Go to top of page

PEPs and AML/CTF regulation

PEPs are considered to be potentially higher risk due to their position and potential access to wealth and resources. The effective implementation of customer due diligence (CDD) is a key obligation for reporting entities when dealing with PEPs (12).

Australia’s AML/CTF regime requires reporting entities to have an AML/CTF program. The primary purpose of Part A of an AML/CTF program is to identify, mitigate and manage ML/TF risk. In identifying its ML/TF risk, a reporting entity must consider the risk posed by, among other things, its customer types, including any politically exposed persons (PEPs).

Part A must include a requirement that, in determining what is an appropriate risk‑based procedure for inclusion in Part B of the reporting entity’s AML/CTF program, the reporting entity must consider the ML/TF risk involved in providing the designated service.

Part B of an entity’s program must set out the applicable customer identification procedures of the entity. An entity is required to undertake enhanced CDD requirements when it determines under its risk‑based systems and controls that the ML/TF risk is high (13).


Footnotes

  1. On 1 June 2014, amendments to the AML/CTF Rules relating to PEPs took effect - see the Customer due diligence page
  2. Chapter 15 of the AML/CTF Rules
Last modified: 08/07/2015 11:15