General Studies · Politically Exposed Persons
Regarding 'Politically Exposed Persons' (PEPs) under AML/KYC guidelines, what mandatory procedure must banks follow?
- 1PEPs are only foreign officials out of office for more than 10 years, after which they are automatically categorized as low-risk.
- 2PEPs include any domestic or foreign politician; transactions must be reported weekly to the Election Commission of India.
- 3PEPs are individuals entrusted with prominent public functions in a foreign country; banks must obtain senior management approval to open such accounts, conduct Enhanced Due Diligence (EDD), and apply this to family members and close associates.✓
- 4Banks have the discretion to treat PEPs as low-risk if they are from neighboring countries, with branch manager approval.
Correct answer
PEPs are individuals entrusted with prominent public functions in a foreign country; banks must obtain senior management approval to open such accounts, conduct Enhanced Due Diligence (EDD), and apply this to family members and close associates.
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