Politically Exposed Person List

 admin



The term “politically exposed person” generally includes a current or former senior foreign political figure, their immediate family and their close associates. Interagency guidance issued in January 2001 offers banks resources that can help them to determine whether an individual is a PEP. More specifically:

Politically exposed person. The PEP database contains the most comprehensive list of Politically Exposed Persons (PEPs) from more than 240 territories of the world, as well as from international organizations and political and diplomatic representations with around 1 million relevant PEPs. The Central Intelligence Agency publishes and updates the online directory of Chiefs of State and Cabinet Members of Foreign Governments weekly.The directory is intended to be used primarily as a reference aid and includes as many governments of the world as is considered practical, some of them not officially recognized by the United States.

  • A “senior foreign political figure” is a senior official in the executive, legislative, administrative, military or judicial branches of a foreign government (whether elected or not), a senior official of a major foreign political party, or a senior executive of a foreign government-owned corporation. In addition, a senior foreign political figure includes any corporation, business, or other entity that has been formed by, or for the benefit of, a senior foreign political figure.
  • The “immediate family” of a senior foreign political figure typically includes the figure’s parents, siblings, spouse, children and in-laws.
  • A “close associate” of a senior foreign political figure is a person who is widely and publicly known to maintain an unusually close relationship with the senior foreign political figure, and includes a person who is in a position to conduct substantial domestic and international financial transactions on behalf of the senior foreign political figure.

The New Hot Topic

Establishing a domestic list of PEPs is seemingly the new BSA rage, although many financial institutions have already been maintaining either a separate domestic PEP list or one combined with foreign PEPs. Defining domestic PEPs is a rather rudimentary procedure. Since one nation’s foreign PEPs mirror another nation’s domestic PEPs, the same FFIEC definition could be applied, substituting the different titles nation’s use (secretary as opposed to minister for example). Defining a senior level political figure is also fairly straightforward. Suffice to say that in United States any federal elected official should occupy the list, plus Supreme Court Justices, ambassadors and the assorted secretaries, under-secretaries and directors that populate American government. One could argue that the United States system of government has a second tier of senior domestic PEPs, those on the state level, who in the context of state government are on an equal footing when it comes to authority and influence.

Identification

However you choose to go, it is at the customer identification program (CIP) stage where all PEPs must be identified and reported to BSA compliance. Any employee who administers CIP at a financial institution needs to be trained on whom exactly your institution is considering to include. The office held is what they are looking for since public officials come and go with the mood of the electorate. Because a new account opening form requires employment information, the task would appear to be more record keeping than anything else, however, most former public officials eventually go on to other occupations. Coupled with the sad fact that in America a large segment of the population would have to think twice about the name of their current senators and congressional representatives, let alone who occupied the position before them. The task may not be as simple as it seems, becoming even more difficult if your PEP parameters include state officials.

As for family members and close associates, an Internet search of the official, along with any third party databases your company subscribes to, would probably yield many of the close connections to which the definition speaks. Remember to then scrub your customer base to those results and perform your due diligence.

Reality vs. Theory

In reality, most American banks will never see a senior foreign official as their customer, nor have any inkling that a close associate may be a customer. The same holds true (to a somewhat lesser degree) for America’s senior officials. Most PEPs, foreign or domestic, are generally confined to a specific geographical region such as Washington D.C. and its surroundings or New York City, home of the United Nations and its suburbs.

All PEPs are Local

When it comes to PEPs, the old adage, “All politics is local,” certainly rings true. In many lower socio-economic nations that point is driven home all too often by violence, with local political leaders and law enforcement overseeing a reign of terror to protect their own criminal enterprises. They get away with it because the government in those countries is weak, indifferent, complicit and/or unable to logistically police the entire nation. Stories abound around the world of law enforcement being so brazen that even when they act for the good of society by making a legitimate arrest, they may decide to execute the suspect on the spot because of that same lawless culture. Whether they had the right person or not is somewhat irrelevant.

For financial institutions in the United States, it is the local PEP that poses the biggest challenge. We all obviously understand that a local mayor involved in a small conduit contribution scheme pales in comparison to a congressman, for example, jeopardizing the safety of the United States by selling government classified documents to the highest foreign bidder. But while the suspicious activity report (SAR) that exposed former New York State Governor, Eliot Spitzer, commands the headlines, big name politicians are usually the anomaly. It is the county legislator, city mayor, town councilman, superintendent of highways, police chief and building inspector who are usually knee-deep in bribes, kickbacks, shakedowns, influence peddling, self dealing and corruption. One look at the FBI Newark web site will validate the propensity for bad behavior by the local politico.

