PEPs are people who hold or have recently held a prominent public office – such as politicians, ambassadors or senior officials in international organisations. Because of their position, they can be considered persons with an increased risk of, for example, corruption or money laundering.

More than 100 representatives of embassies, international organisations and banks attended the session to understand PEP regulations in more detail. Attendees heard the in’s and out’s about how the regulations relate to the Vienna Convention on Diplomatic Relations, the headquarters agreements with international organisations, and the practical consequences of the regulations.

The basis for the PEP regulations lies in the 2003 United Nations Convention against Corruption (UNCAC) and in Recommendations 12 and 22 of the Financial Action Task Force. These international agreements have been translated by the European Union into directives for member states. Member states in turn implement the EU directives in their national legislation. The Netherlands has incorporated them into Dutch law through the Money Laundering and Terrorist Financing (Prevention) Act (WWFT).

Financial institutions and other ‘gatekeepers’ are required to apply enhanced due diligence to PEPs, adopting a risk-based approach. The financial institution or gatekeeper will conduct an initial risk assessment to categorise PEP clients, based on factors such as their position and transaction patterns. When a PEP is considered higher risk, the bank will ask more questions and require more background information than in lower-risk cases. Ultimately, institutions and gatekeepers aim to understand who their customer is and how their transactions are conducted. This means asking more questions where necessary and fewer where the risk is lower.

The event helped enhance understanding of the regulations, and the implications for everyday operations, amongst both financial institutions and the Diplomatic Corps. The Protocol and Host Country Affairs Department (DPG) of course remains available to answer additional questions should they arise.