Financial Crime World

Financial Institutions Must Implement Enhanced Due Diligence for Politically Exposed Persons (PEPs)

Istanbul, Turkey

In an effort to combat money laundering and terrorist financing, the Turkish government has introduced new regulations requiring financial institutions to implement enhanced due diligence measures for customers who are Politically Exposed Persons (PEPs).

New Regulations

According to Article 19 of the “Regulation On Measures Regarding Prevention Of Laundering Proceeds Of Crime And Financing Of Terrorism,” financial institutions must:

  • Conduct permanent monitoring of transactions conducted by PEPs
  • Keep up-to-date information, documents, and records regarding these customers
  • Verify the accuracy of customer identification information using a risk-based approach

The regulation also requires financial institutions to establish appropriate risk management systems to identify and assess the risks associated with PEPs. Additionally, the Ministry of Finance has the authority to determine obliged parties and specify the implementation of principles and procedures for ensuring compliance with this law.

What is Enhanced Due Diligence?

Enhanced due diligence involves a more thorough review of a customer’s background and financial transactions to identify potential risks associated with money laundering or terrorist financing. This includes:

  • Verifying the accuracy of customer identification information
  • Conducting ongoing monitoring of transactions
  • Identifying and assessing potential risks

Who are Politically Exposed Persons (PEPs)?

Politically Exposed Persons are individuals who have been entrusted with prominent public functions, such as:

  • Heads of state
  • Government officials
  • High-ranking politicians

These individuals may be at a higher risk of being involved in money laundering or terrorist financing due to their position and influence.

What are the Consequences of Non-Compliance?

Failure to implement enhanced due diligence measures for PEPs can result in:

  • Fines
  • Penalties
  • Criminal charges

Conclusion

The Turkish government’s new regulations requiring financial institutions to implement enhanced due diligence measures for PEPs is a significant step towards combating money laundering and terrorist financing. Financial institutions must take immediate action to comply with these regulations to avoid serious consequences.