| answer text |
<p><strong>H</strong>M Treasury is responsible for the Money Laundering Regulations
2017 (‘the Regulations’). The Regulations set out the high-level requirements on regulated
firms to combat money laundering and ensure that key professionals identify their
customers and understand the purpose behind transactions, including the source of
funds. The Regulations are designed to combat illicit finance, while minimising the
burden on legitimate customers.</p><p> </p><p>The Regulations require firms in scope
of the regulations to have in place appropriate risk-management systems and procedures
to determine whether a customer (or their beneficial owner) is a Politically Exposed
Person (PEP), family member of a PEP or close associate of a PEP.</p><p> </p><p>PEPs
are individuals entrusted with a prominent public function. This definition includes
but is not limited to heads of state, heads of government, ministers and deputy or
assistant ministers, members of parliament or of similar legislative bodies.</p><p>
</p><p>PEPs can pose a high money laundering risk because they may be able to abuse
their position for private gain. Not all PEPs, however, pose the same money laundering
risk; there is a hierarchy depending on country of origin and rank, from middle tier
officials to individuals with significant or absolute control over the levers, patronage
and resources in a given area. For example, the Financial Conduct Authority’s guidance
states that UK PEPs should be considered as lower risk.</p><p> </p><p>Where a firm
has identified that a customer (or their beneficial owner) is a PEP, family member
or close associate of a PEP, it must conduct an appropriate range of Enhanced Due
Diligence (EDD) measures. When carrying out EDD on PEPs, firms must take adequate
measures to establish the source of wealth and source of funds which are involved
in the proposed transaction or business relationship, get approval from senior management
to establish or continue a relationship with that person and carry out enhanced monitoring
of the business relationship.</p>
|
|
