Posted on by Juan Carlavilla

UK and its definition of PEP

The United Kingdom, like other countries in its vicinity such as France, Netherlands, Portugal, or Spain, also defines specific regulations on Politically Exposed Persons (PEPs). The main Anglo-Saxon regulation outlining the key aspects of anti-money laundering is the The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017.

This regulation, like its European counterparts, establishes the core principles related to the prevention of money laundering and terrorism financing. Among these principles are the specific provisions for Politically Exposed Persons (PEPs).

The key article in this regulatory framework concerning PEPs is Article 35. This provision, found in the chapter dedicated to enhanced due diligence measures, outlines several considerations that should be taken into account in relationships between an obliged entity and a PEP client.

On the other hand, British law also establishes an obligation for the FCA — the Financial Conduct Authority — to issue guidance on PEPs for obliged entities. The FCA is one of the supervisory authorities in the UK. It does not act as a Financial Intelligence Unit, but it does have some duties related to the prevention of money laundering and the financing of terrorism.

In July 2017, the FCA published the FG17/6 guidance on the treatment of PEPs for anti-money laundering purposes. This guideline shed light on the topic of PEPs. However, it missed the opportunity to delve deeply into the definition of PEP.

PEP List in the United Kingdom

The definition of PEP is provided in Article 35 of the above-mentioned regulation. However, the FCA, in its guidance on PEPs, makes a few notes on these definitions, which we transcribe in this list.

  1. Heads of State, Heads of Government, Ministers, and Deputy or Assistant Ministers
  2. Legislative bodies similar to regional governments in federal systems and devolved administrations, including the Scottish Executive and the Welsh Assembly, when these bodies have some form of executive decision-making power. This does not include local governments in the UK.
  3. Members of governing bodies of political parties — the FCA considers this only applies to political parties that have representation in a national or supranational parliament or similar legislative body. The scope of who should be considered a member of a party’s governing body varies depending on the party’s constitution, but generally applies to national governing bodies where a member has significant executive power (e.g., over candidate selection or distribution of significant party funds).
  4. Members of supreme courts, constitutional courts, or any judicial body whose decisions are not subject to further appeal except in exceptional circumstances — in the UK, this applies only to the judges of the Supreme Court.
  5. Members of courts of auditors or central bank boards
  6. Ambassadors, chargés d’affaires, and senior officers in the armed forces — the FCA considers this necessary only for those in such positions representing the UK government at the level of Permanent Secretary/Deputy Permanent Secretary or those with equivalent military ranks (e.g., Vice Admiral, Lieutenant General, Air Marshal, or above).
  7. Members of administrative, management, or supervisory bodies of state-owned enterprises — the FCA considers this applies only to for-profit enterprises in which the state has a stake of over 50%.
  8. Directors, deputy directors, and board members or equivalent positions in an international organization — the FCA considers international organizations to include only public international organizations like the UN and NATO.

UK regulations state that the PEP status should last at least 12 months after leaving office.

Below we detail the main sources we use at Pibisi to extract the PEPs in the United Kingdom:

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