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Financial Intelligence Centre Act, 2001 (Act No. 38 of 2001)


Guidance Note 3

Guidance for Banks on Customer Identification and Verification and Related Matters

Politically Exposed Persons (PEPs)

27. Policies for dealing with PEPs


It is crucial that banks address the issue of PEPs in their risk framework, referred to in paragraph 2, and group money laundering control policy. PEPs should be regarded as high-risk clients and, as a result, enhanced due diligence should be performed on this category of client. Heightened scrutiny has to be applied whenever PEPs or families of PEPs or closely associated persons of the PEP are the contracting parties or the beneficial owners of the assets concerned, or have power of disposal over assets by virtue of a power of attorney or signature authorisation.


The Wolfsberg principles provide additional guidance on how to recognise and deal with a PEP.  In addition to the standardised KYC procedures, the following prompts are appropriate to recognise a PEP:

the question whether clients or other persons involved in the business relationship perform a political function should form part of the standardised account opening process, especially in cases of clients from corruption prone countries;
client advisers should deal exclusively with clients from a specific country/region to improve their knowledge and understanding of the political situation in that country/region;
the issue of PEPs should form part of a banks regular KYC training programs;
banks may use databases listing names of PEPs including their families, closely associated persons and advisors.