Even though not required, financial institutions may find it prudent to have a procedure in place where some of your more prominent local PEPs are on the radar. Perhaps, even more importantly, it is the political campaign account that should be singled out and placed under a watchful eye with enhanced due diligence.

Local PEP Red Flags

Most local PEPs generally do not start out as people intent on becoming involved in illegal activities. They are generally community people who, for whatever reason, get caught up in the world of politics and power; some ending up well over their heads. Many rationalize their activity as normal or commonplace, something universally accepted. Others convince themselves that it is tantamount to the welfare of society that they serve as opposed to the other guy, making bending the rules important because of the bigger picture. Of course, some just devolve into being crooks.

Some of the disadvantages to investigating local PEPs are that generally the amounts involved are small with many deals centering on a wink and a nod, political patronage and lucrative contracts as the payoff. Some of the advantages are that local PEPs and their friends are generally not the savviest individuals and may have no idea they are breaking the law. This leads to nothing more than a gossamer attempt to obfuscate their behavior, such as structuring a cash bribe. All the normal red flags for money laundering and economic crime apply to all PEPs, their families and associates, but a couple of schemes, which may fly under the radar, are the reason local PEPs and political accounts need monitoring.

Business by Spouse

One of the oldest tricks in the book, and not just reserved for politicians, is the establishment of an LLC by the spouse of a local official for the purpose of marketing or consulting that can be nothing more than a guise for influence peddling. As indicated above, the scheme is surface driven, meaning the name and activity on the surface appears to have no deeper connection. It creates a backdoor for directors to funnel money via inflated payments to the official, since the funds end up in the personal coffers of the official’s household. Since most local campaigns are financially driven by the candidate’s own personal funds, an extra $20,000 in return for steering business to the financial institution, or any of a multitude of favors, can mean the difference between winning or losing. In its most odious form, the scheme is nothing more than a gift, because the board and the politician are partisans of the same party and business being steered toward your company is nothing more than some favorable press at the local chamber of commerce meeting. The maneuver shows utter disdain for accountholders, shareholders and employees, robbing the bottom line.

Conduit Contributions

A conduit contribution is a political donation made through someone else. The article in this issue entitled “Conduit contributions” details the red flags of the scheme for an AML investigator to be on the lookout for.

Domestic PEPs and Insiders

One of the biggest challenges for a BSA/AML professional, especially at smaller community based institutions, is the often unavoidable interlocking personal and business relationships between board members and local politicians and their associates, a relationship that many times leads to an appearance of a conflict of interest at the very least. Many involved in some local government capacity may even sit on the board. Investigating an insider can be a daunting, disconcerting and yes, even dangerous challenge (see the Retaliation Factor/ACAMS TODAY/December 2010 issue). Not only should all board members and senior officers have enhanced due diligence done on their accounts, but all vendors should be reviewed by BSA compliance to determine any beneficial ownership and/or conflict of interest.

Politically exposed person list south africa

Domestic PEPs as Victims

While the preponderance of crimes involving PEPs are by them, they may become the victim of a crime. That type of risk is heightened by geopolitical and economic factors with a foreign PEP of a third world country more susceptible to being a victim because of the prevailing culture and lawlessness of that nation as opposed to the United States. Many male domestic PEPs in the United States engineer their own problems using the Internet to campaign for something other than votes. That notwithstanding, blackmail and extortion still must be on the mind of the BSA/AML officer. Many PEPs are extremely wealthy and will pay hush money to cover-up an indiscretion, not only for themselves but especially a family member. Once again, the Spitzer case shows how activity could be initially construed as blackmail, and how the simplest red flags often lead to the discovery of bad behavior.

Conclusion

How, and if, you wish to monitor for domestic PEPs is up to each financial institution. You can take some solace in the fact that the normal red flags generated from AML reports and software will bring to light most wrongdoing inclusive of all PEPs.

Authority and power vested in politically exposed persons inorder for them to exercise functions of the state, are the source of corruptionrisks and that of laundering dirty money. Politically exposed persons must be subjectto special rules of financial operations control, which would enable timelydiscovery of legalization of funds acquired as the result of corruption acts,namely acceptance of bribes, embezzlement, unlawful acquisition of property ornon-earmarked use of funds, abuse of office etc.

