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Key terms used in ‘politically exposed person’ definition

Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act)

Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No. 1) (AML/CTF Rules)

1. Introduction

1.1. The purpose of this draft guidance is to assist reporting entities in understanding key terms which are used in the ‘politically exposed person’ (PEP) definition (the PEP definition) contained in Chapter 1 of the AML/CTF Rules (relating to key terms and definitions).

1.2. Once public consultation is complete, the final guidance will be incorporated into the AUSTRAC compliance guide.

2. What is a politically exposed person?

2.1. A PEP is defined by the Financial Action Task Force (FATF) as an individual who is or has been entrusted with a prominent public function. FATF is an international inter-governmental body (of which Australia is a founding member), which sets standards and promotes effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system. AUSTRAC supports the use of the FATF guidance on PEPs by reporting entities.1

2.2. Due to their position and influence, it is recognised that many PEPs are in positions that potentially can be abused for the purpose of committing money laundering offences and related predicate offences, including corruption and bribery, as well as conducting activity related to terrorism financing. The potential risks associated with PEPs justify the application of additional anti-money laundering and counter-terrorism financing measures, designed to prevent and detect this conduct.

1 FATF Guidance, Politically Exposed Persons (Recommendations 12 and 22), June 2013.

Draft guidance: Key terms used in 'politically exposed person' definition of 15First round public consultation: January 2015Second round public consultation: August 2015

Draft guidanceDraft guidanceDraft guidanceDraft guidanceDraft guidanceDraft guidanceDraft guidanceDraft guidanceDraft guidanceDraft guidance

http://www.fatf-gafi.org/

http://www.comlaw.gov.au/Series/F2007L01000

http://www.comlaw.gov.au/Series/C2006A00169

2.3. However, it is noted that if a person is a PEP, this does not mean that there is an automatic link to criminal activities or abuse of the financial system. The additional AML/CTF measures applied in the case of PEPs are preventative, and should not be interpreted as stigmatising PEPs as being involved in criminal activity; rather these measures recognise the increased risk, including opportunity, associated with holding this type of role.

2.4. PEP is defined in Chapter 1 of the AML/CTF Rules and included at Attachment A. In brief, a politically exposed person is an individual who holds a prominent public position or function in a government body or an international organisation, their immediate family members and close associates.

2.5. The AML/CTF Rules require reporting entities to identify PEPs before, or ‘as soon as practicable after the designated service has been provided’.2 The term ‘as soon as practicable’ has not been defined in the AML/CTF Rules in order to allow reporting entities to carry out the procedures in a manner which is appropriate to the particular circumstances of each customer.

2.6. Reporting entities may use commercial databases in order to assist in the identification of PEPs, although AUSTRAC notes that the exclusive use of a commercial database cannot be a substitute for a thorough and comprehensive risk assessment by the reporting entity. Such an assessment will include training for frontline staff in identifying whether a person is a PEP.

2.7. Over-reliance on such databases may increase the risk that reporting entities will wrongly assume that if a name is not in the database, then the customer is not a PEP. Commercial databases also have limitations of which reporting entities should be aware, for example, the database:

may not be as comprehensive or reliable as is believed;

may not align with the PEP definition used in Australia if it is a ‘global’ database;

may not catch certain names or may exclude certain categories of PEPs; and

may contain inconsistent transliterations and spellings of names which may affect a reporting entity’s ability to match names.3

2.8. Not all terms used in the PEP definition will be the subject of guidance as it is considered that some are self-explanatory. This guidance is not intended to be exhaustive and it is anticipated reporting entities will refer to other guidance published by bodies such as the FATF, the International Monetary Fund, the World Bank, Global Witness and Transparency International.

2 Chapter 4, paragraph 4.13.1.3 Further information on this issue can be found in the FATF Guidance, Politically Exposed Persons (Recommendations 12 and 22), June 2013, pages 15 and 16.


