Not All PEPs Are Created Equal
The US banking regulators issued a Joint Statement on August 21 clarifying how to apply a risk-based approach to assessing a PEP relationship under the customer due diligence (CDD) rule. There's a few key take-aways. First, US public officials aren't considered PEPs. Second, the CDD rule doesn't require checking whether a beneficial owner of a legal entity is a PEP. Third, not all PEPs are high risk solely by virtue of their status; rather, the risk depends on the facts and circumstances. PEPs with limited transaction volume, a low-dollar deposit account or known legitimate source(s) of funds could reasonably be characterized as being lower risk.