Administrator of the Register, Anti-corruption Action CentreNGO, when identifying the politically exposed persons, is guided by the normsof national and international law, recommendations of internationalorganizations and Service of Financial Monitoring of Ukraine, such as:

  1. 12th Recommendation of FATF – International group to combat money laundering (Financial Action Task Force on Money Laundering) (hereinafter – the Recommendation)

In case of collisions/contradictions of the norms of nationaland international law, Anti-corruption Action Centre NGO is to be guidedforemost by the FATF Recommendations, which, notwithstanding their advisorynature for the actors of primary financial monitoring in Ukraine, thecountry committed to implementingwhen signing Ukraine-European Union Association Agreement (Articles 20 and 127of the Agreement).

The Law of Ukraine “On Prevention andCounteraction to Legalization (Laundering) of the Proceeds of Crime, TerrorismFinancing and Financing of Proliferation of Weapons of Mass Destruction” (hereinafter –the Law), specifies the following categories of politically exposedpersons:

1. national politically exposed persons;

2. foreign politically exposed persons;

3. politically exposed persons, having political functions ininternational organizations;

4. associated persons of politically exposed persons;

5. close persons of politically exposed persons.

National politically exposed persons, according to the Law, aredefined as individuals exercising or havingexercised in the last three years specific public functions in Ukraine,namely:

● President of Ukraine;

● Prime Minister of Ukraine;

● Members of the Cabinet ofMinisters of Ukraine;

● First deputies anddeputies to the ministers;

● Heads of other centralbodies of executive power, their first deputies and deputies;

● Members of Parliament ofUkraine;

● Head and members of theBoard of the National Bank of Ukraine;

● Members of the Council ofthe National Bank of Ukraine;

● Heads and judges of theConstitutional Court of Ukraine, Supreme Court of Ukraine and high specializedcourts;

● Members of the HighCouncil of Justice;

● Members of the HighQualification Commission of Judges of Ukraine;

● Members of theQualifications and Disciplinary Commission of Public Prosecutors;

● Prosecutor General anddeputies;

● Chief of the SecurityService of Ukraine and deputies;

● Director of the NationalAnti-corruption Bureau of Ukraine and deputies;

● Head of the Anti-MonopolyCommittee of Ukraine and deputies;

● Head and members of theAccounting Chamber;

● Members of the NationalCouncil of Television and Radio Broadcasting of Ukraine;

● Ambassadors Extraordinaryand Plenipotentiary;

● Chief of the General Staff– Commander-in-Chief of the Ukrainian Armed Forces;

● Chiefs of the UkrainianGround Forces, Ukrainian Air Force and Ukrainian Navy;

● Civil servants holding“A”- category posts;

● Heads of oblast localcentral agencies of executive power;

● Heads of Prosecutor’sOffice bodies;

● Heads of oblast localbodies of the Security Service of Ukraine;

● Heads and judges of thecourts of appeal;

● Heads of administrative,managerial and supervisory bodies of state companies, economic societies,having over 50 percent of state share in their authorized capital;

● Heads of governing bodiesof political parties and members of their central statute bodies.

Positions of civil servants belonging to “A” category (highest rank of civil service):

●State Secretary of the Cabinet of Ministers of Ukraine withdeputies and state secretaries of ministries;

Person

●Heads of central bodies of executive power non-members of theCabinet of Ministers of Ukraine and their deputies;

●Heads of staff of the Constitutional Court of Ukraine, SupremeCourt, Higher specialized courts and their deputies, heads of secretariats ofthe High Council of Justice, High Qualifications Commission of Judges and theirdeputies, Head of the State Court Administration of Ukraine and their deputies;

●Heads of state service in other state bodies havingjurisdiction over the whole territory of Ukraine.

Heads of subsidiary companies:

The pep.org.ua list also includes heads of administrative,managerial or supervisory bodies of subsidiaries of state enterprises, companies having over 50% share of the state in their authorized capital. Thesepersons are identified as politically exposed persons based on the legalopinion of the Supreme Court of Ukraine on case No. 21-452а14, when the board ofjustices of the Administrative Court Chamber reached the conclusion that sincethe founder of the subsidiary is a public joint stock company, whose 100percent of shares are owned by the state, then subsidiary company is aninherently public company as well, as it operates based on the state property,transferred possession by the founder for economic management.

