Who Are PEPs?
Politically Exposed Persons (PEPs) As a company, we work with individuals who are known as “politically exposed persons,” or PEPs. Usually these are officials affiliated with foreign political parties, or individuals associated with corporations owned or operated by a foreign government.
Titles alone don’t identify a person as a PEP, as governments are organized differently in each country. So consider other factors such as official responsibilities, the type of authority they have, and their access to government assets.
Because of their influence, it is recognized that many PEPs are in positions that can be abused for the purpose of committing money laundering, bribery and corruption, terrorist financing, and other unlawful activities. Therefore, having dealings with PEPs is high risk. So it’s our responsibility to be aware of the PEP status of our customers or potential customers.
If you realize you are working with a PEP or someone who is related to a PEP through business or family relationships, you must seek senior management approval for the business relationship. If granted approval, you will need to follow our policy for ongoing monitoring of the business relationship.
While updating the ownership structure on an old account, Bruce discovered that until recently the brother-in-law of the company’s CEO was a senior government official.
- No, because the CEO and the brother-in-law did not interact while the brother-in-law was in office.
- No, since the brother-in-law is not in the government role anymore.
- No, because the brother-in-law has no shares in or responsibilities for the company.
- Yes, since the brother-in-law likely remains close to the people still in government, there could be some legal risk for Bruce and our company.
A family member of a senior executive holding a position in government potentially exposes our company to the risk or perception of corruption and should be reported. Remember – PEPs occupy positions that can be used or abused for the purpose of bribery and corruption. You need approval to work with PEPs, and they are regarded as high risk for bribery and corruption and other potential unlawful activity.
Jane is dealing with an approved agent in a foreign location. She tells you: “I just learned that our agent is married to the sister of the Minister for Trade.”
- Nothing. The agent was approved, so the risks have already been quantified.
- Contact Legal to determine the proper course of action. This situation could expose Jane and our company to some legal risk.
- Cut off all communication with the agent. The risk is too high.
Jane must make sure our company is aware of the new information she has about the relationship between the agent and the government minister and find out whether any further due diligence is required to assure that no improper transactions occur. Remember, identifying a PEP does not mean you cannot do business with them, but it does mean that additional investigation and ongoing vigilance is required.
This content is an extract from the anti bribery and corruption booklet.