3. Assessment of PEP money laundering and terrorism financing risk by reporting entities

3.1. The PEP definition is not intended to exhaustively list the type of PEPs which should be subject to identification, verification and risk management by reporting entities. Persons not listed in the definition may be considered as a PEP by reporting entities if those persons fall within the concept of a person entrusted with a prominent public position or function in a government body or international organisation.

3.2. Effective due diligence and risk assessment procedures put in place by reporting entities not only identify persons who are PEPs, but will also assist reporting entities to detect any suspicious transactions or behaviour related to money laundering and related predicate offences.

3.3. Further guidance on transactions and behaviour is available in the FATF Guidance, Politically Exposed Persons (Recommendations 12 and 22),4 and in the AUSTRAC Strategic analysis brief, PEPs, corruption and foreign bribery.5

3.4. AUSTRAC’s approach is to provide guidance on principles that may be applied by reporting entities to identify individuals who are PEPs rather than to develop an exhaustive list of PEPs.

‘Source of wealth and source of funds’

3.5. Although this term is not specifically used in the PEP definition, guidance is provided in regard to its use as it is directly relevant to the assessment of ML/TF risk for PEPs.

3.6. FATF states that ‘source of wealth’ refers to the origin of the PEP’s entire body of wealth (the total assets), which in turn will give reporting entities an indication of both the volume of wealth the customer would be expected to have and how the PEP acquired that wealth.

3.7. ‘Source of funds’ refers to the origin of the particular funds or assets which are the subject of the business relationship between the PEP and the reporting entity, such as the amounts being invested, deposited or transferred.

3.8. The purpose of ascertaining such information is to ensure that the reason for the business relationship is commensurate with what a reporting entity could reasonably expect of the PEP in the particular circumstances relating to that customer.

3.9. What constitutes a ‘reasonable expectation’ may relate to the PEP’s current income and sources of wealth and funds that could be explained from previous positions, business undertakings or family estates. When the source of wealth and funds do not appear reasonable when the circumstances of the PEP are considered, then this would be relevant to the ML/TF risk assessment by the reporting entity of that customer and may be an indicator of corruption.6

3.10. A public source of information that may inform a reporting entity’s assessment of wealth and funds can be obtained through legal requirements to publicly disclose

4 Pages 27 - 32.5 Page 12.6 See, by way of reference for risk assessment: FATF Report: Specific Risk Factors in Laundering the Proceeds of Corruption: Assistance to Reporting Institutions, June 2012.


assets, such as a Register of Member’s Interests (or equivalent) which apply to politicians at the Commonwealth, State and Territory levels in Australia.

3.11. The Commonwealth ‘Statement of Registrable Interests’, for example, requires the disclosure of information relating to shareholdings in public and private companies, family and business trusts, real estate, directorships, partnerships, liabilities, savings or investment accounts, bonds, debentures, substantial sources of income and any assets valued at over $7,500.

3.12. These categories can in turn be further investigated by the reporting entity, if considered appropriate in its ML/TF risk assessment of the customer, through the use of other publicly available resources, such as registers relating to companies which could provide information about a PEP’s wealth and funds. A reporting entity might also request information from the customer such as evidence of insurance payouts, bequests, gambling wins or asset sales.

3.13. The extent of investigation expected of a reporting entity in relation to the source of wealth and source of funds for the PEP is determined by the use of ‘reasonable measures’,7 which is defined in Chapter 1 of the AML/CTF Rules as ‘appropriate measures which are commensurate with the money laundering or terrorist financing risks’. The investigation by a reporting entity must be ‘reasonable’ in the context of the circumstances under consideration, and this may vary from case to case. Accordingly a definitive explanation of what is ‘reasonable’ cannot be given.

3.14. If a reporting entity is unable to determine the source of wealth and the source of funds after undertaking a demonstrated investigation, then the reporting entity may consider whether it is appropriate to continue the business relationship, or if the relationship does continue, whether to submit a suspicious matter report for that particular PEP.

