When discussing Anti-Money Laundering there has always been the concept of a Politically Exposed Person (PEP) which recognises that people in positions of power are more susceptible to bribery and corruption.

As we have seen over recent years, there has been an increase in financial crimes that have links to those in government or who hold public or prominent positions in society – but these crimes such as bribery and corruption are now more often involving people outside the traditional definition of a direct PEP.   

The Financial Intelligence Centre (FIC) Amendment Act 2017 expanded on this concept to recognise that there is a broader range of politically or publicly exposed persons that should be identified as a source of potential risk.

To address this, the concepts of a Domestic Prominent Influential Person (DPIP) and a Foreign Prominent Public Official (FPPO) were created and it was stipulated that not only should people that fulfil the roles published in Schedule 3A and 3B of the Amendment Act be subject to enhanced due diligence checks, but their ‘immediate family members’ or ‘known close associates’ should be treated as if they were DPIPs and FPPO’s themselves.
 
At the end of 2022, the above acronyms were again amended by the General Laws (Anti-Money Laundering and Combating Terrorism Financing Amendment Act). DPIPs are now referred to as DPEPs (Domestic Politically Exposed Persons), FPPOs are now referred to as FPEPs (Foreign Politically Exposed Persons) and Prominent Influential Persons (PIPs) now form part of a new Schedule 3C.

For the purpose of this blog, we will take a closer look at DPEPs specifically. If you would like more information around FPEPs click here. 
 

What is a Domestic Politically Exposed Person?

To expand on the above, DPEPs are defined as individuals who are or who have been entrusted by South Africa with a prominent or public role or function. This covers a wide range of positions such as government ministers, leaders of state-owned enterprises and members of the judiciary. 

According to section 21G of the Financial Intelligence Centre Act (FICA), Accountable Institutions need to undertake enhanced due diligence where a client is identified as a DPEP. This involves seeking senior management approval for the single transaction or business relationship, establishing the source of funds/wealth for the transaction and subjecting the relationship to enhanced, ongoing monitoring.

Identifying DPEPs proves to be a tricky and often a time consuming task as there is no official list of South African DPEPs and the names of people who hold these roles change on a regular basis as companies and government departments change. Most of the time Accountable Institutions have to rely on the internet or a client’s disclosure when asked if they are a politically exposed person or related to these persons.

DocFox Database

As a South African first, to address this, we have enhanced our DocFox database to now include the core roles identified in schedule 3A of the FIC Act which include: 

  • The President or Deputy President

  • A government minister or deputy minister

  • The Premier of a province

  • A member of the Executive Council of a province

  • An executive mayor of a municipality

  • A leader of a political party registered in terms of the Electoral Commission Act

  • The head, accounting officer or chief financial officer of a national or provincial department or government component

  • The municipal manager of a municipality

  • SOE: The chairperson of the controlling body, the chief executive officer, the accounting authority, the chief financial officer or the chief investment officer of a public entity

  • The chairperson of the controlling body, the chief executive officer, the chief financial officer or the chief investment officer of a municipal entity

  • A constitutional court judge or any other judge

  • An ambassador or high commissioner or other senior representative of a foreign government based in the Republic of South Africa

  • An officer of the South African National Defence Force above the rank of major-general

  • The position of head, or other executive directly accountable to that head, of an international organisation based in the Republic of South Africa

With our enhanced database, Accountable Institutions no longer have to rely on potentially unreliable client disclosures, outdated data sources or waste time manually researching each individual client.

As always a risk based assessment should be carried out on individuals and when a DPEP is identified it indicates that enhanced due diligence should be carried out. In other words just because a person has a DPEP status doesn’t mean that you should avoid doing business with them. Instead it is an indicator of potentially higher risk and you should take the time to perform due diligence checks, especially around the source of funds and source of wealth to determine where they originated from.

The most comprehensive DPEP database in South Africa_DocFox

This enhanced database is built into our comprehensive watchlist screening solution and automatically notifies you if any person or entity loaded onto DocFox is a DPEP. In addition to this, we have also added the World Bank Debarred list to our DocFox screening process for an added layer of due diligence.

This enhanced database coupled with our adverse media screening will give you peace of mind knowing that your clients are continuously screened using the most comprehensive anti-money laundering software.

Request a demo to see how DocFox can help your team make informed decisions in a fraction of the time, prevent your business from being used to launder money and ultimately meet your FICA requirements.

 

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