Interesting note

Who are PEPs (Politically Exposed Persons)?

Politically Exposed Persons, a term introduced by FATF Recommendations, means individuals who hold prominent public offices. In an effort to fight corruption, the accounts of these people are placed in a high-risk category and are therefore subject to stricter control from foreign banks. Officers of financial institutions must seek permission of senior management to accept such clients, take measures to ascertain the origin of their funds, and constantly monitor their business relations. So, a foreign bank cannot open an account for such a politician without prior approval of the bank’s director.

In practice, some banks implement these measures also in respect of family members and close associates of such PEPs. In the USA, for example, the relevant regulation is included in the Guidance on Enhanced Scrutiny for Transactions That May Involve the Proceeds of Foreign Official Corruption issued by the Department of the Treasury and Department of State. At the same time, there are banks that implement these measures based on their own internal regulations.