In a recent blog we took a look at The FIC Amendment Act of 2017 (FICAA) and highlighted key concepts which changed from when the Act came into force. In this blog we will be looking into another concept that has been enhanced under the amended act, this being Prominent Influential Persons (PIPs) and Politically Exposed Persons (PEPs) now being classified as Domestic Prominent Influential Persons (DPIPs) and Foreign Prominent Public Officials (FPPOs).
Firstly let’s have a look at what’s changed and what has remained the same. In general, the concept of PEPs/ PIPs still remains the same but the name has changed in order to broaden the definition as well as better distinguish between foreign and domestic PEPs:
- Domestic Prominent Influential Persons – formerly referred to as Domestic PEP. An individual who holds, or has held, a prominent public function. This includes individuals in the private sector who do business with the government, traditional leaders, etc. Referred to in Schedule 3A of the FICAA.
- Foreign Prominent Public Officials – formerly referred to as Foreign PEP. A person referred to in Schedule 3B of the Act is defined as being an individual holding a prominent public function in a foreign country
Understanding why you should identify and perform enhanced due diligence checks on DPIPS and FPPOs is an important first step to understanding why this process should not be taken lightly. According to the Financial Action Task Force (FATF), due to their positions, individuals in prominent public functions are potentially more likely to commit money laundering offences and related predicate offences, including corruption and bribery. However, just because a person is in a prominent public position doesn’t mean that you should avoid doing business with them. Instead you should create and document a process on how to identify these individuals, as well as, once identified there should be further steps in place to screen these individuals’ source of funds. It’s important to note that these same processes are also to be taken into account when dealing with known family members and close associates of DPIPs and FPPOs.
It is recommended that you do not take any chances and that you always report any instances of proven or suspected criminal activity. “The FIC Act requires a person who carries on a business, or is in charge of or manages a business, or who is employed by a business, and who has a suspicion of money laundering or terror financing activity or unusual transaction, to report this to the Centre.” The FIC
At DocFox our comprehensive screening solution provides global coverage for identifying DPIPs, FPPOs, sanctioned individuals and organisations, in real time. Speak to us today to request a demo.