White Paper –
Politically Exposed Persons (PEPs) in Jamaica
As it relates to politically exposed persons (PEPs), is there a
deficiency in the current legal and regulatory framework for the
Jamaican Banking Sector when compared to the Guidance given by
the Financial Action Task Force (FATF)?
1
Table of Contents
Page
Acknowledgements 2
Abbreviations 3-4
Executive Summary 5-9
Introduction and Background 10-12
Description of the FATF 40 Recommendations 13-15
Description of FATF Recommendation 12 - (PEPs) 15
Description of the FATF Interpretive Note to Recommendation 12 - (PEPs) 16
Description of the FATF Methodology for Recommendation 12 - (PEPs) 16 -17
Description of the FATF Effectiveness Assessment of Recommendation 12 - (PEPs) 17-18
Description of the Legal and Regulatory Framework for PEPs in Jamaica 19-21
Description of Jamaica’s Third Round MVAL Report 22-23
Assessment and Way forward 24-26
Other Recommendations 26-27
Conclusion 28-30
Bibliography 31-32
White Paper –
Politically Exposed Persons (PEPs) in Jamaica
As it relates to politically exposed persons (PEPs), is there a
deficiency in the current legal and regulatory framework for the
Jamaican Banking Sector when compared to the Guidance given by
the Financial Action Task Force (FATF)?
2
ACKNOWLEDGEMENT
The researcher would like to acknowledge the work done and guidance provided by
the Financial Action Task Force (FATF) and the FATF-Style regional body, the
Caribbean Financial Action Task Force (CFATF), of which Jamaica is a member.
In particular, the FATF Guidance on politically exposed persons (PEPs)
(Recommendations 12 and 22), as well as FATF Recommendations (the International
standards on combating money laundering and the financing of terrorism and
proliferation 2012) and Methodology (for assessing compliance the FATF
Recommendations and the effectiveness of the AML/CFT systems 2013) were
extensively used to compare the Jamaican legal and regulatory framework. In
addition, in order to advise the discussion as to whether the legal framework had
any deficiencies, the Jamaica Third Round Mutual Evaluation/Detailed Assessment
Report—Anti-Money Laundering and Combatting the Financing of Terrorism (MVAL)
of the Caribbean Financial Action Task Force was used. In addition, the follow-up
reports subsequent to the final report were also consulted. The ensuing discussion
draws heavily from the research conducted on the Mutual Evaluation Report and its
attendant findings.
The author would also like to acknowledge the work done by the International Bank
for Reconstruction and Development/World Bank and The United Nations
(UN)/United Nations Office on Drugs and Crime (UNODC). In particular, the author
would like to mention the Financial Market Integrity Unit (World Bank) and in
particular the PEP Team, the Global Programme against Money Laundering
Proceeds of Crime and the Financing of Terrorism, Law Enforcement, Organized
Crime and Anti-Money Laundering Unit, (UNODC) and the World Bank/UNODC
Stolen Asset Recovery Initiative. Their website and the following publications, were
helpful in this research: the Politically Exposed Persons, Preventative Measures for
the Banking Sector, Stolen Asset Recovery Politically Exposed Persons, a policy
paper on Strengthening Preventative Measures and Using Asset Disclosure for
Identifying Politically Exposed Persons and the United Nations Convention against
Corruption.
White Paper –
Politically Exposed Persons (PEPs) in Jamaica
As it relates to politically exposed persons (PEPs), is there a
deficiency in the current legal and regulatory framework for the
Jamaican Banking Sector when compared to the Guidance given by
the Financial Action Task Force (FATF)?
3
1. Finally, I would also like to thank the various authors of the aforementioned works
including, the CFATF Secretariat (and its attendant assessors/authors of the MVAL
Report), Theodore S. Greenberg, Larissa Gray, Delphine Schantz, Michael Latham,
Carolin Gardner, Ivana Rossi, Laura Pop, Francesco Clementucci and Lina Sawaqed.
ABBREVIATIONS AND ACRONYMS
AML/CFT Anti-Money Laundering and Combating the Financing of Terrorism and
the Proliferation of Weapons of Mass Destruction
APG Asia Pacific Group on Money Laundering, Terrorism Financing and
the Proliferation of Weapons of Mass Destruction
BOJ Bank of Jamaica
BCBS Basel Committee on Banking Supervision
CICAD Comisión Interamericana Para el Control Del Abuso de Drogas/
Inter-American Drug Abuse Control Commission
CDD Customer Due Diligence
CFATF Caribbean Financial Action Task Force
DNFBPs Designated Non-Financial Businesses and Professions
EDD Enhanced Due Diligence
EAG Eurasian Group on Money Laundering, Terrorism Financing
and the Proliferation of Weapons of Mass Destruction
EU European Union
ESAAMLG Eastern and Southern Africa Anti-Money Laundering Group
FATF Financial Action Task Force
FATF 40 FATF Forty Recommendations on Money Laundering, Terrorism Financing
and the Proliferation of Weapons of Mass Destruction
FID Financial Investigatory Division
FIU Financial Intelligence Unit
FSC Financial Services Commission
FSRB FATF-Style Regional Body
GAFILAT1 Latin America Anti-Money Laundering Group
GAFISUD Financial Action Task Force of South America GIABAIntergovernmental
Action Group against Money Laundering in West Africa
IBRD International Bank for Reconstruction and Development/World Bank
IMF International Monetary Fund
1 The Acronym GAFILAT has now replaced GAFISUD.
White Paper –
Politically Exposed Persons (PEPs) in Jamaica
As it relates to politically exposed persons (PEPs), is there a
deficiency in the current legal and regulatory framework for the
Jamaican Banking Sector when compared to the Guidance given by
the Financial Action Task Force (FATF)?
4
MENAFATF Middle East and North Africa Financial Action Task Force MLP Money
Laundering Prevention Regulations
ML Money Laundering
MOF Ministry of Finance MONEYVAL Council of Europe Select Committee of Experts on the Evaluation of Anti-
Money Laundering Measures MVAL Mutual Evaluation/Detailed Assessment Report – Anti-Money Laundering
and Combatting the Financing of Terrorism NAMLAC National Anti-Money Laundering Committee NRA National AML/CFT Risk Assessment OAS Organization of American States
PEPs Politically Exposed Persons
POCA Proceeds of Crime Act (2007)
PWMD Proliferation of Weapons of Mass Destruction
RBA Risk Based Approach
SRBs Self-Regulatory Bodies
StAR World Bank/UNODC Stolen Asset Recovery Initiative
STR Suspicious Transaction Report
TF Terrorism Financing
TPA Terrorism Prevention Act (2010)
UN United Nations
UNCAC United Nations Convention against Corruption
UNODC United Nations Office on Drugs and Crime
WB World Bank
WMD Weapons of Mass Destruction
White Paper –
Politically Exposed Persons (PEPs) in Jamaica
As it relates to politically exposed persons (PEPs), is there a
deficiency in the current legal and regulatory framework for the
Jamaican Banking Sector when compared to the Guidance given by
the Financial Action Task Force (FATF)?