3.15. The Parliament of Australia 'Parliamentary Remuneration' web page provides information about asset disclosure requirements at the Commonwealth, state and territory levels.

3.16. Information about international public figures and financial disclosure has been collated in the World Bank's Financial Disclosure Law Library.

‘Senior management approval’

3.17. Although this term is not specifically used in the PEP definition, guidance is provided in regard to its use as it is directly relevant to the development of ML/TF risk management systems for PEPs.

3.18. Part 4.13 of the AML/CTF Rules requires ‘senior management approval’ where the risk is high for domestic and international PEPs and for all foreign PEPs, in regard to whether a business relationship should commence or continue or whether a designated service should be provided or continue to be provided.

3.19. The appropriate time frame for senior management consideration is a matter for the reporting entity.

7 AML/CTF Rules, Chapter 4, paragraph 4.13.3(3).


http://publicofficialsfinancialdisclosure.worldbank.org/

http://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/Browse_by_Topic/Key_Internet_Links/pol/CodeConduct

3.20. It would be assumed that in the assessment of such relationships, with their potential for high ML/TF risk, senior management consideration would be provided in a timely manner, as an inordinate delay may have impacts both on the potential customer and the business of the reporting entity.

3.21. For example, the senior management assessment may be crucial for the provision of a designated service relating to a significant loan amount, as without that assessment the reporting entity may be exposed to potential financial risk with that high ML/TF risk customer.

3.22. Likewise, in circumstances where this designated service has been provided to a PEP or a business relationship has been established, it would also be prudent for senior management approval to be obtained ‘as soon as practicable’ after the commencement of that relationship for the same reason.

3.23. The guidance noted above at paragraph 3.3 may aid reporting entities in assessing the circumstances in which a business relationship should be established or maintained.

4. Key Terms used in the PEP definition

‘Prominent public position or function’

4.1. This term relates to functions which may exist at the Commonwealth, State and Territory or municipal levels or foreign equivalent. The meaning of ‘prominent’ may be determined through the size of the function in relation to the number of affected persons, the budget and relevant powers and responsibilities.

4.2. The FATF guidance provides examples8 of positions which are covered, such as Heads of State or of government, senior politicians, senior government, judicial or military officials, senior executives of state-owned corporations, important party officials, or, in relation to international organisations, directors, deputy directors and members of the board or equivalent.

4.3. Such positions commonly hold specific powers in relation to approving government procurement processes, budgetary spending, development approvals and government subsidies and grants.

4.4. It is noted that although FATF considers that a prominent public function may extend to the municipal or local government level, it is generally considered that this will only apply to persons who have the substantive powers noted in paragraph 4.3 above, relevant to this level of government.

4.5. The definition of ‘domestic politically exposed person’ in the AML/CTF Rules limits such persons to those who hold a position in an ‘Australian government body’, which is defined in the AML/CTF Act as extending to the Commonwealth, State or Territory levels. This definition does not capture the local government or municipal level.

8 In the definition of ‘politically exposed persons’ in The FATF Recommendations, February 2012. Further detail is also provided in the FATF Guidance, Politically Exposed Persons (Recommendations 12 and 22), June 2013.


4.6. This is not the case with the definition in the AML/CTF Rules of ‘foreign politically exposed persons’ who hold positions in a ‘government body’, which is defined more broadly in the AML/CTF Act to include the ‘government of part of a country’.

4.7. Accordingly, domestic customers of reporting entities at the local government or municipal level and who would otherwise be considered PEPs if they were foreign customers, are not required to be treated as PEPs under Part 4.13 of the AML/CTF Rules. However, the normal obligations relating to customer identification in Chapter 4 and ongoing customer due diligence in Chapter 15 will apply to such persons.

4.8. The Heads of Government List provides details on the names and titles of heads of state, heads of government, foreign ministers, trade ministers and in some cases, ministers responsible for development assistance.

