Firms should conduct enhanced due diligence (EDD) and enhanced ongoing monitoring in higher-risk situations. Situations that present a higher money-laundering risk might include, but are not restricted to customers linked to higher-risk countries or business sectors; or who have unnecessarily complex or opaque beneficial ownership structures; and transactions which are unusual, lack an obvious economic or lawful purpose, are complex or large or might lend themselves to anonymity.
The Regulations also require that EDD measures should be applied where the customer is not present, in correspondent banking relationships where the correspondent bank is outside the EEA, and for Politically Exposed Persons.
Politically Exposed Persons (PEPs) are individuals whose prominent position in public life may make them vulnerable to corruption. The definition extends to immediate family members and known close associates. The full definition of a PEP is set out in the Money Laundering Regulations 2007. We have included in our Financial Crime Guide more details on how firms can go about identifying, assessing and mitigating their risks in these areas.
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