The PEPS requirements are preventative not punitive

Nov 15, 2021 Features / Columnists, Peeping Tom

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Kaieteur News- Anyone who has had the fortune or misfortune to visit a money transfer agency may end up leaving with the feeling that too many questions were asked of them. But those questions are not intended to violate anyone’s privacy or to discriminate or stigmatise rather to ensure compliance with the law and to ensure due diligence in financial transactions.
I have long told my overseas relatives not to send any monies for me through a bank or a wire transfer agency. I do not need remittances but the main reason for not accepting them is because I am not prepared to answer those questions which are often asked by banks and wire transfer companies.
However, I do acknowledge that the agencies concerned have every right to be asking those questions which are requirements of the country’s Anti Money Laundering and Countering the Financing of Terrorism (AML/CFT) Act.
If the average citizen feels violated by those requirements, imagine how much harder it is for politically exposed persons (PEPs). Such persons are subject to much more stringent requirements, in accordance with the country’s anti money laundering and the combatting of the financing of terrorism laws.
Those stringent requirements are part of the principal AML/CFT Act. The APNU+AFC made amendments to this Act but saw no reason to alter the requirements in relation to the politically exposed persons.
The law provides that a money transfer agency of any other financial institution must do a number of things in relation to transactions involving PEPs. First, the agency must identify and verify the identity of the politically exposed person. Second, it must have appropriate risk management systems to determine whether the person is politically exposed. Third, the approval of senior management is required before doing any business with a politically exposed person. Fourth, in such cases the agency has to take reasonable measures to determine the source of the money which is being transferred. Fifth, the agency is required to undertake enhanced monitoring of the business relationship with the politically exposed person.
A PEP is defined by the AML/CFT Act as any individual who is or has been entrusted with prominent public functions on behalf of a State, including a Head of State or of government, senior politicians, senior government, judicial or government officials and senior executives of state-owned corporations. It also includes important political party officers, including family members or close associates whether resident in Guyana or not.
If when one visits a money transfer company to undertake a transaction, one is told that one is deemed a politically exposed person, then it is not discriminatory for the approval of management to be sought before any transaction is initiated or processed. It is not discriminatory also for the entity concerned to ask the source of the funds being transacted and the uses to which it will be put. It is not discriminatory for questions or queries to be asked or made respectively in relation to those and other transactions.
The law mandates that these actions be taken. It is a law which the APNU+AFC did not object to or find discriminatory.
The laws and regulations concerning PEPs are preventative rather than punitive. According to the Financial Action Task Force (FATF), many PEPs hold positions that can be abused for the purpose of laundering illicit funds or other predicate offenses such as corruption or bribery.
Because of the risks associated with PEPs, the FATF recommendations require the application of additional AML/CFT measures to business relationships with PEPs. These requirements should not be interpreted as meaning that all PEPs are involved in criminal activity.
FATF has gone to great lengths insisting that these requirements which apply to PEPs do not collide with anti-discrimination laws which safeguard equality of all citizens. The requirements are part of a corpus of additional measures which are purely preventative in nature and which are applied to high-risk relationships, “whether those relationships are with natural persons or legal persons” and are specifically “linked to prominent public functions, irrespective of the personal characteristics of the persons holding them.”
The main aim of the PEPs requirements goes beyond preventing money laundering and financing terrorism. It is also directed towards their predicate offences including preventing corruption and bribery, according to FATF.
Those who do not wish to subject themselves to interrogation and to these requirements always have another option, as I have relied upon: Ask those who are sending remittances to you not to do so.
(The views expressed in this article are those of the author and do not necessarily reflect the opinions of this newspaper.)

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