5
Executive Summary
The global financial system is at risk of being used to clean dirty money, to finance terrorism
and weapons of mass destruction (WMD). Countries have sought to implement various policies
and process to mitigate the risk of being used as vehicles for money laundering (ML), terrorist
financing (TF) and the proliferation of weapons of mass destruction (PWMD). The Financial
Action Task Force (FATF) has been at the forefront of the global fight against ML/TF. The FATF
has issued 40recommendations (FATF 40), these recommendations have been issued three
times with each iteration representing enhanced guidance over the previous one. The current
iteration absorbs the 9 Special Recommendations, which were issued subsequent to the events
of 9/11.
In particular, the FATF has sought to provide guidance on how politically exposed persons
(PEPs) should be supervised through Recommendation 12 and the publication and issuance of
several different pieces of guidance to further expound on matters relating to PEPs. Several
jurisdictions continue to contemplate the required legal and regulatory structure needed to
fulfill the requirements of this Recommendation and its attendant methodology and guidance.
Jamaica’s Application of Recommendation 12
Jamaica is one such jurisdiction that has endeavored to comply with FATF’s Recommendation
12. Jamaica has established a legal and regulatory structure to comply with Recommendation
12, by enacting two principal acts and one guidance document, guiding financial institutions
and DNFBPs as to how to treat PEPs. The two principal acts and guidance document are:
The Proceeds of Crime Act (POCA) 2007 and its attendant Money Laundering
Prevention (MLP) regulations;
The Terrorism Prevention Act (TPA) 2010 and its attendant regulations;
Guidance Notes on the Detection and Prevention of Money Laundering and
Terrorist Financing (2009).
White Paper –
Politically Exposed Persons (PEPs) in Jamaica
As it relates to politically exposed persons (PEPs), is there a
deficiency in the current legal and regulatory framework for the
Jamaican Banking Sector when compared to the Guidance given by
the Financial Action Task Force (FATF)?
6
Subsequent to the promulgation of these acts, Jamaica was subject to the Third
Round Mutual Evaluation Process (MVAL) of 2005 and a Third Round Mutual
Evaluation/Detailed Assessment Report on Anti-Money Laundering and Combating
the Financing of Terrorism (MVAL Report) was completed.
As it pertains to the banking sector,2 the assessors stated in the MVAL Report that there were
certain gaps in the Jamaican legal and regulatory framework—one of which was that neither
the POCA nor TPA included sections which substantially deals with the issue of PEPs.
In order to close this gap, the Jamaican authorities passed the POCA Amendment Act, 2013
(Regulation 7A) and the TPA Amendment Act, 2013, (Regulation 6A). These acts inter alia:
Defined PEPs
Defined relatives of PEPs
Defined close associate of PEPs
Gave guidance on the due diligence, enhanced due diligence (EDD) and
verification procedures required for PEPs
With the promulgation of these amendments, the legal and regulatory gap was significantly
closed. In addition to these acts, Jamaican authorities provide further guidance with the
issuance and subsequent amendments of the Bank of Jamaica Guidance Notes on the Detection
and Prevention of Money Laundering and Terrorist Financing Activities to guide commercial
banks, merchant banks, credit unions, Cambios bureau de exchange, money transfer agents and
remittance agencies (issued 2004, latest revision 2009). This Guidance Note had already
substantially dealt with the issue of PEPs prior to the aforementioned Amendment Acts.
Principal Recommendation
Based on the requirements of the FATF 40 and the wider FATF, Jamaica has substantially dealt
with the issue of PEPs but in order to close the regulatory gap, Jamaica needs to fully
implement a risked-based approach (RBA) to its assessment of both foreign and domestic PEPs.
Under the RBA there are two obligations for countries and financial institutions (and Designated
Non-Financial Businesses and Professions [DNFBPs]).3 There are two stages involved under each
obligation, that of risk assessment and risk mitigation.
2 With regard to this paper, banking sector means licensed Deposit Taking Institutions licensed, supervised and regulated by the Bank of
Jamaica (the Central Bank of Jamaica) and includes commercial banks licensed under the Banking Act (BA), Financial Institutions (commonly called merchant banks) licensed under the Financial Institutions Act (FIA) and Building Societies licensed under the Bank of Jamaica Building Societies Regulations). The aforementioned suite of Acts is to be replaced by the Banking Services Act (2014) and is expected to come into operation in 2015.
White Paper –
Politically Exposed Persons (PEPs) in Jamaica
As it relates to politically exposed persons (PEPs), is there a
deficiency in the current legal and regulatory framework for the
Jamaican Banking Sector when compared to the Guidance given by
the Financial Action Task Force (FATF)?
7
Obligations and Decisions for Countries
Risk assessment (identify and assess the ML/TF risks, coordinate actions to
assess risks and keep risk assessments up-to-date).
Risk mitigation (apply a risk-based approach to allocating resources and
implementing measures to prevent or mitigate ML/TF).
Countries that decide not to apply some of the FATF Recommendations requiring financial
institutions or DNFBPs to take certain actions, should demonstrate that there is a proven low
risk of ML/TF or that the “financial activity is carried out by a natural or legal person on an
occasional or very limited basis.”4
Obligations and Decisions for Financial Institutions and DNFBPS
Risk assessment (identify, assess and understand ML/TF risks).
Risk mitigation (have board approved policies, controls and procedures;
monitor and enhance those controls if necessary; and take enhanced
measures to manage and mitigate the risks where higher risks are
identified).
Countries may only permit financial institutions and DNFBPs to take simplified measures to
manage and mitigate risks, if lower risks have been identified, and the relevant criteria are met.
Simplified measures should not be permitted whenever there is a suspicion of ML/TF.
Other Recommendations
Whether through statute, subsidiary legislation (Regulations and Rules), Guidelines or
otherwise, the Jamaican authorities should seek to implement the following:
Establish a risk-based methodology for designating PEPs and create a
publicly available and current list of all persons designated as PEPs.
Ensure that banks establish a current and up-to-date PEPs database.
3 FATF (2013), Methodology for Assessing Compliance with the FATF Recommendations and the Effectiveness of AML/CFT Systems, FATF, Paris, www.fatf-gafi.org. 4 Anti-Money Laundering and Terrorist Financing Measures and Financial Inclusion, FATF, June 2011, http://www.fatf-
gafi.org/media/fatf/content/images/AML%20CFT%20measures%20and%20financial%20inclusion.pdf
White Paper –
Politically Exposed Persons (PEPs) in Jamaica
As it relates to politically exposed persons (PEPs), is there a
deficiency in the current legal and regulatory framework for the
Jamaican Banking Sector when compared to the Guidance given by
the Financial Action Task Force (FATF)?