Heads of large municipal enterprises:

According to the Law, heads of municipal enterprises are notpolitically exposed persons, unlike heads of the state companies.

Recommendation 12 of FATF (paragraph 38)[1] defines Publicfunction (politically exposed person) as a physical entity vested with prominentpublic function. What constitutes a prominent public function domesticallydepends on the particular organizational framework of government orinternational organization concerned, and the powers and responsibilitiesassociated with particular public functions and other factors that areconsidered as part of the risk assessment. For example, prominent publicfunctions may exist at the federal, state or provincial, and/or municipallevels.

Recommendation 12 of FATF (Paragraph 41[2]) states that in orderto determine PEPs there is another approach, which would be to describegenerally the types of responsibilities that are sufficiently prominent (e.g.,final approval over government procurement processes, responsibility forbudgetary spending).

In view of the above, in the Register we publish informationabout a number of persons who are not politicaly exposed persons according tothe Law, but perform prominent publicfunctions:

● Seniormanagers of largemunicipal enterprises

● Heads of branches of largestate enterprises and companies with a state share of more than 50 percent

● Majors of big cities

● Chairman of the Board ofthe Social Insurance Fund of Ukraine

● Managing Director of the DepositGuarantee Fund for Individuals and his Deputies

● Commissioner of theVerkhovna Rada of Ukraine for Human Rights

● Secretary of the NationalSecurity and Defense Council

● Members of the CentralElection Commission

From the economic significance standpoint, access to managingbudget funds, certain municipal enterprises are comparable to the state ones bytheir importance. Therefore, heads of some administrative, managerial orsupervisory bodies are included in the pep.org.ua database as nationalpolitically exposed persons.

For instance, KP “ZhytloInvestBud-Ukb” is a municipalenterprise under jurisdiction of Department of Development and Housingprovision of Kyiv City Council executive body (Kyiv City State Administration).The function of the enterprise is organization of planning, construction,reconstruction, capital repairs, commissioning and alienation of residentialand non-residential buildings, raising funds from physical and legal entitiesfor housing and real estate development. In 2017, KP “ZhytloInvestBud-Ukb”concluded 2,058,832,041.52 UAH public procurement agreements, including thosefor building schools and kindergartens, reconstruction of social infrastructureobjects, social housing development. Funds for construction of these objectsare allocated from the local budget.

Municipal corporation “KyivAvtoDor” was created under thedecision of Kyiv City Council of March 3, 2002. The corporation is underjurisdiction of executive body of Kyiv City Council (Kyiv City StateAdministration). The corporation provides technical supervision, maintenanceand repairs of roads as well as road and transport facilities on them, streetlighting network. In 2017, the corporation concluded 2,221,505,825.07 UAH ofpublic procurement agreements. Those were agreements for capital repairs ofstreets and avenues of Kyiv city, pathways between houses, territories aroundhouses, development of projects estimating documentation and the expertexamination of construction projects. Along with KyivAvtoDor the same functionsare delegated to subsidiaries PJSC “DAK “Roads of Ukraine”, theheads of which are also politically exposed persons.

Municipal company “Kyiv Underground” is an enterprisemanaging the capital city underground system, which provides 50% of the totalcity passenger transportation in Kyiv. In 2017, Kyiv Underground concluded 373,510,321.88 UAH worth public procurement agreements.

Therefore, municipally owned companies, similar to theaforementioned ones, can be characterized as:

1) having important public functions on the city level in Kyiv,which is the capital of Ukraine;

2) are financed from Kyiv city budget, which is partiallyfinanced from the state budget;

3) manage budget costs which significantly surpass those managedby most state companies.

Thus, considering criterion of “prominent public functions” andcorruption risks associated with these posts, we consider heads of largemunicipal companies of Kyiv City to be national politically exposed persons andinclude their data to pep.org.ua.

Heads of branches of large state enterprises and companies witha state share of more than 50 percent:

The Register includes Heads of branches of large state enterprises and companieswith a state share of more than 50 percent in case the aggregate value ofassets of the enterprise according to the latest financial statements exceeds 2billion UAH[1], and a branch has the right to make procurementson its own.

Mayors of big cities:

Politically Exposed Person List Download Philippines

Wolfsberg Group Recommendations includecharacteristics of certain prominent public functions, which can be useful asindicators of importance or prominence and can be employed to determine whethera person can be identified as a politically exposed person. As an example of function which can be ground for givingthe status of a politicallyexposedperson, the status of city mayor, governor, leader of federal region.[3].