‘Government body’

4.9. In summary, the AML/CTF Act defines ‘government body’ as an agency or authority of the government or the government of a country, or an agency or authority of the government or the government of part of a country.

4.10. The AML/CTF Act also defines ‘Australian government body’ as the Commonwealth, a State or Territory or an agency or authority of the Commonwealth, State or Territory. Such bodies are created for a public purpose and come under the power of government, whether at the Commonwealth, State or Territory level. This description is also relevant for foreign government bodies, with ‘public purpose’ being the key indicator in determining the categorisation.

4.11. The Government Online Directory provides details of government bodies at the Commonwealth, State and Territory levels.

‘International organisation’

4.12. ‘International organisations’ for the purposes of the PEP definition are organisations established by formal political agreement between countries, where the agreement has the status of an international treaty, and the organisation is recognized in the law of the countries which are members.

4.13. The examples provided by FATF include: the United Nations and affiliates such as the International Maritime Organisation; regional international organisations such as the Council of Europe, institutions of the European Union, the Organisation for Security and Co-operation in Europe, the Organisation of American States, military international organisations such as the North Atlantic Treaty Organisation and economic organisations such as the World Trade Organisation.


http://www.fatf-gafi.org/pages/glossary/d-i/

http://www.directory.gov.au/

http://www.info.dfat.gov.au/headgov

‘Government Minister or equivalent senior politician’

Government Minister

4.14. In Australia, a government minister (at the Commonwealth, State or Territory level) is an elected person who holds an executive office in the government and is responsible for administering one or more departments. A Parliamentary Secretary may be considered the equivalent of a minister.

4.15. For foreign PEPs, there may be situations where the government minister or equivalent is not an elected person but may be appointed directly by the government (for example, Cabinet Secretaries in the United States) with all the relevant or equivalent powers which ministers within Australia hold.

Equivalent senior politician

4.16. The term ‘equivalent senior politician’ includes ‘shadow’ ministers in the opposition and will include persons such as the Leader of the Opposition and the leaders of parties in Parliament. At the local government level, Mayors and local councillors may be considered equivalent senior politicians.

4.17. In situations where the government does not have a clear majority and therefore relies upon members of other parties to pass legislation implementing its policies, politicians who would not fulfil the requirements of being ministers or have sufficient seniority, may be considered to fall within this category due to the power they have to influence the Government of the day through the casting of their votes.

4.18. The 'ElectionGuide' website provides a worldwide overview of elections, including details of senior politicians.

‘Senior government official’

4.19. The criteria noted above in regard to ‘prominent public position or function’ are also relevant to determining whether a person is a ‘senior’ government official.

4.20. These include the size of the function in relation to the number of affected persons, the budget and relevant powers and responsibilities, including the approval of government procurement processes, control over regulatory approvals including the awarding of licenses or concessions, budgetary spending and government subsidies and grants.

4.21. Reporting entities may also consider positions at lower levels if those persons are in roles which have powers and responsibilities which are equivalent or similar to those of senior government officials (for example a Chief Financial Officer and Chief Information Officer with significant procurement or other budgetary responsibility or oversight).

4.22. The roles of senior government officials in foreign countries may vary widely from those in Australia. The following may assist reporting entities in determining whether a person is a foreign senior government official.

4.23. Does the official have:


http://www.electionguide.org/

Substantial authority over or access to state assets and funds, policies and operations?

Control over regulatory approvals?

control or influence over decisions that would effectively address identified shortcomings in the AML/CTF system of the country?

Access, control or influence over government accounts?

4.24. Is the official involved in state industries such as:

The arms trade and defence industry?

Banking and finance?

Construction and large infrastructure?

Government procurement?

Mining and extraction?

The provision of public goods and utilities?