8
Establish no timeline in which PEPs revert.5 Where a person has ceased to be
entrusted with a prominent public function, Jamaica should not introduce
time limits on the length of time the person, family member, or close
associate needs to be treated as a PEP.
Conduct a national anti-money laundering/counter-terrorist financing
(AML/CTF) risk assessment (NRA) annually.
Establish a constructive dialogue (cooperation and collaboration) between
asset disclosure and AML/CTF stakeholders.6
Require PEPs to complete a written declaration of the identity and details of
the natural persons who are the ultimate beneficial owners of the account,
business relationship or transaction.7
Require a PEP to provide a copy of any asset and income declaration forms
filed with their authorities.8
Conclusion
2. ML/TF and PWMD continues to be a serious issue for countries and financial
institutions. One of the most high risk categories of bank customers continue to be
those classified as politically exposed persons. The FATF has issued detailed
guidance on such persons through the issuing of Recommendation 12, and the
attendant Interpretive Note and Methodology. The Jamaican authorities in their
attempt to comply with the Recommendations and Standards set by FATF has
promulgated several pieces of legislation and issued detailed guidance to the
Banking Sector. The question to be answered is as to whether there is a deficiency
in the current legal and regulatory framework for the Jamaican Banking Sector
when compared with the Guidance given by FATF. It was found that Jamaica was
largely compliant with the FATF standards however to close the gap, Jamaica would
have to fully implement the risk based approach to AML/CFT and PWMD.
Furthermore, Recommendation 1 mandates countries to assess risks and apply a
risk based approach to implementing measures to prevent or mitigate ML / TF in
5 Theodore S Greenberg, Larissa Gray, Delphine Schantz, Michael Latham, Carolin Gardner (2009), Stolen Asset Recovery: Politically Exposed Persons – A Policy Paper on Strengthening Preventive Measures. 6 Rossi, Ivana, Laura Pop, Francesco Clementucci, Lina Sawaqed (2012), Using Asset Disclosure for Identifying Politically Exposed Persons. 7 Theodore S Greenberg, Larissa Gray, Delphine Schantz, Michael Latham, Carolin Gardner (2009), Stolen Asset Recovery: Politically Exposed Persons – A Policy Paper on Strengthening Preventive Measures. 8 Theodore S Greenberg, Larissa Gray, Delphine Schantz, Michael Latham, Carolin Gardner (2009), Stolen Asset Recovery: Politically Exposed Persons – A Policy Paper on Strengthening Preventive Measures.
White Paper –
Politically Exposed Persons (PEPs) in Jamaica
As it relates to politically exposed persons (PEPs), is there a
deficiency in the current legal and regulatory framework for the
Jamaican Banking Sector when compared to the Guidance given by
the Financial Action Task Force (FATF)?
9
relation to areas such as PEPs. The authorities can also implement other measures
such as conducting regular NRAs and the establishment of an up to date PEPs
register in order to achieve compliance with Recommendation 1 and 12. With the
full implementation of the major recommendation (the RBA), Jamaica would be
fully compliant with the guidance of the FATF.
Introduction and Background
Money laundering (ML) refers to the process by which criminals transform the proceeds of
crime arising to legitimate assets and by disguising its source in order to make these proceeds
appear to be derived from legal sources. Money Laundering, then, is the process of
transforming the proceeds of illegal activities into legitimate capital.9 Terrorist Financing (TF),
on the other hand, refers to the processing, provision or collection of assets (usually money)
with the intention of using these assets in full or in part to sponsor or facilitate terrorist activity,
terrorist organizations, terrorist objectives or the proliferation of weapons of mass destruction
(PWMD). In order to prevent the spread of ML/TF several jurisdictions have sought to
implement measures designed to prevent the spread of ML/TF in their respective jurisdictions.
The policies that are designed to prevent and stem the spread of ML/TF have been coined Anti-
money laundering/counter-terrorist financing (AML/CTF) and weapons of mass destruction
(WMD) policies.
The Financial Action Task Force (FATF) against ML, TF and PWMD was established in 1989, at a
G7 summit in Paris in fulfillment of a pledge given at the Toronto summit of 1988. FATF is the
only international body dedicated solely to identify, deter and prevent ML/TF. Therefore FATF
9 Peter Alldridge, Money Laundering Law, Forfeiture, Confiscation, Civil Recovery, Criminal Laundering and taxation of the proceeds of Crime 2003.
White Paper –
Politically Exposed Persons (PEPs) in Jamaica
As it relates to politically exposed persons (PEPs), is there a
deficiency in the current legal and regulatory framework for the
Jamaican Banking Sector when compared to the Guidance given by
the Financial Action Task Force (FATF)?
10
leads the global collaborative effort in order to fight ML/TF. Eight FATF Style Regional Bodies
(FSRBs) have been established around the world to assist in the fight against ML/TF. These
bodies are:
Caribbean Financial Action Task Force (CFATF)
Financial Action Task Force of South America (GAFILAT/GAFISUD)
-Asia Pacific Group against Money Laundering (APG)
Eurasian Group (EAG)
Committee of Experts on the Evaluation of Anti-Money Laundering
Measures and the Financing of Terrorism (MONEYVAL)
Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG)
Intergovernmental Action Group against Money Laundering in West Africa
(GIABA)
Middle East and North Africa Financial Action Task Force (MENAFATF)
These FATF style bodies have adopted FATF’s 40 Recommendations and have a similar mandate
as the FATF and impose their mandate on jurisdictions, which are members of their FSRB.
Since the establishment of the FATF, several other organizations have joined in the fight against
ML/TF and PWMD. These include:
The Organization of American States (OAS) and in particular CICAD
(Comisión Interamericana Para el Control Del Abuso de Drogas/ Inter-
American Drug Abuse Control Commission)
The EGMONT Group of financial intelligence units (FIUs)
Wolfsberg (Group of 11 global banks)
World Bank/International Bank for Reconstruction and Development
(WB/IBRD)
International Monetary Fund (IMF)
The Basel Committee on Banking Supervision (BCBS)
Objectives of FATF
FATF has several objectives including the:10
10 Study Guide for the CAMS Certification Examination, Fifth Edition, 2012.
White Paper –
Politically Exposed Persons (PEPs) in Jamaica
As it relates to politically exposed persons (PEPs), is there a
deficiency in the current legal and regulatory framework for the
Jamaican Banking Sector when compared to the Guidance given by
the Financial Action Task Force (FATF)?