Therefore, even though city mayors are not politically exposedpersons under the Law, in pep.org.ua data base mayors of cities with a statusof oblast centres are identified as politically exposed persons,considering “prominent public functions” of these persons, highcorruption risks associated with their post and their influence on makingdecisions considering local budget funds allocation.

Chairman of the Board of the Social Insurance Fund of Ukraine

In compliance with the Article 4 of the Law of Ukraine 'OnCompulsory State Social Insurance', the Social Insurance Fund of Ukraineis the body that manages and controls the compulsory state social insuranceagainst accidents in case of temporary incapacity for work and medicalinsurance, carries out the accumulation of insurance premiums, controls the usageof these funds. The Social Insurance Fund is a non-profit self-governingorganization. The management is carried out on a parity basis by the state,representatives of insured persons, and employers.

At the same time, the sources of Fund formation are mostlyinsurance premiums of insurers and insured persons. The amount of insurancepremiums and the obligation to pay them are established by the Law of Ukraine'On the Collection and Registration of a Single Contribution to ObligatoryState Social Insurance' in a mandatory manner. Persons who pay insurance premiumscan not refuse to pay. Incorrect accounting of obligations to pay insurancepremiums, non-payment of these premiums or not full payment is punishably byfinancial sanctions and administrative fines.

The right to impose and enforce financial sanctions andadministrative fines for the violations listed above belongs to the SocialInsurance Fund.

The budget of the Fund is approved by the Cabinet of Ministersof Ukraine.

One of the main tasks of the Fund is the implementation of statepolicy in the areas of social insurance against industrial accidents andoccupational diseases that caused disability for work, due to temporaryincapacity for work, and medical insurance.

Therefore, we believe that functions of the Fund are essentiallyfunctions of a state body, and the Chairman of the Fund has impact andsufficient authority to be classified as a politically exposed person on anequal basis with the heads of central executive authorities.

Managing Director of the Deposit Guarantee Fund for Individualsand his Deputies

The Deposit Guarantee Fund operates under the Law of Ukraine'On the System of Guaranteeing Individual’s Deposits'.

In compliance with the Article 19 of the Law of Ukraine 'Onthe System of Guaranteeing Individuals' Deposits'. Sources of fundformation are fees from participants of the Fund, funds from the State Budgetof Ukraine (including domestic governmnet loan bonds), and other sources. Everyyear (2016, 2017, 2018) the Law of Ukraine 'On the State Budget ofUkraine' provides the capacity of issuing domestic governmnet loan bondsto finance the Fund.

The functions of the Fund are implementation of the procedurefor the withdrawal of insolvent banks from the market, including implementationof temporary administration and liquidation of banks, organization of the sale ofall or a part of the assets and liabilities of insolvent bank, sale ofinsolvent bank or the establishment and sale of a transitional bank.

It is worth noting that some banks, management, liquidation,sale of assets of which are implemented by the Fund, have significant debts tothe National Bank of Ukraine. Some of these banks were brought to a state, whereit was necessary to implement the temporary administration of the Fund, by unfairactions of bank officials.

It depends on the representatives of the Deposit Guarantee Fund whetherfacts of abuse by the officials of the banks transferred to the Fund's managementwill be recorded; whether action will be taken on dissolution, recognition ofnull and void contracts, with the help of which funds were illegally withdrawnfrom banks; how effectively will the sale of property of banks under thecontrol of the Fund be organized. It depends how much of funds of the depositsof individuals and other creditors (including the National Bank of Ukraine)will be repaid, how much of the State Budget of Ukraine will be spent on it.

As ofFebruary 2018, the Deposit Guarantee Fund provides the liquidation of 92 banks,two of them has temporary administration (according to the website of theDeposit Guarantee Fund). Participants of the deposit guarantee system are 83banks. In such a situation, we believe that the management of the DepositGuarantee Fund has a significant impact on the economic situation in thecountry, management of budget funds and shall be recognized as a national politicallyexposed person.

Commissionerof the Verkhovna Rada of Ukraine for Human Rights:

Theexistence of the position of Commissioner of the Verkhovna Rada of Ukraine onHuman Rights is stipulated by the Constitution of Ukraine, and the legal statusof this person is regulated by the Law of Ukraine 'On the Commissioner ofthe Verkhovna Rada of Ukraine on Human Rights'. The Commissioner'soperations are ensured by the secretariat, head of which is a politically exposed person.Since the Commissioner of the Verkhovna Rada of Ukraine fore Human Rights hasmore powers than his/her Head of Secretariat, it is reasonable to include theCommissioner for Human Rights to the category of public figures.