‘Judge of a court of equivalent seniority in a foreign country or international organisation’

4.25. The PEP definition specifies courts of equivalent seniority to the High Court of Australia, the Federal Court of Australia or the Supreme Courts of a State or Territory. Supreme courts are the highest court in the judicial hierarchy of each State or Territory; the Federal Court covers almost all civil matters arising under Australian federal law, including some summary and indictable criminal matters; while the High Court deals with cases which originate in the High Court and is the highest court of appeal in Australia on all legal matters.

4.26. Further information can be accessed from the Attorney-General's Department courts web page , which can also be used to find the details of judges for relevant courts such as the High Court and the Federal Court.

4.27. Accordingly, the relevant principle in respect to foreign country courts is whether the court is one of the superior courts within its relevant jurisdiction (such as a State or Territory), or whether it is the highest within the country.

4.28. The PEP definition also refers to judges of ‘international organisations’. Not all international organisations will have judicial or similar functions, however, examples include the International Court of Justice and the European Union Court of Justice.

4.29. In these examples, the term ‘judge’ may not be used, however, their role (and therefore their title) may be the equivalent of a judge as those persons are required to determine matters through the application of a legal remedy.


http://www.fedcourt.gov.au/about/judges/current-judges-appointment

http://www.hcourt.gov.au/justices/about-the-justices

http://www.ag.gov.au/legalsystem/courts/Pages/default.aspx

http://www.ag.gov.au/legalsystem/courts/Pages/default.aspx

‘Governor of a central bank or any other position that has comparable influence to the Governor of the Reserve Bank of Australia’

4.30. Central banks oversee the monetary system of a nation and have a wide range of responsibilities, from overseeing monetary policy to implementing specific goals such as currency stability, low inflation and full employment. They may also issue currency, function as the bank of the government, regulate the credit system, oversee commercial banks, manage exchange reserves and act as a lender of last resort. The Reserve Bank of Australia (RBA) is a ‘central bank’ and has legislated functions to contribute to the stability of the Australian currency, full employment and the economic prosperity and welfare of the Australian people. The Governor of the RBA manages the bank and its operations.

4.31. Identifying the central bank of a foreign country and the position equivalent to the Governor of the RBA can usually be achieved by an internet search. For example, in the United States the central bank is the Federal Reserve, with the equivalent position being the Chairman of the Board of Governors. In the United Kingdom, the Bank of England is the central bank with the equivalent position being the Governor and in Indonesia, Bank Indonesia is the central bank and it is led by the Governor.

4.32. The Bank for International Settlements website provides a comprehensive overview of world central banks.

‘Senior foreign representative, ambassador or high commissioner’

4.33. The foreign postings of the Australian Government include:

Ambassador – Head of an embassy which is the main representative office of one country in the capital city of another.

High Commissioner – Head of the High Commission, a main representative office of a Commonwealth country in the capital city of another Commonwealth country.

4.34. The following Australian Government foreign postings may be characterised as ‘senior foreign representatives’:

Consul-General – Head of the Consulate or Consulate-General, a lower level representative office, usually located in a city outside the capital city.

Deputy Head of Mission – The deputy to the ambassador.

Charge d’affaires – An official placed in charge of diplomatic business during the temporary absence of the ambassador.

Honorary Consul – Head of the Honorary Consulate. This is usually a private businessperson (usually an Australian citizen) who agrees to perform limited consular functions, in a city where Australia does not have an Australia-based representative.

4.35. The Department of Foreign Affairs and Trade's Embassies and consulates web page provides details of persons in the above roles. Equivalent terms used by foreign countries include: Head of Mission, Chief of Mission, Minister and Minister-


http://www.dfat.gov.au/embassies.html

http://www.bis.org/cbanks.htm

Counsellor, Deputy Chief of Mission, Nuncio, Chargé d'affaires, Permanent Representative and minister plenipotentiary.

4.36. Other titles regarding diplomatic postings may be considered by reporting entities as being PEPs if the person has a prominent public position or function.

