So what exactly is the definition of a politically exposed person?

According to the new definition of the Monetary and Financial Code, resulting from Decree 2018-284 of 18/04/2018, which will apply as of 01/10/2018, a politically exposed person is a person exposed to particular risks due to his or her functions.

I. This is a person who is or has been engaged in any of the following occupations for less than one year:

Head of state, head of government, member of a national government or of the European Commission,
Member of a national parliamentary assembly or of the European Parliament, member of the governing body of a political party or grouping subject to the provisions of law no. 88-227 of March 11, 1988 or of a foreign political party or grouping,
A member of a supreme court, constitutional court, or other high court whose decisions are not subject to appeal, except in exceptional circumstances,
Member of a court of auditors,
Officer or member of the governing body of a central bank,
Ambassador or chargé d'affaires,
General officer or senior officer in command of an army,
Member of an administrative, management or supervisory body of a public company,
Director, deputy director, members of the board of an international treaty organization, or a person who holds an equivalent position within it.

II. To which are added persons known to be direct family members of the persons mentioned in point I of whom:

The spouse or common-law partner,
The partner bound by a civil solidarity pact or by a partnership contract registered under foreign law,
Children, as well as their spouse, partner in a civil solidarity pact or partnership contract registered under foreign law,
First degree ascendants.

III. As well as persons considered to be closely associated with the persons mentioned in point I of which:

Natural persons who, together with the person mentioned in point I, are beneficial owners of a legal person, collective investment, trust or comparable legal arrangement under foreign law,
Individuals who are the sole beneficial owners of a legal entity, collective investment, trust or comparable legal arrangement under foreign law known to have been established for the benefit of the person referred to in item I,
Any natural person known to have a close business relationship with the person mentioned in point I.

What business risk?

A business relationship with a politically exposed person has long been considered a privilege, with banks, for example, being heavily involved in having them as clients. However, the tightening of anti-corruption, anti-money laundering and terrorist financing measures has forced companies to strengthen their due diligence targeting all legal entities and individuals at risk, including PEPs.

The influence that people in important political, administrative or military positions may have makes them more susceptible to corruption-related risks. The potential use by many PEPs of bank accounts for terrorist financing or money laundering purposes, often linked to acts of corruption on a greater or lesser scale, means that they are now considered a high-risk audience.

This implies that companies must conduct thorough due diligence before even considering any business relationship with politically exposed persons.

What solution?

Conducting due diligence can be a tedious and time-consuming operation. It is therefore strategic for the company to choose between conducting them itself or having them carried out by specialized companies in order to optimize the process and focus on the core business. It is profitable to choose the second option in order to benefit from external know-how in due diligence, and thus obtain reliable results with regular updates performed by expert teams.