social) or business (professional) ties.

International standards include in this definition:

• partners outside the family;

• prominent members of the same political party, public organization, trade unions;

• business partners or colleagues, especially those who, together with the PEP, have beneficial ownership of legal entities;

• persons who are relatives;

• persons who, due to personal relationships (social, economic, and cultural conditions), may play a certain role in relationships with PEPs.

Close relatives and persons close to PEPs are treated as PEPs, as there is a potential danger of abusing such relationships to move proceeds from crimes or to ensure the placement and concealment of proceeds, as well as their use for criminal purposes.

3. Measures Applied to PEPs

4. FIs must ensure that they have an appropriate risk management system that allows them to identify clients who are PEPs.

5. The FI's risk management system must ensure consistency of actions between front-office units, compliance function, and risk management, define the distribution of responsibilities, and provide practical tools (algorithms, criteria, and control measures) necessary for the uniform application of internal control requirements and proper execution of legislation in the field of CFT/AML.

6. FIs must implement the following customer due diligence measures (hereinafter – CDD) in relation to PEPs:

1. use a risk management system to determine whether the client or beneficial owner is a PEP;

2. obtain written permission from the executive body or one of the members of the executive body managing the current activities of the FI to establish or continue (for existing clients) business relationships with a PEP;

3. establish the source of funds and other property of the PEP;

4. conduct continuous and enhanced monitoring of business relationships, including operations (transactions) carried out by the PEP, in the manner established for high-risk clients;

5. continuously update available information on foreign PEPs.

FIs are obliged to apply the above measures also to family members and close persons of PEPs.

13. The measures specified in sub-paragraphs 2-4 of paragraph 12 of these Methodological Recommendations apply to national PEPs and PEPs of international organizations, as well as their family members and close persons, if a high risk of business relationships with such persons is determined.

14. Clients must provide FIs with the requested information and/or documents for conducting CDD.

15. In case of non-provision by the client of information and/or documents necessary for conducting CDD, FIs shall take one of the following decisions:

1. not establish business relationships with the client (refuse to accept for service or open an account);

2. suspend or terminate an established business relationship with the client (refuse service) and terminate the concluded agreement with the client;

3. not carry out the operation (transaction).

When making a decision in this case, FIs are obliged to send a corresponding message to the financial intelligence unit within 1 (one) working day from the date of such decision.

16. A list of national PEPs, their family members, and close persons of PEPs in the form of an electronic database is formed by the State Financial Intelligence Service under the Ministry of Finance of the Kyrgyz Republic (hereinafter – SFIS).

17. Access to the information of the electronic database of national PEPs is provided to FIs via secure electronic communication channels.

18. The list of information in the national PEP database to which access is provided is determined by agreement between the SFIS and the database user.

19. Database users ensure confidentiality, security, and protection against unauthorized access and are responsible for transferring information obtained from the national PEP database to third parties.

20. FIs may use open sources of information to establish, monitor, and verify information regarding PEPs.

21. Identification of Beneficial Owner

22. FIs must identify whether the client is a PEP. A PEP can be a client – a natural person or the beneficial owner of a legal entity that is a client.

23. FIs should properly identify PEP clients who may use legal entities to conceal their identity, so that, as the beneficial owner of the client, they can distance themselves from operations and gain access to financial systems without the risk of being identified (intermediaries (e.g., lawyers, realtors, escrow agents, lobbyists, bankers) acted on behalf of PEPs to hide that the latter are the real owners of assets).

24. When implementing CDD measures, FIs must identify the beneficial owner and take measures to verify their identity. If there are grounds to believe that the beneficial owner is a PEP, then identity verification must be carried out in this case. If there is an assumption that a person is acting on behalf of a beneficial owner (or a natural person), then it is necessary to ascertain the reasons and grounds for such representation of interests, as it may turn out that the beneficial owner of the client is a PEP.

25. If the person acting on behalf of a PEP, or the client, the beneficial owner – is a family member of a PEP or a close person of a PEP, then appropriate CDD measures must be applied to them.

26. Enhanced Measures for PEPs

27. CDD measures must be applied to every PEP client, beneficiary, beneficiary of a bank transfer, trust, as well as to close relatives and close persons of PEPs.

28. When determining a high risk of business relationships with PEPs, FIs must at least apply the following enhanced CDD measures:

1. collection of additional identification information and documents regarding the client from available and reliable sources of information, as well as the use of this information in assessing the risk associated with the client;

2. collection of additional information about the client and beneficial owner for a deep understanding of the risk of possible involvement of such client and beneficial owner in criminal activity;

3. requesting additional information from the client regarding the purpose and intended nature of the business relationship, as well as the source of the client's funds;

4. verification of the sources of the client's funds used within the framework of establishing business relationships, to ensure that the funds are not proceeds from criminal activity;

5. regular updating of identification data of the client and beneficial owner using a risk-based approach;

6. requesting additional information from the client clarifying the reason or economic meaning of planned or conducted operations (transactions);

7. obtaining permission to establish or continue business relationships with the client from the executive body or one of the members of the executive body managing the current activities of the FI;

8. carrying out enhanced monitoring of business relationships through daily monitoring of operations (transactions), analysis of information, consideration and accounting of the purpose of funds, including in manual mode, in order to identify signs of suspicious operations (transactions) and operations (transactions) that do not have an obvious economic meaning or obvious legitimate purpose, as well as bringing the results of monitoring to the attention of the internal control service and the executive body managing the current activities of the FI;

9. offering to conduct the operation (transaction) through a bank account, in case the operation (transaction) is planned to be conducted without opening a bank account.

