Politically Exposed Persons (PEPs) & Prominent Influential Persons (PIPs)
There is no single global definition for a politically exposed person (PEP), they are classified differently in each country/bank. In the broadest sense a PEP is any individual who holds or has in the past held a position of public trust, such as government officials, senior executives of government corporations, politicians, and important political party officials. It is not always limited to an individual who directly holds public office, it also includes their immediate family members, close business associates, as well as any senior executives of state owned enterprises.
These people are of particular interest to antimoney-laundering institutions, such as the Financial Intelligence Centre, because as a result of their position, they have easier access to public funds and carry a higher risk with regard to their potential for involvement in bribery and corruption.
Banks and financial institutions treat PEPs as “high-risk clients” and must, therefore, take additional measures with regard to monitoring their financial transactions, and taking reasonable measures to establish the source of their wealth and the origin of funds going into their accounts.
As the notion of PEPS in Africa differs from that in the West, it has been suggested that Africa should adopt a wider definition of PEPs than the West given the number of different organisations involved in political activity. The notion of Prominent Influential Persons (PIPs) was raised, with suggestions for stressing the importance of local influencers, such as religious leaders or chiefs of provinces.
The term ‘PIP’ was recently identified by the Banking Association South Africa as a deviation from the internationally accepted terminology.
