16 Questions
What is the primary concern associated with Political Exposed Persons?
Their potential involvement in money laundering and related crimes
What is the purpose of FATF Recommendations 12 and 22?
To prevent abuse and detect potential risks in the financial system
Why are Political Exposed Persons considered an increased risk in the Know Your Customer field?
Due to their position and influence, which can be potentially abused
What is the definition of a Political Exposed Person according to the FATF?
A person who holds, or has held, a prominent public function
What should financial institutions and designated non-financial enterprises do to address the risks associated with PEPs?
Take measures to prevent abuse and detect potential risks
What is the spirit of the FATF recommendation regarding PEPs?
To prevent abuse and corruption while allowing legitimate business relationships
Which of the following government positions does not fit into the definition of a Politically Exposed Person?
Member of a city council
What is the primary reason for including family members in the PEP definition?
To alert financial institutions to potential risks from close family ties
According to the Financial Action Task Force, how should the treatment of a PEP be based?
A risk-based approach
What was the outcome of the Luanda Leaks investigation?
The investigation revealed billions of dollars had been funneled away from Angolan government funds
What is the term for relationships outside the family that are considered close associates of a PEP?
All of the above
Why is it important to consider direct relationships with a PEP?
To identify potential risks of money laundering
What is the purpose of a PEP investigation?
To research potential risks of money laundering
Who is often referred to as Africa's richest woman?
Isabel dos Santos
What is the term for the transfer of public funds for personal gain?
Embezzlement
What was the outcome of the Luanda Leaks investigation in terms of international companies and financial institutions?
They were accused of knowingly doing business with Isabel dos Santos
Study Notes
Political Exposed Persons (PEPs)
- A PEP is a person who holds, or has held a prominent public function, increasing the risk of money laundering, corruption, bribery, and terrorist financing.
- Examples of PEPs include:
- Head of state
- Head of government
- Minister
- Deputy minister or secretary of state
- Member of Parliament or similar legislative body
- Member of the executive board of a political party
- Member of a supreme court
- Member of a court of account or board of directors of a central bank
- Ambassador, chargé d'affaires, or senior officer of the armed forces
PEP Relationships
- Family members and close associates are considered to be in direct relationship with a PEP.
- Close associates include relationships outside the family, such as boyfriends, girlfriends, lovers, or mistresses.
Duration of PEP Status
- The duration of PEP status is not clearly defined and may vary per financial institution, company, or profession.
- The Financial Action Task Force (FATF) recommends a risk-based approach rather than a prescribed time limit.
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 and her partners obtained enormous wealth through Angola and international companies outside Angola.
- The investigation uncovered corruption, embezzlement of public funds, and the transfer of public funds for personal gain.
- The scandal led to legal proceedings in several countries and widespread discussions about corruption, accountability, and transparency in Angola and beyond.
FATF Recommendations
- FATF Recommendations 12 and 22 require countries to ensure that financial institutions and designated non-financial enterprises take measures to prevent financial system abuse and detect potential abuse.
- The FATF's PEP requirements are preventive and should not stigmatize business relationships.
Discover the definition of a Political Exposed Person (PEP) in the Know Your Customer field and how it relates to Financial Economic Crime. Learn about the standards and recommendations set by the Financial Action Task Force (FATF).
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