11
Promotion of AML/CTF and PWMD networks. This is achieved through, inter
alia, the establishment and development of FATF style bodies across the
globe as well as through the cooperation and collaboration with other
international bodies such as IMF and IBRD-World Bank;
Monitoring the implementation of the FATF Recommendations among FATF
members. Implementation is monitored through a two-pronged approach:
o An annual self-assessment exercise where member countries are
required to fill out detailed standard questionnaires on the status of
their compliance with the Recommendations. This information is
then compiled and analyzed, and provides the basis for assessing the
extent to which the Recommendations have been implemented by
both individual countries and the group as a whole.
Each member country is examined by FATF on the basis of an on-site
visit conducted by a team of three or six experts in the legal, financial
and law enforcement fields from other member governments. The
experts write a report assessing the extent to which the evaluated
country has moved forward in implementing an effective system to
counter ML and to highlight areas in which further progress is still
required.
White Paper –
Politically Exposed Persons (PEPs) in Jamaica
As it relates to politically exposed persons (PEPs), is there a
deficiency in the current legal and regulatory framework for the
Jamaican Banking Sector when compared to the Guidance given by
the Financial Action Task Force (FATF)?
12
Description of FATF 40 Recommendations
In order to guide countries and other stakeholders in the development and implementation of
their AML/CTF frameworks, as well as the assessment of AML/CTF trends and the development
of countermeasures, the FATF has established and issued 40 Recommendations. These
recommendations were first issued in 1990 and revised in 1996, 2003 and 2012 (“Typologies”
exercise). These recommendations are listed below.
DESCRIPTION
RECOMMENDATION
A - AML/CFT POLICIES AND COORDINATION
Assessing risks and Applying a risk-based approach 1
National Cooperation and coordination 2
B - MONEY LAUNDERING AND CONFISCATION
Money Laundering Offence 3
Confiscation and Provisional measures 4
C - TERRORIST FINANCING AND FINANCING OF PROLIFERATION
White Paper –
Politically Exposed Persons (PEPs) in Jamaica
As it relates to politically exposed persons (PEPs), is there a
deficiency in the current legal and regulatory framework for the
Jamaican Banking Sector when compared to the Guidance given by
the Financial Action Task Force (FATF)?
13
Terrorist Financing Offence 5
Targeted Financial Sanctions related to Terrorism and Terrorist Financing
Terrorist Financing Sanctions related to proliferation 6
Targeted Financial Sanctions related to proliferation 7
Non-Profit Organizations 8
D - PREVENTATIVE MEASURES
Financial institution secrecy laws 9
Customer Due Diligence 10
Record Keeping 11
Politically Exposed Persons 12
Corresponding Baking 13
Money or Value Transfer Services 14
New Technologies 15
Wire Transfer 16
Reliance on Third Parties 17
Internal Controls and foreign branches and subsidiaries 18
Higher-Risk Countries 19
Reporting of Suspicious Transactions 20
Tipping-Off and Confidentiality 21
DNFBPs: Customer Due Diligence 22
DNFBPs: Other Measures 23
E - TRANSPARENCY AND BENEFICIAL OWNERSHIP OF LEGAL PERSONS AND
ARRANGEMENTS
Transparency and Beneficial Ownership of Legal Persons 24
Transparency and Beneficial Ownership of Legal Arrangement
25
F - POWERS AND RESPONSIBILITIES OF COMPETENT AUTHORITIES AND OTHER INSTITUTIONAL MEASURES
Regulation and Supervision of Financial Institutions 26
Powers of Supervisors 27
Regulation and Supervision of DNFBPs 28
White Paper –
Politically Exposed Persons (PEPs) in Jamaica
As it relates to politically exposed persons (PEPs), is there a
deficiency in the current legal and regulatory framework for the
Jamaican Banking Sector when compared to the Guidance given by
the Financial Action Task Force (FATF)?
14
Financial Intelligence Units 29
Responsibilities of Law Enforcement and Investigative Authorities
30
Powers of law enforcement and investigative authorities
31
Cash Couriers 32
Statistics 33
Guidance and Feedback 34
Sanctions 35
G - INTERNATIONAL COOPERATION
International Instruments 36
Mutual Legal Assistance 37
Mutual Legal Assistance : Freezing and Confiscation 38
Extradition 39
Other Forms of International Cooperation 40
The FATF has issued guidance on the treatment of PEPs through Recommendation 12, including
the interpretive notes, methodology and immediate outcome 4.
Description of FATF Recommendation 12—PEPs
According to Recommendation 12,11 financial institutions should be required, in relation to
foreign PEPs, (whether as a customer or beneficial owner), to perform normal customer due
diligence (CDD) measures, to:
Have appropriate risk-management systems to determine whether the customer
or the beneficial owner is a PEP
Obtain senior management approval for establishing (or continuing, for existing
customers) such business relationships.
Take reasonable measures to establish the source of wealth and source of funds.
Conduct enhanced ongoing monitoring of the business relationship.
11 FATF (2012), International Standards on Combating Money Laundering and the Financing of Terrorism & Proliferation, FATF, Paris, www.fatf-
gafi.org/recommendations.
White Paper –
Politically Exposed Persons (PEPs) in Jamaica
As it relates to politically exposed persons (PEPs), is there a
deficiency in the current legal and regulatory framework for the
Jamaican Banking Sector when compared to the Guidance given by
the Financial Action Task Force (FATF)?
15
26. Recommendation 12 further indicates that financial institutions should be required
to take reasonable measures to determine whether a customer or beneficial owner
is a domestic PEP or a person who is or has been entrusted with a prominent
function by an international organization. In cases of a higher risk business
relationship with such persons, financial institutions should be required to apply the
measures referred to above. The requirements for all types of PEPs should also
apply to family members or close associates of such PEPs.
Description of the FATF Interpretive Note to Recommendation 12—PEPs
FATF gives further guidance through the Interpretive Note on Recommendation 12. According
to the interpretive note, financial institutions should “take reasonable measures to determine
whether the beneficiaries of a life insurance policy and/or, where required, the beneficial
owner of the beneficiary,” are PEPs. “This should occur at the latest at the time of the
payout.”12 Where there are higher risks identified, in addition to performing normal CDD
measures, financial institutions should be required to:
“Inform senior management before the payout of the policy proceeds.
Conduct enhanced scrutiny on the whole business relationship with the
policyholder, and consider making a suspicious transaction report.”13
DESCRIPTION OF FATF METHODOLOGY FOR ASSESSING COMPLIANCE WITH
RECOMMENDATION 12 - PEPs
The FATF through its methodology for assessing compliance with the FATF and the
effectiveness of AML/CTF systems,14 gives further guidance in relation to both foreign and
domestic PEPs.