Secretaryof the National Security and Defense Council:

Thefunctions of the National Security and Defense Council of Ukraine include:

1)making suggestions to the President of Ukraine on the implementation of theprinciples of domestic and foreign policy in the field of national security anddefense;

2) coordinationand control over the activity of executive authorities in the field of nationalsecurity and defense in times of peace;

3)coordination and control over the activities of executive authorities in thefield of national security and defense in case of a martial law or state of emergency, and in case of crises threatening the national security of Ukraine.

In compliancewith Articles 2and 5 of the Law of Ukraine 'On Sanctions', thedecision of the National Security and Defense Council is the legal basis for applicationof sanctions by Ukraine. The decision on the application, cancellation, andamendment of sanctions is made by the National Security and Defense Council ofUkraine, and shall be enacted by a Decree of the President of Ukraine.

Forexample, the Resolution of the National Security and Defense Council datedApril 28, 2017 imposed sanctions on 1228 individuals and 468 legal entities.

TheSecretary of the National Security and Defense Council of Ukraine is appointed tothe position and dismissed from it by the President of Ukraine and is directlysubordinated to him. He/she provides the organization of work andimplementation of decisions of the National Security and Defense Council ofUkraine.

In viewof the above, we consider that the powers of the Secretary of the NationalSecurity and Defense Council of Ukraine are very important to consider him anational politically exposed person, despite the lack of a direct indication inthe Law.

Members of the Central Election Commission

The Central Election Commission is a permanently actingcollegiate state body that has the authority to organize the preparation andconduct the elections of the President of Ukraine, Members of Parliament ofUkraine and local councilors .

The Commission heads the system of election commissions andreferendum commissions that are formed to organize the preparation and conduct ofthe elections of the President of Ukraine, people's deputies of Ukraine, anall-Ukrainian referendum.

The Law of Ukraine 'On the Central ElectionCommission' stipulates that the CEC registers the candidates for the positionof President of Ukraine, their trustees; appeals to the High AdministrativeCourt of Ukraine regarding the cancellation of the registration of a candidatefor the position of President of Ukraine; registers candidates for the pisitionof Member of Parliament of Ukraine; decides to cancel the registration ofcandidates for the pisition of Member of Parliament of Ukraine; organizes thepreparation and conducts an all-Ukrainian referendum; registers initiativegroups from an all-Ukrainian referendum; establishes the results of electionsand referendum and officially promulgates them.

Liquidators and heads liquidation commissions:

The pep.org.ua list also includes in the category of nationalpolitically exposed persons liquidators and headsliquidation commissions ofthe state companies and economic societies with the state share of over 50percent in the liquidation period. During the liquidation period, liquidator orliquidation commission de facto manages the company. For instance, part 4 ofArticle 105 of the Civil Code of Ukraine states that commission on legal entityliquidation (reorganization commission, liquidation commission) or liquidationsince the moment of appointment has authority to manage the legal entity. Headof commission, its members or liquidator of a legal entity represent the latterin relations with third parties and act in court on the behalf of theliquidated legal entity.

Family members and close persons

The national law uses the term “close persons” inreference to the closest relatives of politically exposed persons, under theLaw of Ukraine “On Corruption Prevention”. However, Recommendation 12 of FATFand Fourth Anti-Money Laundering Directive use the term “Familymembers”.

Close persons – the term “close persons” (of a politicallyexposed person) is used in the meaning provided by the law of Ukraine “CorruptionPrevention ”, i.e., people who live together, share common household and haverights and obligations in common with the entity mentioned in partone of the Article 3 of the Law (except persons, whose common rights andobligations with the entity have no familial nature), including persons thatlive together without being married, as well as – independent of specifiedconditions – husband, wife, father, mother, step-father, stepmother, son,daughter, stepson, stepdaughter, brother, sister, grandfather, grandmother,great-grandfather, great-grandmother, grandson, granddaughter, great-grandson,great-granddaughter, son-in-law, daughter-in-law, father-in-law, mother-in-law,adopter or adoptee, guardian or care-taker, person under wardship or care ofthe said individual.

