16 Questions
What is the full form of FATF?
Financial Action Task Force
What does PEP stand for in the context of Know Your Customer procedures?
Political Exposed Person
According to the FATF, who qualifies as a PEP?
A person who holds or has held a prominent public function
Which FATF recommendations address the measures to prevent abuse, bribery, and corruption associated with PEPs?
Recommendations 12 and 22
What is the main intention behind the FATF's PEP requirements?
Preventive measures to combat abuse and financial crimes
Why does the FATF caution against stigmatizing business relationships with PEPs?
To avoid violating the spirit of FATF recommendations
What are some examples of government positions that fit the definition of a Politically Exposed Person according to the Dutch definition?
Head of state, head of government, minister, deputy minister, Member of Parliament, Member of a political party executive board, Member of a supreme court, Member of a central bank's board of directors, Ambassador, senior military officer.
Why is it important to consider direct relationships of a PEP in PEP investigations?
To assess potential risks that may arise from those relationships, such as money laundering or corruption.
What types of relationships are included in the PEP definition beyond family members?
Close associates, like boyfriend, girlfriend, lover, or mistress.
Why is the inclusion of family members in the PEP definition important for financial institutions?
To be alerted to potential risks associated with close family ties and financial activities related to corruption or money laundering.
According to the Financial Action Task Force, how should the treatment of when someone is a PEP be approached?
Based on a risk-based approach rather than a prescribed time limit.
What major corruption and financial misconduct scandal was uncovered in January 2020 involving Isabel dos Santos?
The Luanda Leaks scandal.
What sectors were affected by the corruption scandal involving Isabel dos Santos as revealed in the Luanda Leaks investigation?
Telecommunications, banking, and energy sectors.
What were some of the illegal activities revealed in the Luanda Leaks investigation involving Isabel dos Santos and her family members?
Corruption, embezzlement of public funds, and transfer of public funds for personal gain.
What impact did the Luanda Leaks revelations have on discussions globally beyond Angola?
They sparked discussions on corruption, accountability, and transparency beyond Angola.
How did the Luanda Leaks scandal affect international companies associated with Isabel dos Santos and her family?
It raised questions about the ethics of transactions and involvement in potentially unethical dealings.
Study Notes
Politically Exposed Persons (PEPs)
- A PEP is a person who holds, or has held, a prominent public function, and is at a higher risk of being involved in money laundering, corruption, and bribery.
- Examples of PEPs include:
- Heads of state
- Heads of government
- Ministers
- Deputy ministers or secretaries of state
- Members of Parliament or similar legislative bodies
- Members of the executive board of a political party
- Members of supreme courts
- Members of courts of account or boards of directors of central banks
- Ambassadors, chargés d'affaires, or senior officers of the armed forces
- PEPs can be considered high-risk due to their position and influence, which can be abused for illegal activities.
Relationships with PEPs
- Close relationships with PEPs, such as family members and close associates, can also be considered high-risk.
- Family members include:
- Spouses
- Children
- Parents
- Siblings
- Close associates include:
- Boyfriends or girlfriends
- Lovers or mistresses
- Business partners
- Financial institutions and organizations should research and consider these relationships when dealing with PEPs.
Duration of PEP Status
- There is no clear definition of when a person ceases to be a PEP.
- The treatment of PEPs should be based on a risk-based approach, rather than a prescribed time limit.
- Financial institutions and organizations should assess the risk level of each PEP on a case-by-case basis.
Case Study: Luanda Leaks
- The Luanda Leaks investigation revealed a major corruption and financial misconduct scandal involving Isabel dos Santos, the daughter of the former president of Angola.
- Dos Santos was accused of using her political connections to gain control of important Angolan industries, including telecommunications, banking, and energy companies.
- The investigation uncovered billions of dollars in potentially laundered funds and international companies that had done business with dos Santos and her associates.
- Legal proceedings were initiated in several countries as a result of the investigation.
Test your knowledge on the definition of a Political Exposed Person (PEP) according to the Financial Action Task Force (FATF). Learn about the increased risk associated with PEPs in the Know Your Customer field.
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