12 “Politically Exposed Persons (Recommendations 12 and 22),” FATF, June 2013, http://www.fatf-
gafi.org/media/fatf/documents/recommendations/Guidance-PEP-Rec12-22.pdf 13 “The FATF Recommendations: International Standards on Combating Money Laundering and the Financing of Terrorism and Proliferation,”
FATF, February 2012, http://www.fatf-gafi.org/media/fatf/documents/recommendations/pdfs/FATF_Recommendations.pdf
White Paper –
Politically Exposed Persons (PEPs) in Jamaica
As it relates to politically exposed persons (PEPs), is there a
deficiency in the current legal and regulatory framework for the
Jamaican Banking Sector when compared to the Guidance given by
the Financial Action Task Force (FATF)?
16
In relation to foreign PEPs, in addition to performing the CDD measures required under
Recommendation 10, financial institutions should be required to:
Put in place risk management systems to determine whether a customer or
the beneficial owner is a PEP;
Obtain senior management approval before establishing (or continuing, for
existing customers) such business relationships;
Take reasonable measures to establish the source of wealth and the source
of funds of customers and beneficial owners identified as PEPs; and
Conduct enhanced ongoing monitoring on that relationship.
In relation to domestic PEPs or persons who have been entrusted with a prominent function by
an international organization, in addition to performing the CDD measures required under
Recommendation 10, financial institutions should be required to:
Take reasonable measures to determine whether a customer or the
beneficial owner is such a person;
In cases when there is a higher risk business relationship with such a person,
the aforementioned enhanced due diligence measures should be adopted.15
Financial institutions should be required to apply the relevant requirements of the
aforementioned criteria to family members or close associates of all types of PEPs.
In relation to life insurance policies, financial institutions should be required to take reasonable
measures to determine whether the beneficiaries and/or, where required, the beneficial owner
of the beneficiary, are PEPs. This should occur, no later than, at the time of the payout. Where
higher risks are identified, financial institutions should be required to inform senior
management before the payout of the policy proceeds, to conduct enhanced scrutiny on the
whole business relationship with the policyholder and to consider making a suspicious
transaction report.
14 FATF (2013), Methodology for Assessing Compliance with the FATF Recommendations and the Effectiveness of AML/CFT Systems, FATF, Paris, www.fatf-gafi.org. 15 “The FATF Recommendations: International Standards on Combating Money Laundering and the Financing of Terrorism and Proliferation,”
FATF, February 2012, http://www.fatf-gafi.org/media/fatf/documents/recommendations/pdfs/FATF_Recommendations.pdf
White Paper –
Politically Exposed Persons (PEPs) in Jamaica
As it relates to politically exposed persons (PEPs), is there a
deficiency in the current legal and regulatory framework for the
Jamaican Banking Sector when compared to the Guidance given by
the Financial Action Task Force (FATF)?
17
Description of FATF Effectiveness: Assessment for Assessing Compliance with
Recommendation 12—PEPs
Finally, the FATF has given guidance on how to assess the effectiveness of AML/CTF systems
through the 11 expected immediate outcomes of the effective implementation of the FATF 40
Recommendations. This guidance is specific to country assessors who are to assess the
effectiveness of the AML/CTF regime in particular countries. In this regard, Immediate Outcome
4 gives specific guidance on Recommendation 12.16
Characteristics of an Effective System
Financial institutions and DNFBPs should understand the nature and level of their ML/TF risks;
develop and apply AML/CTF policies (including group-wide policies), internal controls, and
programs to adequately mitigate those risks; apply appropriate CDD measures to identify and
verify their customers (including the beneficial owners) and conduct ongoing monitoring;
adequately detect and report suspicious transactions; and comply with other AML/CTF
requirements. This ultimately leads to a reduction in ML/TF activity within these entities. This
outcome relates primarily to several recommendations including Recommendation 12.
FATF Guidance Note to Assessors
Assessors are expected to consider, on the basis of evidence and interviews with supervisors,
FIUs, financial institutions and DNFBPs, whether financial institutions and DNFBPs have
adequately assessed and understood their exposure to PEPs and whether their policies,
procedures and internal controls adequately address these risks; and whether regulatory
requirements (including STR reporting) are being properly implemented.17
In respect to PEPs and according to FATF, the Core Issues to be considered in determining if the
compliance with the FATF Recommendations is being achieved is how well financial institutions
and DNFBPs apply the enhanced or specific measures for PEPs.
16 FATF (2013), Methodology for Assessing Compliance with the FATF Recommendations and the Effectiveness of AML/CFT Systems, FATF,
Paris, www.fatf-gafi.org. 17 “For Assessing Compliance with the FATF Recommendations and the Effectiveness of AML/CTF Systems,” FATF, February 2013, http://www.fatf-gafi.org/media/fatf/content/images/FATF%20Methodology%2022%20Feb%202013%20.pdf
White Paper –
Politically Exposed Persons (PEPs) in Jamaica
As it relates to politically exposed persons (PEPs), is there a
deficiency in the current legal and regulatory framework for the
Jamaican Banking Sector when compared to the Guidance given by
the Financial Action Task Force (FATF)?
18
Description of the Current Legal and Regulatory Framework for PEPs in Jamaica
The AML/CTF legal framework in Jamaica is primarily based on two pieces of statute: the
Proceeds of Crime Act (POCA) 2007 and its attendant the Money Laundering Prevention
Regulations and the Terrorism Prevention Act (TPA) 2010 and Regulations. There was a gap in
the Jamaican framework, as both the POCA and TPA were void of a section that specifically
dealt with PEPs. However, this gap was closed with the passage of the POCA Amendment Act
and the TPA Amendment Act. Specifically, the POCA Amendment Act of 2013 and the TPA
Amendment Act of 2013 introduced new regulations, i.e., Regulation 7(A) and 6(A) respectively
which inter alia, defined PEPs,18 relatives19 of a PEP and a close associate20 of a PEP and gave
guidance on the due diligence (including enhanced due diligence [EDD]) and verification
procedures required for PEPs. The promulgation of these regulations aided in closing the
regulatory gap as it concerns PEPs.
In addition to the aforementioned laws, Jamaica has issued the Bank of Jamaica Guidance
Notes on the Detection and Prevention of Money Laundering Terrorist Financing Activities to
guide commercial banks, merchant banks, credit unions, cambios bureau de exchange, money
transfer agents and remittance agencies.
18 An individual, who in relation to any state, carries out functions analogous to the functions of any of the following persons (1) a head of
state; (2) a head of government (3) a member of any House of Parliament; (4) a minister of government; (5) a member of the judiciary (6) a military official above the rank of Captain; (7) a member of the police of or above the rank of Assistant Commissioner; (8) a Permanent Secretary, Chief Technical Director or chief officer in charge of the operations of a Ministry, department of Government, executive agency or statutory body, as the case may be; (9) a director or chief executive of any company in which the government owns a controlling interest; (10) an official of any political party; (11) an individual who is a relative or is known to be a close associate of a PEP. 19 Relative means his spouse, his child (including his step child or adopted child), the spouse of his child, his parents, his brother or his sister. 20 Close Associate means an individual who is a business partner, or associate in any other form, in a common commercial enterpr ise.