‘High ranking member of the armed forces’

4.37. In Australia the ‘armed forces’ refer to the Australian Army, the Royal Australian Navy and the Royal Australian Air Force. However, foreign armed forces may vary in regard to the services which exist.

4.38. In Australia, the following may be considered to be ‘high ranking’ and are listed in descending order of seniority:

Australian Army Royal Australian Navy Royal Australian Air Force

General Admiral Air Chief Marshall

Lieutenant General Vice Admiral Air Marshall

Major General Rear Admiral Air Vice Marshall

4.39. The seniority of a rank is generally based upon two elements: what the rank may command in the field (or equivalent) in times of conflict, and the executive role which they may undertake. For example, a Major General may command a division (approximately 10,000 to 15,000 soldiers) and hold an executive appointment such as Special Operations Commander – Australia.

4.40. The Australian Government Department of Defence's website provides details on senior appointments in the Australian Defence Force.

‘State enterprise’

4.41. In Australia, a ‘state enterprise’ is usually known as a government business enterprise (GBE) and may exist at the Commonwealth, State or Territory level. It is characterised by the relevant Government controlling the body; the body being principally engaged in commercial activities; and the body having a legal personality separate to a department of government. It may be a body corporate established by legislation for a public purpose (state-owned or statutory corporations), or a company established under corporations law in which a state or territory government has a controlling interest.

4.42. Examples of current Commonwealth GBEs are ASC (formerly known as Australian Submarine Corporation), Australian Postal Corporation, Australian Rail Track, Defence Housing Australia and NBN Co Limited. Details about Commonwealth GBEs may be accessed at the Department of Finance's website.

4.43. The Australian Government Organisations Register is produced by the Department of Finance.


http://www.finance.gov.au/resource-management/governance/agor/

http://www.finance.gov.au/property/gbe/

http://www.defence.gov.au/Leaders/

4.44. In foreign countries, GBEs may be known as a crown corporation, government-owned corporation, state-owned company, state-owned entity, state enterprise, commercial government agency or public sector undertaking.

4.45. As noted in the PEP definition, a PEP in such organisations is the board chair, chief executive, chief financial officer or any other position which has comparable influence in the organisation.

‘Immediate family member and close associate’

4.46. The FATF Recommendations require that family members and close associates of PEPs should be treated as PEPs because of the potential for abuse of the relationship for the purpose of moving the proceeds of crime, or facilitating their placement and disguise, as well as for terrorism financing purposes. For the assessment of risk by the reporting entity, it is the identified links between the PEP and the close associate and/or family member which will determine the level of risk.

4.47. The close associate category does not purport to capture any person who has been associated with a PEP, such as friends or colleagues. A close associate is an individual who is known (having regard to information that is public or readily available) to have joint beneficial ownership of a legal entity (e.g. a company) or legal arrangement (e.g. a trust) with the PEP, or sole beneficial ownership of a legal entity or legal arrangement that is known to exist for the benefit of the PEP. This describes close business cooperation which may be involved in or facilitate any dealings with funds, and where the source of those funds may be a legitimate question.

4.48. The PEP definition specifies that an immediate family member includes a spouse, a de facto partner, a child and a child’s spouse or de facto partner, and a parent.

4.49. The definition of an immediate family member is inclusive and therefore is not limited to the relationships specified. However, the list indicates what is captured by the term ‘immediate family member’ and will be informed by what information is public or readily available about the PEP. For example, it may be known that a particular PEP has a history of dealings with a sibling, and a reporting entity may therefore consider that a sibling relationship is sufficiently ‘immediate’ to fall within the term, even though not specifically included in the definition.

4.50. The PEP definition also notes that the term ‘de facto partner’ is defined in the Acts Interpretation Act 1901 (section 2D (References to de facto partners), section 2E (Registered relationships) and section 2F (De facto relationships)) and this should therefore be used for the purposes of the AML/CTF Rules. In summary, that definition specifies that a person is a de facto partner of another person (whether of the same or different sex) if:

(a) the person is in a registered relationship with the other person; or

(b) is in a de facto relationship with the other person.

