What are PEPs?

What are PEPs?

          PEPs (Politically Exposed Persons) are categorized as a characteristic of a person that the international AML/CTPF standards, as well as the Anti-Money Laundering and Anti-Terrorism Financing Act, have designated as a high-risk factor. Therefore, individuals (customers) of financial institutions and non-financial financial and investment service providers must be considered to have a high-risk money laundering risk level as “high-risk customers”. In establishing a relationship with a high-risk customer, intensive due diligence must be conducted to find out the facts about the customer. There shall also be a more intensive review period for the business relationship and intensive monitoring than low-risk customers. Any financial institutions or non-financial financial and investment service providers must set regulations that, in the case of a high-risk customer, any approval for establishing the relationship must be given by senior executive, or an executive of the unit authorized by senior executive only.

          The meaning of PEPs (Politically Exposed Persons) means an individual who is or has been entrusted with prominent public function in Thailand or in a foreign country; such as, a Head of State or Government, a minister, a senior official in the government or Court or independent organization or prosecutorial organization or the military, a senior executive of a state enterprise or other government agencies, an important political party official, a person who is or has been entrusted with prominent function in an international organization and person holding an equivalent position. This shall be prescribed in a Notification issued by the Secretary-General and approved by the Board including;

          “Family members” means (1) father, mother, child(ren), adopter or adopted child of a PEP; (2) biological siblings or stepbrothers/stepsister of a PEP; (3) spouse or a de facto partner of a PEP or person as (1) or (2);

          “Close relatives” means (1) an individual who controls or manages assets or other benefit of a PEP; (2) an individual who has close relationship due to establishment or continuing business relationship with a PEP;

           The risk of PEPs from an international perspective arises from the fact that appointees to political positions, including members of political parties, who have influence over political party policies and operations, as well as government officials in positions with the authority to use, approve, and manage government budgets at the national, central, and local levels, are at risk of benefiting themselves and their associates. Such crimes commission cause significant damages or damage to the state and the public’s interests, which begin with corruption, bribery, and lead to the laundering of illegally obtained money.

          In Thailand, the Anti-Money Laundering Office (AMLO) has issued the Ministerial Regulation on Customer Fact-Finding B.E. 2563 issued under the Anti-Money Laundering Act B.E. 2542 and its amendments, defines PEPs to include both domestic and foreign PEPs, and also expands the scope of individuals to include “family members” and “close associates” of such PEPs. The Ministerial Regulation also requires financial institutions and non-financial financial & investment service providers to verify the information of all customers whether there are risk factors in being a PEPs or not. And in the case that the customer is PEP, the financial institutions and professionals in financial & investment services, who are not financial institutions, must adjust the risk level of such customers to be “customer with high money laundering risk” and must also enhance the level of customer approval, financial movement inspection or business relationship monitoring with such customers more strictly than customers with other risk levels.