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. FICAA referred to these prominent public positions/functions as Domestic Prominent Influential Persons (DPIPs) and Foreign Prominent Public Officials (FPPOs). 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.
Domestic Politically Exposed Persons (DPEPs)
Importantly, DPEPs now include those individuals listed in Schedule 3A (Government Ministers, Executive Mayors of Municipalities etc) that have held a prominent or public position for a period exceeding 6 months, including in an acting position. Previously, this was limited to holding such position in the preceding 12 months, which included in an acting position exceeding 6 months.
Foreign Politically Exposed Persons (FPEPs)
The definition of an FPEP (foreign Heads of State, members of a foreign royal family) has been radically broadened, removing the previous 12 month time limitation such prominent public positions were capped to.
Prominent Influential Persons (PIPs)
As above mentioned, a new category has been created for PIPs and to support this, a new Schedule 3C has been created for these PIPs. Such positions include individuals who hold, or have held, in the preceding 12 months, the position of a chairperson of the board of directors and audit committee, executive officer or CFO of a company in terms of the Companies Act, provided that the entity provides goods or services to an organ of state. Practically, this would include those private entities having government contracts and tenders.
Understanding why you should identify and perform Enhanced Due Diligence (EDD) checks on DPEPS, PIPs and FPEPs is an important first step to understanding why this process should not be taken lightly. EDD 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. According to the Financial Action Task Force (FATF), due to their positions, individuals in prominent public and politically exposed functions/positions 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 or politically exposed 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 and wealth and consider if there is any public information or adverse media around corruption, or evidence that government funds may be being used inappropriately. 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 DPEPs, PIPs and FPEPs.
It is recommended that you 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.
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