Morocco Takes Steps to Enhance Politically Exposed Persons Screening

Morocco has announced plans to implement additional measures for screening politically exposed persons (PEPs) as part of its efforts to strengthen anti-money laundering and combating the financing of terrorism (AML/CFT) regime.

Strengthening AML/CFT Efforts

The Financial Action Task Force (Fatf) Recommendations require financial institutions to apply enhanced due diligence when dealing with PEPs, who are individuals entrusted with prominent public functions. Morocco’s move is aimed at strengthening its AML/CFT efforts and bringing it in line with international standards.

Guidance for Financial Institutions

According to sources, the Moroccan government has developed guidance aimed at assisting financial institutions in identifying and verifying the identity of PEPs, their family members, and close associates. This includes using external sources of information, such as commercial and other databases, to determine whether an individual is a PEP or not.

Due Diligence and Red Flags

While the Fatf does not require the use of these databases, it emphasizes the importance of financial institutions conducting their own due diligence to ensure that they are fully aware of who they are dealing with. The guidance also provides a list of red flags and indicators that may suggest misuse of the financial system by PEPs during a customer relationship.

Examples of such red flags include:

• Using corporate vehicles to obscure ownership by PEPs
• Inconsistencies between information provided by a PEP and publicly available information
• Doing business with PEPs connected to high-risk countries or industries

Preventive Measures

The Moroccan government has emphasized that these measures are preventive in nature and are intended to prevent the abuse of financial systems for criminal purposes.

Significance and Ongoing Evaluation

This move is seen as a significant step forward in Morocco’s efforts to strengthen its AML/CFT regime. The country is currently subject to an ongoing mutual evaluation by the Fatf, which is expected to report on its progress later this year.

By implementing these measures, Morocco is demonstrating its commitment to strengthening its AML/CFT regime and improving its ability to detect and prevent money laundering and terrorist financing activities.