White Paper –
Politically Exposed Persons (PEPs) in Jamaica
As it relates to politically exposed persons (PEPs), is there a
deficiency in the current legal and regulatory framework for the
Jamaican Banking Sector when compared to the Guidance given by
the Financial Action Task Force (FATF)?
19
Description Guidance Notes on the Detection and Prevention of ML/TF Activities
(Guidance Notes)
According to the Guidance Notes, PEPs are individuals in foreign jurisdictions (or the local
jurisdiction) who are or have been entrusted with prominent public functions. This category of
persons includes the following persons and their immediate family and close associates:
Heads of state or of government
Senior politicians
Senior government officials
Senior executives of state owned corporations
Important political party officials;
Judicial or security force officials (whether elected or not)21
Financial institutions should not establish business relationships with PEPs if the financial
institutions know or have reason to suspect that the funds derive from corruption or misuse of
public assets. Senior management with ultimate responsibility for banking operations should
ensure that the personal circumstances, income sources and wealth of PEPs are known and
verified as far as possible, and should also be alert to sources of legitimate third party
information. Whilst it is appreciated that efforts must be made to protect the confidentiality of
PEPs and their businesses, these accounts must be available for review by the supervisory
authority, the designated authority, and the financial institution’s internal compliance officers
(including the nominated officer) and internal auditors.
The approval of business relationships involving PEPs must be obtained from at least one senior
level officer other than the banking officer/relationship manager. To mitigate the significant
legal and reputational risk exposures that financial institutions face from establishing and
maintaining business relationships with PEPs, the following procedures should be followed
prior to the commencement of such relationships: -
21 “Politically Exposed Persons (Recommendations 12 and 22), FATF, June 2013, http://www.fatf-
gafi.org/media/fatf/documents/recommendations/Guidance-PEP-Rec12-22.pdf
White Paper –
Politically Exposed Persons (PEPs) in Jamaica
As it relates to politically exposed persons (PEPs), is there a
deficiency in the current legal and regulatory framework for the
Jamaican Banking Sector when compared to the Guidance given by
the Financial Action Task Force (FATF)?
20
Obtain all the relevant client identification information as would be required for
any other client prior to establishing the business relationship. In addition, the
decision to open an account for a PEP must be taken at the senior management
level.
Information gathering forms/procedures should be structured to reasonably
allow the financial institution to ascertain whether a client is a PEP, and to
identify persons and companies/business concerns clearly related to or
connected with the PEP. The financial institution should also access publicly
available information to assist in the determination as to whether or not an
individual is a PEP.
Investigate and determine the income sources prior to opening account.
Reference to income sources includes source of funds, source of wealth and
asset holdings, confirmation of the general salary and entitlements for public
positions akin to the one held by the customer in question.—General
information on local PEPs may be available from the Public Services Commission
in Jamaica. General information on local PEPs can also be viewed from the
Jamaica Parliamentarian’s Salaries Review Commission Report on the Ministry of
Finance and Planning’s website. This report details basic salary and allowances
(travelling, subsistence, housing and utilities). It is possible that comparable
information may be available on similar national websites for foreign PEPs.
Following the commencement of banking relationships, there should be:
Regular reviews of customer identification records to ensure they are kept
current
Ongoing monitoring of PEP accounts
The abovementioned procedures should also be followed for the existing client base to ensure
that all current PEPs have been so identified and remain subject to enhanced customer due
diligence processes.
White Paper –
Politically Exposed Persons (PEPs) in Jamaica
As it relates to politically exposed persons (PEPs), is there a
deficiency in the current legal and regulatory framework for the
Jamaican Banking Sector when compared to the Guidance given by
the Financial Action Task Force (FATF)?
21
Description of Jamaica’s Third Round Mutual Evaluation/Detailed Assessment Report
AML/CTR (MVAL Report) 2005
Jamaica has been subject to three Mutual Evaluations. The last completed evaluation was done
in 2005;22 however, at the time of this research Jamaica was undergoing its fourth Mutual
Evaluation.
According to Jamaica’s Third Round Mutual Evaluation/Detailed Assessment Report AML/CTF
(MVAL Report), the Bank of Jamaica Guidance Notes through paragraph 79, require enhanced
measures and procedures in place for establishing business relationships with foreign PEPs.
These include:
Obtaining all the relevant client identification information as would be
required for any other client prior to establishing the business relationship;
Taking the decision to open an account for a PEP at the senior management
level;
Structuring the information gathering forms/procedures to reasonably allow
the financial institution to ascertain whether a client is a PEP, and to identify
persons and companies clearly related to or connected with the PEP;
Accessing the publicly available information to assist in the determination as
to whether or not an individual is a PEP.
The BOJ Guidance Notes require, in addition to the above, investigating and determining the
source of funds prior to opening an account. However, the BOJ Guidance Notes do not
specifically require the determination of the source of wealth of PEPs as an obligation, as
required under Recommendation 12. The Jamaican banking supervisors do state, however, that
the term “source of funds” is interpreted to include the source of a PEPs wealth.
The BOJ Guidance Notes also provides that following the commencement of banking
relationships, there should be:
22 It is important to note that at this time the assessment was based on the FATF 40 + 9 Special Recommendations methodology.
White Paper –
Politically Exposed Persons (PEPs) in Jamaica
As it relates to politically exposed persons (PEPs), is there a
deficiency in the current legal and regulatory framework for the
Jamaican Banking Sector when compared to the Guidance given by
the Financial Action Task Force (FATF)?
22
Regular review of customer identification records to ensure they are kept
current
Ongoing monitoring of PEP accounts
The BOJ Guidance Notes further provides that the abovementioned procedures should also be
followed for the existing client base to ensure that all current PEPs have been so identified and
remain subject to enhanced customer due diligence processes.
Initially, the BOJ Guidance Notes did not extend to PEPs who hold prominent public functions
domestically, which was optional under the former Recommendation 6 (which is now
Recommendation 12), but desirable under the FATF framework at that time. Subsequently
Jamaica amended the BOJ Guidance Notes to include domestic PEPS.
White Paper –
Politically Exposed Persons (PEPs) in Jamaica
As it relates to politically exposed persons (PEPs), is there a
deficiency in the current legal and regulatory framework for the
Jamaican Banking Sector when compared to the Guidance given by
the Financial Action Task Force (FATF)?
23
Assessment and Way Forward—Is there a gap in the legal and regulatory
framework?
