Austrac has issued for public consultation a draft guidance note on the key terms used in the ‘politically exposed person’ (PEP) definition in the AML/CTF Rules.

Chapter 1 of the AML/CTF Rules defines a PEP as “an individual who holds a prominent public position or function in a government body or an international organisation, their immediate family members and close associates”.

The draft guidance note explains that:

“Due to their position and influence, it is recognised that many PEPs are in positions that potentially can be abused for the purpose of committing money laundering offences and related predicate offences, including corruption and bribery, as well as conducting activity related to terrorism financing….

However, it is noted that if a person is a PEP, this does not mean that there is an automatic link to criminal activities or abuse of the financial system. The additional AML/CTF measures applied in the case of PEPs are preventative and should not be interpreted as stigmatising PEPs as being involved in criminal activity; rather these measures recognise the increased risk, including opportunity, associated with holding this type of role.”