The FIU modified the procedures regarding politically exposed persons

The FIU modified the procedures regarding politically exposed persons

Photo: File.

The Financial Information Unit (FIU) modified the figure and procedures to be carried out with respect to politically exposed persons, in order to adapt to the good practices of the International Financial Action Task Force (GAFI), through resolution 35/2023 published this Thursday in the Official Gazette.

Politically exposed persons (PEPs) are public officials who are or have been holding political positions and who must state this condition before the obligated subjects of providing information to the FIU, following international standards of the FATF, the Organization of American States (OAS ), the Organization for Economic Cooperation and Development (OECD) and other international conventions regarding ethics and corruption in the public service

The obligated subjects -such as financial and exchange entities, the Central Bank, insurance entities, brokers and brokerage firms, and the automobile, real estate and aircraft registries- are the ones that must submit an affidavit and verify the status of PEP with a risk-based approach and the objective of preventing and detecting money laundering and terrorist financing operations, thus avoiding the “improper use of the financial and non-financial system” by these people.

To do this they must obtain official approvals to initiate business relationships with these customers and take reasonable steps to establish the source of funds and assetsalong with continued monitoring.

Who are politically exposed persons?

The figure of PEP includes heads of state, governors, members of parliament, judges, ambassadors, and personnel of the Armed Forces, among other positions, both municipal, provincial, national, and abroad.

The normative will come into effect on April 1 replacing and repealing resolution 134/18, in which a new regulation regarding the treatment of PEPs by regulated entities was approved with the aim of strengthening the due diligence measures applicable to relations with these persons and on the basis of said measures in a risk-based approach, as indicated in the recitals.

Juan Carlos Otero President of the Financial Information Unit FIU Press Photo
Juan Carlos Otero, President of the Financial Information Unit / Photo: UIF Press.

However, according to the FIU, some of these 2018 provisions “do not strictly respond to the risk-based approach” and, therefore, it considered it necessary to modify them to “provide predictability and greater legal certainty”.

Specifically, a period of two years after leaving the public function or office for the cessation of the PEP figure but now it is established that the Obligated Subjects must evaluate the level of risk of the client.

In this evaluation, it will be taken into account “the relevance of the function performed, the power to dispose or administer funds and the seniority in the public function exercised” in order to maintain or not the same level of monitoring.

In the same way, the scope of the regulations regarding the ties of PEPs is modified, reducing it from the third level of consanguinity to the second and replacing the term “affinity” with “kinship or closeness” to provide greater precision.

On the other hand, ties with PEPs by reporting entities will now require the approval of a compliance officer, following FATF recommendation 12, and will require an affidavit not only at the beginning of the business relationship but also at the end of the business relationship. time to stop having the status of PEP.

Finally, the obligation to report the PEP status of the final beneficiaries is addedif applicable.

The changes in the resolutions -informed the FIU- are made with a view to the Mutual Evaluation Process of the 4th Round of the FATF to the country, whose pre-evaluation process will begin on May 29.

In the same sense, a draft reform of Law No. 25,246 on anti-launderingthe first modification since 2011.

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