The Law has no mention of the term “family members” of anational politically exposed person and its differentiation from the term“close person” of a national politically exposed person.

In paragraph 48 of Recommendation 12 of FATF it is stated, thatthe number of persons belonging to the family depend on culturalcharacteristics of a certain country, it may include narrow circle of persons(spouses, their parents, children, siblings), as well as the broader one,including cousins or even clans[4].

Paragraph 10 of Article 3 of the Fourth Anti-Money LaunderingDirective states that the term family members of politically exposed personsincludes the following: the spouse, (or a person considered to be equivalent toa spouse), parents, children and spouses of children (or other personsconsidered to be equivalent to a spouse).

Therefore, Anti-corruption Action Centre NGO, when working oncontent for the Register (pep.org.ua), is guided by the norms of internationallaw and uses the term “Family member”.

The “Family members” category includes:

● spouse (or any individual residing withpolitically exposed person and having common family without registeringmarriage);

● father/ mother (stepfather/ stepmother);

● son/ daughter (stepson/ stepdaughter);

● son/daughter-in-law of a politically exposedperson;

● siblings of a politically exposed person;

● father/mother-in-law.

It is worth mentioning that the term “Family members” inRecommendation 12 of FATF and Fourth Anti-Money Laundering Directive is morenarrow than the term “Close persons”, used in the Law. We include the personsnot belonging to family members, but being close persons, under the Law ofUkraine, belong to connected persons (grandparents, grandchildren, cousinsetc). Therefore, information on these individuals can be found on pep.org.ua.

Associates – individuals having business or personal connections withfamily members of national or foreign politically exposed persons and thosehaving political functions in international organizations, as well as legalentities, that have politically exposed persons, their family members orindividuals having business or personal connections as finalbeneficiary owners (controllers).

Financial Monitoring Service in Methodical guidelinesrecommends tointerpret “business connections” as connections having documental proof(namely, by title deeds) between politically exposed persons and/or theirfamily members and individuals or legal entities in the context of:

● right of property – jointownership, use or managing of assets belonging to family members of politicallyexposed persons (e.g., an individual owns a share of joint partial or commonproperty, such as facilities, equipment, transport, other movable property orreal estate etc. in a company owned by a family member of a politically exposedperson or their close relative. Also, this property right is confirmed with anappropriate document);

● control, i.e., ability tosignificantly influence economic activity of a company, exerted through,namely, property right realization,use of all the assets or a significant partof them, the right to significantly influence composition, voting results andmaking decision making process of managing bodies of a company, as well aslegal actions enabling determination of economic activity conditions, givingbinding orders or functioning as a managing body of a company;

● holding executive positions inmanaging bodies of a company;

● representation: (а)representation based on an administrative act; (b) representation based on law,(representation by law); (c) representation based on agreement (voluntary oragreed representation); (d) commercial representation;

● business partnership.

Just one out of the above criteria is not necessarily an indicator of close businessconnections. This criterion is evaluated by an analyst individually along withall other apparent indicators/criteria of connection.

What constitutes “personal connections” isrecommended to interpret connections that evolve between politically exposedpersons and/or their family members, and individuals, for instance, such as theright to use assets of politically exposed persons’ family membersnotwithstanding formal ownership (e.g., it is known that an individual resideswith a family member of a politically exposed person or their accommodation ispaid for by family members of a politically exposed person etc.)

Recommendation 12 of FATF (paragraph 49)[5] gives thefollowing examples of personal connections: (known) (sexual) partners outsidethe family unit (e.g. girlfriends, boyfriends, mistresses); prominent membersof the same political party, civil organisation, labour or employee union. Inthe case of personal relationships, the social, economic and cultural contextmay also play a role in determining how close those relationships generallyare.

In the relationship category the following types of connectionsare reflected:

- partners outside the family unit (girlfriend,boyfriend, mistress)

- former husband / wife;

Politically Exposed Person List Uk

- godfather/godmother

- godfather/godmother of the child

- personal assistant

- close friends

- cousins

- nephew/niece

- uncle/aunt

- grandparents/grandchildren

- great-grandparents/ great-grandchildren

Concerning the term of being considereda politically exposed person:

When including a person in this category, we use the list ofpositions identified in paragraph 25 of part 25 of Article 1 of the Law. Thesame paragraph also states that any individual is considered to be a PEP ifthey had held one of the specified positions in the last three years.

