Posted on by Juan Carlavilla

Ecuador and its definition of PEP

Ecuador and its definition of PEP

The concept of politically exposed person stems from intergovernmental collaboration within international organizations such as the FATF. The outcome of this collaboration is incorporated into the legal frameworks of individual states, with Ecuador being the one analyzed in this article. 

Ecuador’s main legislative framework for anti-money laundering (AML) is composed of two key regulations: 

To define PEPs, Ecuador uses the Regulation developed under its domestic law. Article 42 of this Regulation defines PEPs as “all natural persons, whether Ecuadorian or foreign, who hold or have held prominent public functions or positions in Ecuador or abroad; or prominent roles in an international organization.”

Moreover, as in other countries, family members of Politically Exposed Persons are also considered PEPs. These family members include “spouses or partners in civil unions, relatives up to the second degree of consanguinity or first degree of affinity; and direct associates, meaning natural persons with whom a PEP is associated or has a business relationship.”

A key characteristic of Ecuadorian regulations regarding PEPs is the duration of this status. Article 42 of the Regulation does not specify a time limit for when a person will cease to be considered a PEP, leaving it to the discretion of obligated entities based on their risk assessment to determine “​​the duration for which a PEP client will remain in that category.”

The Regulation also highlights that the relationship between obligated entities and PEPs does not entail the termination of contractual relations, but rather the application of enhanced due diligence measures for anti-money laundering purposes.

PEP List of Ecuador

Subsequently, Article 44 of the Regulation lists Ecuador’s national PEPs as follows:

  1. From level 5 to 10 of the unified monthly salary scale for the senior hierarchical level and its equivalents, issued by the governing labor body:
    1. President of the Republic.
    2. Vice President of the Republic.
    3. Ministers.
    4. Vice Ministers.
    5. Undersecretaries.
    6. Superintendents of Regulatory Bodies, Superintendents, National and Provincial Directors, Government Secretaries.
    7. Advisors, National and Regional Directors, and Coordinators.
  2. Public Banks from Deputy Managers of Departments or their equivalent Office Coordinators.
  3. Directors, Managers, Deputy Managers, Advisors, and Coordinators of State-Owned Enterprises.
  4. Armed Forces, at the following ranks:
    1. Army, from Major.
    2. Navy, from Lieutenant Commander.
    3. Air Force, from Major.
  5. National Police, from Major.
  6. Public Universities, from Directors.
  7. Mayors, Deputy Mayors, Councilors, Administrators, Commissioners, Directors, Managers, Deputy Managers, Advisors, and Coordinators of Autonomous Decentralized Governments and their Public Companies.
  8. Main and Alternate Assembly Members and top executives of the National Assembly, freely appointed and removed.
  9. Governors and Regional Commissioners.
  10. Prefects, Deputy Prefects, Councilors, Directors of Prefectures.
  11. Diplomats, Ambassadors, Consuls (on Ecuadorian foreign missions and those representing other countries within Ecuador).
  12. Magistrates, Judges, Substitute Judges, Prosecutors, President and Members, National and Provincial Directors and Advisors, National and Provincial Coordinators of the National Judicial Council; Public Defender; Ombudsman; Comptroller General; Attorney General; Managers and Directors of Hospitals and Health Units; Directors of the Ministry of Education; and senior officials under the Organic Code of Citizen Security and Public Order Entities.
  13. President, Vice President, Council Members, and Coordinators of the Council of Citizen Participation and Social Control.
  14. President, Vice President, Council Members, National and Provincial Coordinators of the National Electoral Council, and Judges of the Electoral Dispute Tribunal.
  15. President, Council Members, and Coordinators of the Higher Education Council.
  16. Top executives of political parties and organizations registered with the National Electoral Council.
  17. All popularly elected positions.

When the first section refers to “unified monthly salary,” it is referring to the salary scale established by the Ministry of Labor under the authority granted by the Organic Law of Public Service.

In addition, the Regulation allows obligated entities to create their own PEP lists, considering the roles and functions listed above. This gives some flexibility when extending PEP status to other equivalent positions.

Finally, Article 44 reminds us that the Financial and Economic Analysis Unit (UAFE) may add positions that align with the definition of PEP. Additionally, this body published a PEP Guide to assist obligated entities in dealing with these situations, making it a useful resource if you are subject to Ecuadorian legislation.

Below, we detail the main sources we used at Pibisi to compile Ecuador’s PEPs:

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