Agencies issue statement on BSA due diligence

Federal regulators issued a joint statement clarifying that Bank Secrecy Act due diligence requirements for customers who may be considered politically exposed persons should be commensurate with the risks posed by the relationship.

The PEP term is commonly used to refer to foreign individuals who are or have been entrusted with a prominent public function, along with their immediate family members and close associates. Due to their positions, their funds might more likely be the proceeds of corruption or other illicit activity.

The interagency statement recognizes that PEP relationships present varying levels of money-laundering risk. It clarifies that, while banks must adopt appropriate risk-based procedures for conducting customer due diligence, there are not regulatory requirements or supervisory expectations for banks to have additional due diligence steps for PEP customers.