According to Recommendation 12 of FATF (paragraphs 44, 45), whendetermining whether an individual is a PEP or has connections to a politicallyexposed person, it is better to consider not the timeframe, but the risk levelassociated with the current status of a person. Namely, it is necessary toconsider whether a person has kept their influence level and connections,whether their current activity is connected with the previous public functions.Risk level of family members and persons connected with a PEP is correlatedwith the risk level retained by a politically exposed person[6]. That is why we do not delete information on individuals fromthe database after three years have passed, but their profile is in a different colour in order to show thepossible lower risk associated with such person for financial monitoring purposes.

In cases webelieve that the risk associated withthe status ofa person has preserved - the profile is not displayed in a different color, but we indicate the fact of expiring of three-year term.The user canfind the dismissal date from thelast position specified in the profile.
We believe thatthe risk associated with the status ofa national politically exposed person has preserved, if:
- a person is indicated in the sanction lists of Ukraine,the USA, the EU or a Member State of the European Union;
- a person is the subjectof an international orall-Ukrainian manhunt, has the status of a suspect or accused in a criminal proceedings in Ukraine or abroad;
- a person who owns a large business that he/she has created or developed duringhis/her tenure in publicoffice. Business uses state resources, permissions and licenses, participationin public procurement, takes a monopoly position;
- a person that hold the position of Minister of MykolaAzarov government from 2013 till February 2014.

Informationabout deceased politically exposed persons (if we have information about theirdeaths) is also displayed in the Register:


Politically Exposed Person List

[1] Although the Glossary definitionincludes some examples of what is meant by prominent public function, theprecise level of seniority which triggers the PEPs requirements is notspecified, and the list of examples provided is not exhaustive. This is becausewhat constitutes a prominent public function domestically depends on the size(e.g. number of inhabitants, size of the budget), particular organisationalframework of government or international organisation concerned, and the powersand responsibilities associated with particular public functions and otherfactors that are considered as part of the risk assessment under Recommendation1. For example, prominent public functions may exist at the federal, state orprovincial, and/or municipal levels. Jurisdictions may use the risk assessmentin Recommendation 1 to identify the specific levels and types of PEPs whichpose a higher risk.

[2] Another approach would be todescribe generally the types of responsibilities that are sufficientlyprominent (e.g., final approval over government procurement processes,responsibility for budgetary spending over a certain amount, decision makingpowers over government subsidies and grants).

[3] In addition, the following may alsobe considered to fall within the definition but, equally, may be excluded incountries or organisations where the risk of corruption or abuse is consideredto be relatively low e.g. where there is low record of corruption or where theindividual does not have significant influence or the ability to control ordivert funds.

...

• City mayors and governors or leaders of federal regions

[4] For family members, this includessuch relevant factors as the influence that particular types of family membersgenerally have, and how broad the circle of close family members and dependentstends to be. For example, in some cultures, the number of family members whoare considered to be close or who have influence may be quite small (e.g.,parents, siblings, spouses/partners, and children). In other cultures, grandparentsand grandchildren might also be included, while in others, the circle of familymembers may be broader, and extend to cousins or even clans.

[5] For close associates, examplesinclude the following types of relationships: (known) (sexual) partners outsidethe family unit (e.g. girlfriends, boyfriends, mistresses); prominent membersof the same political party, civil organisation, labour or employee union asthe PEP; business partners or associates, especially those that share(beneficial) ownership of legal entities with the PEP, or who are otherwiseconnected (e.g., through joint membership of a company board). In the case ofpersonal relationships, the social, economic and cultural context may also playa role in determining how close those relationships generally are.

[6] 44. Recommendation 12 also definesa PEP as being someone who has been (but may no longer be) entrusted with aprominent public function. The language of Recommendation 12 is consistent witha possible open ended approach (i.e., “once a PEP – could always remain aPEP”). The handling of a client who is no longer entrusted with a prominentpublic function should be based on an assessment of risk and not on prescribedtime limits.

45. The risk based approach requires that financial institutionsand DNFBPs assess the ML/TF risk of a PEP who is no longer entrusted with aprominent public function, and take effective action to mitigate this risk.Possible risk factors are: the level of (informal) influence that theindividual could still exercise; the seniority of the position that theindividual held as a PEP; or whether the individual’s previous andcurrent function are linked in any way (e.g., formally by appointment of thePEPs successor, or informally by the fact that the PEP continues to deal withthe same substantive matters).