At the same time, FIs must document the need to apply enhanced CDD measures for effective management and/or reduction of risks.

27. It is recommended to apply reasonable measures to determine whether the client or ultimate beneficial owner (controller) is a foreign or national PEP or a PEP of an international organization. Requirements for PEPs also extend to their family members, close persons of PEPs.

28. Effective control of business relationships with PEPs is the continuous application of a risk-based approach and strict adherence to the "know your customer" principle.

29. Temporary Limitations on PEP Status

30. Requirements for determining PEPs must also cover a person who was once entrusted with significant public functions, according to the "once a PEP – always a PEP" approach. The attitude towards a client whose powers have been terminated should be assessed based on risk and does not depend on time frames.

31. A risk-based approach requires FIs to assess all CFT/AML risks in relation to a person who is no longer entrusted with significant functions and to take effective measures to mitigate the risk. Possible risk factors include:

the level of (unofficial) influence that the person may still exert; how high their position was as a PEP; or

whether the person's past and present functions are related (e.g., official appointment of a PEP's successor or the PEP continues to deal with the same important issues).

7. Use of Information Sources for Identifying PEPs, their Family Members and Close Persons

8. Establishing whether a client or beneficial owner is a PEP and/or who is a family member and close person poses difficulties, especially with regard to foreign PEPs, for whom complete information is often unavailable. Another problem related to implementation is identifying which existing FI clients became PEPs after establishing business relationships. Thus, it is especially important for FIs to monitor accounts of non-PEP clients to understand whether the client's status, profile, account operations have changed, and to update information about such a client. Such continuous monitoring should be based on the FI's CFT/AML risk.

9. It is very important to emphasize that CDD is the primary way to obtain information to determine whether a client is a PEP. For example, the client's main occupation or place of work can be a key factor. However, there are other sources of information that can help FIs determine whether a client is a PEP. FIs should consider using additional sources of information, especially to find out if a person is a foreign PEP.

10. Although general queries in large search engines can be complex, FIs can use free search tools provided through specialized sites with targeted searches. In addition, targeted searches in client-related sources can help find reliable information, for example, through media sites. Internet search also helps to obtain general information about a country. For example, it is appropriate for FIs to know which countries prohibit certain PEPs (e.g., elected officials) from holding bank accounts abroad.

11. FIs are obliged to use available sources of information, including information systems and databases, to continuously identify PEPs, close relatives of PEPs, and persons close to PEPs among clients, beneficial owners, and persons acting in the interests of the client, as well as to update relevant information. If necessary and possible, it is recommended to gain access to commercial databases.

12. Many countries have a system for disclosing information about the assets and property of individuals entrusted with significant functions.

13. A client's declaration of their PEP status (e.g., providing information about current or past employment or main occupation that indicates the person is a PEP) is a measure that allows understanding whether the client is a PEP. However, FIs that introduce the definition of a PEP to a client and ask if they fall into this category should not rely solely on this procedure and the information obtained (as it may be unreliable). Such a procedure shifts the FI's obligations to its client, which is an unacceptable practice. Moreover, not all clients may be able to determine whether they are PEPs or not, for example, because the client does not know the definition of "PEP". Instead, organizations should more actively engage with clients and establish information that correlates with individual elements of the "PEP" definition. To deal with this most effectively, well-trained staff and information gathering are necessary.

14. FATF recommendations require that internal control rules include ongoing employee training programs, which should include effective methods for determining whether a client is a PEP. Training should use real-life examples to ensure their relevance.

15. Establishing the Source of Funds and Other Property of PEPs

16. FIs must establish the sources of funds and other property of PEPs. It is important to note that "source of wealth" and "source of funds" are two different things.

17. "Source of wealth" is the origin of the PEP's entire wealth (i.e., all assets). This information usually reflects data on what the client's wealth is and how the PEP acquired it. And although FIs may not have information about assets they are not involved with, it is still possible to obtain information from commercial databases and other open sources.

18. "Source of funds" is the origin of specific funds or assets that are the subject of a business relationship between a PEP and an FI (e.g., invested funds, funds deposited, or transferred during a business relationship). Usually, such information is easy to obtain, but one should not be limited to just understanding where they were transferred from. The information obtained must be meaningful, i.e., the source or grounds for its acquisition must be indicated.

19. Information on the source of wealth and source of funds can be useful for ongoing monitoring. When enhanced monitoring of business relationships is carried out, FIs must ensure that the level of operations corresponds to the knowledge of the PEP's source of wealth and funds. The goal is to ensure consistency between the reasons for establishing business relationships and what is expected from the PEP, taking into account his/her circumstances. When making such a decision, the following factors must be considered: the PEP's current income, sources of wealth and funds that can be explained by a previously held position, the presence of commercial enterprises, and family property.

20. If the level or type of activity in the business relationship differs from what could be reasonably explained, taking into account information on the PEP's sources of wealth and funds, an assessment of the situation must be undertaken immediately. Based on the results of such an assessment, a decision must be made to initiate or continue business relationships or other measures must be taken, for example, termination of relationships and/or sending information to the SFIS.

21. When working with PEPs, verification should not be limited to analyzing generally known information about assets owned or effectively controlled by the PEP. When determining the source of wealth, FIs should take measures to obtain more detailed information about what property (wealth) belongs to or is controlled by the PEP. Refusal to