PEP — Politically exposed Person

PEP — Politically Exposed Person

Finnish legislation requires that in order to know a customer, a bank or other financial institution must also know whether the client is a politically exposed person (PEP) or a family member of such person or a close corporate partner.

In order to prevent and establish the financing of money laundering and terrorism, a person shall be considered a politically powerful person if he acts:

1. as head of state, head of government, minister, deputy or deputy minister;
2. as a Member of Parliament;
3. as a member of the Supreme Court, the Constitutional Court or any other similar judicial body, the decisions of which, except in exceptional cases, cannot be appealed;
4. as a member of the Supreme Court of Auditors and the State Financial Audit Authority, the supreme decision-making body responsible for the State Audit Office;
5. as a member of the Board of Governors of the Central Bank;
6. as an ambassador or agent;
7. in the defence forces as an officer of at least the rank of general; or
8. as a member of the administrative, management and supervisory body of an undertaking wholly owned by the State.

Family members of a politically exposed person include:

1. a spouse or partner who is equated by the national law of the country concerned with a spouse;
2. children and their spouses or partners referred to above; and
3. parents.

Corporate partners of a politically exposed person include:

1. any natural person who is known to be the beneficial owners and beneficial owners of entities or traders or legal arrangements, or who are known to have any other close business relationship with a politically powerful person; and
2. all natural persons who are the true sole proprietors and beneficiaries of entities or traders or legal arrangements known to have been effectively established for the benefit of a politically powerful person.

Based on the data, banks and other financial institutions are working to better understand customer behavior, such as what kind of cash flows through customer accounts. This allows a bank or other financial institution to detect a customer's unconventional behavior more easily.

Banks and other financial institutions are obliged to report suspicious transactions to the FIU, which operates under the auspices of the Central Criminal Police. The regulation aims to ensure that banks and other financial institutions in EU countries follow a similar procedure for knowing customers in global financial markets.