Principal Recommendation
For the Jamaican legal and regulatory framework to be fully in line with the current
requirements of FATF, an AML/CTF risk-based approach (RBA) must be adopted and fully
implemented.23 The RBA requires that the relevant AML/CTF authorities, the BOJ, (and the
Financial Services Commission [FSC], Ministry of Finance [MOF] through the Financial
Investigatory Division [FID]) is expected to assess (identify and understand) and mitigate the
ML/TF risks present in the Jamaican jurisdiction. In order to effectively assess and mitigate the
AML/CTF risks, the BOJ should effectively cooperate and collaborate with the other AML/CTF
stakeholders.24 This objective is currently being achieved through the National Anti-Money
Laundering Committee (NAMLAC).
Under the RBA, there are two obligations: one for countries and one for financial institutions
and DNFBPs. There are two stages involved under each obligation, that of a risk assessment and
that of a risk mitigation.
Description of the FATF RBA Methodology 25
“Obligations and Decisions for Countries
Risk Assessment
Countries should identify and assess the ML/TF risks for the country;
Countries should designate an authority or mechanism to co-ordinate actions to
assess risks;
Countries should keep the risk assessments up-to-date;
Countries should have mechanisms to provide information on the results of the
risk assessment(s) to all relevant competent authorities and self-regulatory
bodies (SRBs), financial institutions and DNFBPs.
Risk Mitigation
23 Recommendation 1 of the FATF40 and its associated Interpretive Note, Methodology and guidance for the banking sector substantially treats with this issue. 24 FATF (2013), Methodology for Assessing Compliance with the FATF Recommendations and the Effectiveness of AML/CFT Systems, FATF, Paris, 25 FATF (2013), Methodology for Assessing Compliance with the FATF Recommendations and the Effectiveness of AML/CFT Systems, FATF, Paris, www.fatf-gafi.org.
White Paper –
Politically Exposed Persons (PEPs) in Jamaica
As it relates to politically exposed persons (PEPs), is there a
deficiency in the current legal and regulatory framework for the
Jamaican Banking Sector when compared to the Guidance given by
the Financial Action Task Force (FATF)?
24
3. Based on their understanding of their risks, countries should apply a risk-based
approach to allocating resources and implementing measures to prevent or
mitigate ML/TF.
4. Countries which decide not to apply some of the FATF Recommendations
requiring financial institutions or DNFBPs to take certain actions, should
demonstrate that:
There is a proven low risk of ML/TF; the exemption occurs in strictly limited
and justified circumstances; and it relates to a particular type of financial
institution or activity, or DNFBP;
A financial activity (other than the transferring of money or value) is carried
out by a natural or legal person on an occasional or very limited basis (having
regard to quantitative and absolute criteria), such that there is a low risk of
ML/TF.
5. Where countries identify higher risks, they should ensure that their AML/CFT
regime addresses such risks, including through:
Requiring financial institutions and DNFBPs to take enhanced measures to
manage and mitigate the risks; or
Requiring financial institutions and DNFBPs to ensure that this information is
incorporated into their risk assessments.
6. Countries may allow simplified measures for some of the FATF
Recommendations requiring financial institutions or DNFBPs to take certain
actions, provided that a lower risk has been identified, and this is consistent with
the country’s assessment of its ML/TF risks. Supervisors and FSRBs should ensure
that financial institutions and DNFBPs are implementing their obligations under
Recommendation 17.
Obligations and Decisions for Financial Institutions and DNFBPS
Risk Assessment
7. Financial institutions and DNFBPs should be required to take appropriate steps
to identify, assess, and understand their ML/TF risks (for customers, countries or
geographic areas; and products, services, transactions or delivery channels). This
includes being required to:
White Paper –
Politically Exposed Persons (PEPs) in Jamaica
As it relates to politically exposed persons (PEPs), is there a
deficiency in the current legal and regulatory framework for the
Jamaican Banking Sector when compared to the Guidance given by
the Financial Action Task Force (FATF)?
25
Document their risk assessments.
Consider all the relevant risk factors before determining the level of overall
risk and the appropriate level and type of mitigation to be applied.
Keep these assessments up to date.
Have appropriate mechanisms to provide risk assessment information to
competent authorities and SRBs.
Risk Mitigation
8. Financial institutions and DNFBPs should be required to:
Have policies, controls and procedures, which are approved by senior
management, to enable them to manage and mitigate the risks that have
been identified (either by the country or by the financial institution or
DNFBP).
Monitor the implementation of those controls and to enhance them if
necessary.
Take enhanced measures to manage and mitigate the risks where higher
risks are identified.
9. Countries may only permit financial institutions and DNFBPs to take simplified
measures to manage and mitigate risks, if lower risks have been identified, and
the relevant criteria are met. Simplified measures should not be permitted
whenever there is a suspicion of ML/TF.”26
Other Recommendations
Whether through statute, subsidiary legislation (regulations and rules), guidelines or otherwise,
the designated authority should seek to implement the following:
Establish a risk-based methodology for designating PEPs and create a publicly
available and current list of all persons designated as PEPs.
Ensure that banks establish a current and up-to-date PEP database.
26 “Recommendation 1: Assessing Risk and Applying A Risk Based Approach,” FATF/OECD, 2013, http://www.eurasiangroup.org/Methodology/eng/tech_mark/1/
White Paper –
Politically Exposed Persons (PEPs) in Jamaica
As it relates to politically exposed persons (PEPs), is there a
deficiency in the current legal and regulatory framework for the
Jamaican Banking Sector when compared to the Guidance given by
the Financial Action Task Force (FATF)?
26
Ensure that banks establish a risk-based methodology for determining PEPs that
is consistent with the methodology stated by FATF.
Establish no timeline in which a PEP reverts. Where a person has ceased to be
entrusted with a prominent public function, Jamaica should not introduce time
limits on the length of time the person, family member, or close associate needs
to be treated as a PEP.27
Conduct a National AML/CTF Risk Assessment.
Establishing a dialogue (cooperation and collaboration) between asset disclosure
and AML/CTF stakeholders for the purpose of determining PEPs.28
Require PEPs to complete a written declaration of the identity and details of the
natural persons who are the ultimately beneficial owners of the account,
business relationship or transaction.29
Require a PEP to provide a copy of any asset and income declaration forms filed
with their authorities.30
27 Theodore S Greenberg, Larissa Gray, Delphine Schantz, Michael Latham, Carolin Gardner (2009), Politically Exposed Persons – A Policy Paper on Strengthening Preventive Measures. 28 Rossi, Ivana, Laura Pop, Francesco Clementucci, Lina Sawaqed (2012), Using Asset Disclosure for Identifying Politically Exposed Persons. 29 Theodore S Greenberg, Larissa Gray, Delphine Schantz, Michael Latham, Carolin Gardner (2009), Politically Exposed Persons – A Policy Paper on Strengthening Preventive Measures. 30 Theodore S Greenberg, Larissa Gray, Delphine Schantz, Michael Latham, Carolin Gardner (2009), Politically Exposed Persons – A Policy Paper on Strengthening Preventive Measures.
