Financial Crime World

Peru’s Financial Institutions Urged to Tighten Measures Against Politically Exposed Persons

The Financial Action Task Force (FATF) has released guidance aimed at helping financial institutions in Peru and globally prevent money laundering and terrorist financing by politically exposed persons (PEPs). PEPs are individuals who hold prominent public positions or have done so in the past, and are often targeted for their potential to be used as conduits for illicit funds.

Applying Additional Measures

According to FATF Recommendations 12 and 22, financial institutions must apply additional anti-money laundering and combating the financing of terrorism (AML/CFT) measures when dealing with PEPs. This includes:

  • Conducting thorough customer due diligence to ensure that they know who their customers are
  • Avoiding inadvertently facilitating illegal activities

Using Multiple Sources of Information

The guidance highlights the importance of using multiple sources of information, including commercial databases, to determine whether an individual is a PEP or has a close association with one. However, it emphasizes that these databases are not sufficient on their own and that financial institutions must also conduct their own research and analysis to ensure compliance with AML/CFT requirements.

Red Flags

The guidance sets out a list of “red flags” that may indicate suspicious activity by PEPs, including:

  • The use of corporate vehicles to conceal ownership
  • Inconsistencies in information provided about assets or income
  • Doing business with companies connected to high-risk countries or industries

Financial institutions are advised to be vigilant for these signs and report any suspicions to the relevant authorities.

Welcomed Guidance

Peru’s financial regulatory bodies have welcomed the guidance, saying that it will help them strengthen their AML/CFT defenses and prevent the misuse of the financial system by PEPs. “We are committed to ensuring that our country’s financial institutions are equipped with the tools they need to combat money laundering and terrorist financing,” said a spokesperson for Peru’s Financial Intelligence Unit.