The Financial Information Unit Updated the List of Individuals Considered Politically Exposed Persons

The Financial Information Unit (“UIF”) issued UIF Resolution No. 134/2018 (the “Resolution”), published in the Official Gazette on November 23, 2018, which updates the list of individuals considered Politically Exposed Persons (“PEP”), strengthens due diligence measures applicable to relations with PEP and bases the obligations and due diligence measures on a risk-based-approach, in line with the latest regulatory updates made by the UIF, and no longer on the basis of the course of time since leaving office.
 

Such amendments are mainly based on certain recommendations made by the Organization for Economic Co-operation and Development (“OECD”) in March, 2017, in a report made in the framework of Phase 3 bis of the membership process of the Argentine Republic, as stated in the recitals of the Resolution.
 

Regarding the list of local PEPs,  several new categories have been added, namely provincial and municipal (including the City of Buenos Aires) public officers, in order to replicate the list of federal level officers. Likewise, the list of individuals considered PEP in relation to political parties and/or political alliances, workers unions and business chambers, union-related medical insurance companies, among others, has been expanded.
 

The list of foreign PEPs has been expanded to incorporate  representatives of international organizations and authorities of foreign political parties and companies with state participation.
 

Moreover, the degree of consanguinity and affinity that determines a person’s consideration as a PEP has been extended from the 1st degree to the 3rd degree, also including all relationships that by their characteristics, and on the basis of a risk-based approach at the sole criteria of the reporting entity, are relevant.
 

The Resolution establishes a series of parameters with the purpose of determining the risk level at the time of beginning or continuing a contractual relationship with a PEP, amongst which are included the specific characteristics of the operations, the inherent risk thereof, the origin of the funds, if the exercise of public office is related to activities which have a history of exposure to high levels of corruption, etc.
 

The two year term previously applicable as of leaving office no longer implies that the individual will automatically cease to be a PEP, but rather will enable an evaluation of the client on the basis of a risk-based approach, which will take into consideration the importance of the position held, the ability to dispose of and /or administer funds and the seniority of the public officer for the risk assessment.
 

Consequently, PEP must be the object of appropriate due diligence measures which are proportional to the associated risk and operation or operations related. In all cases, rules regarding the control of operations and automatic alerts must be implemented in a manner that allows for the intense and continuous monitoring of the execution of operations in relation with the client’s profile.