Enhanced Due Diligence and Politically Exposed Persons – Reg 35 MLR17

IPA Insolvency Practitioner newsletter AML Digest, May 2024

The 2023 MLR Amendment Regulations introduced Reg 35(3A) and Reg 35 (12)(d-f) regarding domestic Politically Exposed Persons (PEPs).

Reg 35(12)(d-f) provides updated definitions of a domestic and a non-domestic PEP and details on enhanced risk factors.

Reg 35(3A) advises that where a customer or potential customer is a domestic PEP or a family member or known close associate of a domestic PEP, the starting point for the assessment is that the customer or potential customer present a lower level of risk than a non-domestic PEP.

The regulation advises that if there are no enhanced risk factors present the extent of EDD to be applied is less that the extent to be applied in the case of a non-domestic PEP.

The amended Reg 35 does not state that a domestic PEP is now a normal or low risk and members will still be expected to carry out due diligence to ascertain if the customer or potential customer is a PEP and then review the information to consider the EDD that is required to be able to effectively understand and manage and mitigate any potential risks.

The need for clear file notes and conclusions of EDD carried remains key.