Agencies Clarify CDD Requirements For Politically Exposed Persons

The Federal Reserve Board, the FDIC, FinCEN, the National Credit Union Administration and the OCC (collectively, "the Agencies") clarified customer due diligence ("CDD") requirements for customers that may be "politically exposed persons" ("PEPs").

In a joint statement, the Agencies explained that Bank Secrecy Act ("BSA") / AML regulations have not formally defined PEPs, but that the term commonly refers to foreign individuals and their close associates who have "been entrusted with a prominent public function." The term does not include U.S. public officials.

Customer Due Diligence Requirements and Considerations

The Agencies stated that banks must carry out CDD measures that are commensurate with the risk profiles of customers that are PEPs. While the Agencies elaborated that there is no regulation that requires additional due diligence procedures for all PEPs, the Agencies recommended that banks leverage existing processes for developing customer risk