The New PEP Definition under the Polish AML Act 2018
The Polish AML Act of 1 March 2018, published in the Journal of Laws on 12 April 2018, implemented the requirements of the fourth AML Directive (2015/849) into Polish law. Among its most significant changes was a new definition of a politically exposed person (PEP).
The important shift was that the definition now also catches persons residing in the country of the obliged institution. In Poland, that means persons holding public functions in Poland are squarely within scope.
What the Act requires
Article 46 of the AML Act sets out in detail the steps to take when a customer is a PEP. These include:
- obtaining senior management approval to establish or continue the business relationship
- taking adequate measures to establish the source of wealth and the source of funds
- intensifying the financial security measures applied
Family members and close associates (RCA)
The obligations do not apply only to the PEP. They also cover the PEP’s family members and close associates, collectively known as RCA (Relatives and Close Associates). Under the Act:
- Family members are the spouse or a person in a close relationship, children and their spouses, and parents.
- Close associates are natural persons who are beneficial owners of legal persons, unincorporated entities or trusts together with the PEP, or who maintain other close business relationships with the PEP, as well as persons who are the sole beneficial owner of entities known to have been set up to benefit the PEP.
If any family member or close associate holds or controls a legal entity whose beneficial owner is the PEP, the same measures apply as if the entity belonged directly to the PEP.
How to assess PEP, family and close associates
To meet the due diligence requirements, an obliged institution needs the following knowledge:
- for legal persons, unincorporated entities and trusts, it must know all of their beneficial owners
- each beneficial owner must be checked for PEP status, and for whether they are a family member or close associate of a PEP
- in each such case, the measures in Article 46 of the AML Act must be applied
Which positions count
The AML Act sets out nine basic PEP categories, and the list of positions within them is long. Because the detailed list is now specified by the ministerial regulation of 2021 (Dz.U. 2021 poz. 1381), questions such as whether a mayor, a starosta or a particular inspector is a PEP have clear answers. Our dedicated articles cover the most common ones.
How to check PEP status
To verify a person’s PEP status at onboarding, or later during periodic customer reviews, a screening tool makes the check repeatable and auditable. Hyperflow offers PEP and RCA screening through an API, so the check can run automatically as part of the compliance process.
UK perspective
In the UK, politically exposed persons are defined in the Money Laundering Regulations 2017. The Financial Conduct Authority expects firms to apply enhanced due diligence to PEPs and to continue it for at least 12 months after the person leaves office, the same approach described above.