Politically Exposed Persons

In some jurisdictions, PEPs are considered to have a higher risk of involvement in bribery and corruption due to their position and influence. The term PEP was first introduced in the 1997 OECD Anti-Bribery Convention, which aimed to reduce corruption in developing countries. The FATF (Financial Action Task Force) defines PEPs as individuals who have been entrusted with a prominent public function. This definition is consistent with the "once a PEP, always a PEP" approach, which suggests that an individual remains a PEP even after leaving public office. However, the FATF recommends that financial institutions assess the risk of money laundering and terrorist financing for PEPs who have ceased to perform public functions, rather than relying on a fixed time limit. The World Bank's Stolen Asset Recovery Initiative (StAR) also emphasizes the importance of a risk-based approach to managing PEPs. According to StAR, countries should not impose time limits on the duration of PEP status, as this can create a false sense of security and may not accurately reflect the level of risk associated with an individual. Instead, countries should establish a committee to monitor and assess the risks associated with PEPs, even after they have left public office. The Wolfsberg Group, a global association of financial institutions, has also developed guidelines for managing PEPs. According to the Wolfsberg Group, there is no universally accepted method for determining the period during which an individual should be considered a PEP after leaving public office. Therefore, the Group recommends that financial institutions consider a range of factors, including the individual's position, influence, and potential for corrupt activities, when assessing the level of risk associated with a PEP. In determining the terms for maintaining PEP status after an individual has left public office, countries should consider the following factors: * The level of corruption risk associated with the country of the individual's political influence * The position and susceptibility to corruption of the individual's former role * The duration of the individual's tenure in office and the likelihood of their return to a similar position in the future * The level of transparency regarding the individual's source of income and the origin of their funds, particularly those generated during their time in office * Any connections to sectors with high corruption risk * The level of transparency and legitimacy of transactions processed through the individual's account * Whether there is relevant negative information about the individual that is widely reported in reputable sources * The extent to which the individual remains politically connected after leaving office By considering these factors, countries can develop a more nuanced and risk-based approach to managing PEPs, rather than relying on a fixed time limit or a one-size-fits-all approach.