What is a PEP?
In financial regulation, a politically exposed person is one who has been entrusted with a prominent public function. A PEP generally presents a higher risk for potential involvement in bribery and corruption by virtue of their position and the influence that they may hold. (source: Wikipedia)
How does one become a PEP?
Once a person meets the definition of a PEP, a person is a PEP. The PEP database is updated weekly with this public information
Are there any patterns of corrupt PEP relationships?
The actual power structures in a country depend on who defines the rules of the game—the institutions or the acting persons. If institutions are only empty shells, the focus should be on the behaviour of the political elite, i.e. the PEPs and their informal relationships amongst each other. In these instances it is important to understand what kind of relationship patterns one is dealing with and what these relationship patterns say about the type and extent of political corruption in a country. Research on corruption distinguishes four so-called syndromes of political corruption.
This approach will be introduced here, as it can assist in matching the situation in a certain country with these four types. This in turn helps to understand the risks of money laundering or corruption with which a foreign financial institution or corporation is confronted. The following relationship patterns are ideal types. When undertaking the specific country analyses there are likely to be variants and hybrids.
Who to check and when to check
The primary key for institutions is the expectancy of identifying the PEPs before establishing a business relationship as well as ongoing monitoring of existing clientele to ensure funds managed on their behalf do not derive from a corrupt source. While there is no global definition of a PEP, the Financial Action Task Force (FATF) has issued guidelines. Local legislation such as the USA PATRIOT Act and the
European Union Directive use similar definitions of a PEP, typically consisting of the following five layers:
- Current or former senior official in the executive, legislative, administrative, military, or judicial branch of a government
(elected or not)
- A senior executive of a government owned commercial enterprise, and/or being a corporation, business or other entity formed
by or for the benefit of any such individual
- Any individual publicly known (or actually known by the relevant institution) to be a close personal or professional associate
- A senior official of a major foreign political party
- An immediate family member of such individual; meaning spouse, parents, siblings, children, and spouse’s parents or siblings
Which countries does the PEP Caribbean database cover?
The six islands of the Former Netherlands Antilles: Aruba, Bonaire, Curacao, St Maarten, Saba & St Eustatius.