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AML Regulators Clarify Diligence Requirements for Politically Exposed Persons

By Katherine Mooney Carroll, Paul Marquardt, Patrick Fuller & Graham Bannon on August 31, 2020
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On August 21, the Financial Crimes Enforcement Network, together with the federal banking agencies, released a statement to clarify banks’ customer due diligence obligations for politically exposed persons. The Statement affirms that (i) there is no regulatory requirement, and no supervisory expectation, for banks’ Bank Secrecy Act / anti-money laundering programs to include “unique, additional due diligence steps” for customers who are PEPs and (ii) there is no regulatory requirement for banks to screen customers and their beneficial owners for PEPs.  Instead, the Statement confirms that PEP customers should be subject to the same risk-based approach to CDD that applies to any other customer, but that PEP status (and screening for PEPs) may be a factor in developing a customer risk profile and assessing money laundering risk.  It also reminds banks of the continued U.S. national security and law enforcement interest in detecting and combatting public corruption and other criminality involving PEPs.

Please click here to read the full alert memorandum.

Photo of Katherine Mooney Carroll Katherine Mooney Carroll

Katherine Mooney Carroll’s practice focuses on advising U.S. and international financial institutions on U.S. regulatory matters, including recent reforms pursuant to the Dodd-Frank Act, regulatory aspects of bank M&A, cybersecurity and privacy matters, and compliance with U.S. sanctions and anti-money laundering laws.

Read more about Katherine Mooney CarrollEmail
  • Posted in:
    Financial, Technology
  • Blog:
    Cleary FinTech Update
  • Organization:
    Cleary Gottlieb Steen & Hamilton LLP
  • Article: View Original Source

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