White Paper –
Politically Exposed Persons (PEPs) in Jamaica
As it relates to politically exposed persons (PEPs), is there a
deficiency in the current legal and regulatory framework for the
Jamaican Banking Sector when compared to the Guidance given by
the Financial Action Task Force (FATF)?
27
Conclusion
Since its inception in Paris in, FATF has been at the forefront of the fight against ML/TF and
PWMD. FATF has provided tremendous guidance on several high-risk groups in there 40
Recommendations, one of which is PEPs. This guidance includes Recommendation 12 and its
attendant Interpretive Notes and methodology. Many jurisdictions continue to formulate
strategies to enhance their disparate frameworks in order to meet the requirements of FATF
Recommendation 12.
According to FATF Recommendation 12, 31,32 financial institutions should be required, in
relation to foreign PEPs (whether as a customer or beneficial owner) to perform the following,
in addition to the CDD measures required under Recommendation 10:
Have or put in place appropriate risk management systems to determine
whether the customer or the beneficial owner is a PEP;
Obtain senior management approval for establishing (or continuing, for existing
customers) such business relationships;
Take reasonable measures to establish the source of wealth and source of funds
of customers and beneficial owners identified as PEPs;
Conduct enhanced ongoing monitoring of that business relationship.
As it regards domestic PEPs, Recommendation 12 further indicates that financial institutions
should be required to:
Take reasonable measures to determine whether a customer or beneficial owner
is a domestic PEP or a person who is or has been entrusted with a prominent
function by an international organization;
In cases of a higher risk business relationship with such persons, financial
institutions should be required to apply the aforementioned enhanced
measures.
FATF indicates that the requirements for all types of PEPs (whether domestic or foreign) should
also apply to family members or close associates of such PEPs.
31 Paragraphs 25 to 35 of this document comprehensively deal with the requirements of FATF as it relates to PEPs. 32 FATF (2012), International Standards on Combating Money Laundering and the Financing of Terrorism & Proliferation, FATF, Paris, www.fatf-gafi.org/recommendations.
White Paper –
Politically Exposed Persons (PEPs) in Jamaica
As it relates to politically exposed persons (PEPs), is there a
deficiency in the current legal and regulatory framework for the
Jamaican Banking Sector when compared to the Guidance given by
the Financial Action Task Force (FATF)?
28
In relation to insurance policies, financial institutions should be required to take reasonable
measures to determine whether the beneficiaries of a life Insurance policy and/or, where
required, the beneficial owner of the beneficiary are PEPs. This should occur at the latest at the
time of the payout. Where there are higher risks identified, in addition to performing normal
CDD measures, financial institutions should be required to:
“Inform senior management before the payout of the policy proceeds;
Conduct enhanced scrutiny on the whole business relationship with the
policyholder, and consider making a suspicious transaction report.”33
In its attempts to comply with the requirements of FATF, Jamaica has promulgated two acts and
a guidance note. The principal Acts and Guidance Notes were:
The Proceeds of Crime Act (POCA) 2007 and its attendant Money Laundering
Prevention Regulations;
The Terrorism Prevention Act (TPA) 2010 and its attendant Regulations;
The Guidance Notes on the Detection and Prevention of Money Laundering
Terrorist Financing Activities.
Based on the Third Round MVAL Report and Assessment of Jamaica, it was discovered that the
relevant laws did not have a section on PEPs. This deficiency was substantially ameliorated with
the promulgation of the POCA Amendment Act and the TPA Amendment Act though the
introduction of Regulation 7(A) and 6(A) respectively which inter alia, defined PEPs,34 relatives35
of a PEP and a close associate36 of a PEP and gave guidance on the due diligence (EDD) and
verification procedures required for PEPs. The promulgation of these regulations aided in
closing the Regulatory Gap as it concerns PEPs.
33 “The FATF Recommendations: International Standards on Combating Money Laundering and the Financing of Terrorism and Proliferation,”
FATF, February 2012, http://www.fatf-gafi.org/media/fatf/documents/recommendations/pdfs/FATF_Recommendations.pdf 34 An individual, who in relation to any state, carries out functions analogous to the functions of any of the following persons (1) a head of state; (2) a head of government (3) a member of any House of Parliament; (4) a minister of government; (5) a member of the judiciary (6) a military official above the rank of Captain; (7) a member of the police of or above the rank of Assistant Commissioner; (8) a Permanent Secretary, Chief Technical Director or chief officer in charge of the operations of a Ministry, department of Government, executive agency or statutory body, as the case may be; (9) a director or chief executive of any company in which the government owns a controlling interest; (10) an official of any political party; (11) an individual who is a relative or is known to be a close associate of a PEP. 35 Relative means his spouse, his child (including his step child or adopted child), the spouse of his child, his parents, his brother or his sister. 36 Close Associate means an individual who is a business partner, or associate in any other form, in a common commercial enterprise.
White Paper –
Politically Exposed Persons (PEPs) in Jamaica
As it relates to politically exposed persons (PEPs), is there a
deficiency in the current legal and regulatory framework for the
Jamaican Banking Sector when compared to the Guidance given by
the Financial Action Task Force (FATF)?
29
Therefore, the question to be answered by the researcher is as to whether there is a deficiency
in the current legal and regulatory framework for the Jamaican Banking Sector when compared
to the guidance given by FATF. Whilst Jamaica has substantially closed the gap in its framework
as it concerns PEPs, to fully and comprehensively treat with the issue of PEPs, Jamaica needs to
fully implement the RBA to AML/CTF and PWMD, specifically with respect to PEPs. In addition
to this principal recommendation, Jamaica can also seek to implement other initiatives such as
regular (possibly annual NRAs) and establishing a current and up-to-date PEP database.
The adoption of these Recommendations would result in a comprehensive treatment of the
requirements of FATF as it concerns PEPs.
White Paper –
Politically Exposed Persons (PEPs) in Jamaica
As it relates to politically exposed persons (PEPs), is there a
deficiency in the current legal and regulatory framework for the
Jamaican Banking Sector when compared to the Guidance given by
the Financial Action Task Force (FATF)?
30
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White Paper –
Politically Exposed Persons (PEPs) in Jamaica
As it relates to politically exposed persons (PEPs), is there a
deficiency in the current legal and regulatory framework for the
Jamaican Banking Sector when compared to the Guidance given by
the Financial Action Task Force (FATF)?
31
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White Paper –
Politically Exposed Persons (PEPs) in Jamaica
As it relates to politically exposed persons (PEPs), is there a
deficiency in the current legal and regulatory framework for the
Jamaican Banking Sector when compared to the Guidance given by
the Financial Action Task Force (FATF)?
32
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To advise the government on policy
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