4.51. A ‘registered relationship’ means that the relationship is registered under a law of a State or Territory as a prescribed kind of relationship. A ‘de facto relationship’ means that the persons:

(a) are not legally married to each other; and


http://www.fatf-gafi.org/topics/fatfrecommendations/documents/fatf-recommendations.html

(b) are not related by family; and

(c) have a relationship as a couple living together on a genuine domestic basis.

5. PEPs and other legislative requirements

5.1. In some cases, reporting entities may consider that the AML/CTF Rules requirements relating to PEPs are inconsistent with obligations imposed upon them by other legislation, in particular the provision of a designated service.

5.2. For example, Part 4.13 of the AML/CTF Rules requires ‘senior management approval’ where the risk is high for domestic and international PEPs and for all foreign PEPs, in regard to whether a business relationship should commence or continue or whether a designated service should be provided or continue to be provided.

5.3. In this instance, the AML/CTF Rules impose an obligation (the involvement of senior management), but the decision to discontinue or not provide a designated service to the PEP is made by the reporting entity.

5.4. In situations where a reporting entity is required to perform an action under legislation (such as the acceptance or cashing out of superannuation contributions to a high risk domestic or international PEP or a foreign PEP), the reporting entity (after having obtained senior management approval and having complied with its AML/CTF Program obligations), may consider providing a suspicious matter report to AUSTRAC about that customer.

5.5. As the AML/CTF Rules do not prevent a reporting entity from providing a designated service, AUSTRAC considers that there is no conflict between the Rules and a Commonwealth law which requires the provision of a designated service.

6. When does a PEP stop being a Politically Exposed Person?

6.1. Once a person no longer holds the prominent public position, they are no longer considered a PEP. However, a reporting entity should continue to apply a risk-based approach to determine whether an existing customer who is no longer a PEP should continue to be treated as a high risk customer.

6.2. Higher risk PEPs are also more likely to continue to pose a ML/TF risk after they cease holding a public position. As such, reporting entities may choose to undertake enhanced customer due diligence for a longer period for a former PEP under the enhanced customer due diligence provisions in Chapter 15 of the AML/CTF Rules.

7. Privacy requirements – ‘sensitive information’

7.1. The definition of ‘sensitive information’ contained in the Privacy Act 1988 includes information or an opinion about an individual's political opinions or membership of a political association (see section 6(1) of that Act).


7.2. Sensitive information is generally afforded a higher level of privacy protection under the Australian Privacy Principles than other personal information. This recognises that inappropriate handling of sensitive information can have adverse consequences for an individual or those associated with the individual.

8. Further information

8.1. AUSTRAC officers are able to assist reporting entities, their staff and the public in providing general information relating to the AML/CTF Act. Enquiries can be directed to the AUSTRAC Contact Centre via:

email to [email protected].

telephone 1300 021 037 (a local call within Australia).

8.2. The information contained in this document is intended to provide a summary and general overview on these matters. It is not intended to be comprehensive. It does not constitute, nor should it be treated as, legal advice or opinions. This document may contain statements of policy which reflect AUSTRAC’s administration of the legislation in carrying out its statutory functions. The Commonwealth accepts no liability for any loss suffered as a result of reliance on this publication. AUSTRAC recommends that independent professional advice be sought.

8.3. The information contained herein is current as at the date of this document.

Reporting entities should note that in relation to activities they undertake to comply with the AML/CTF Act, they will have obligations under the Privacy Act 1988, including the requirement to comply with the Australian Privacy Principles, even if they would otherwise be exempt from the Privacy Act. For further information about these obligations, please go to the Office of the Australian Information Commissioner’s website or call 1300 363 992.

August 2015© Commonwealth of Australia

Australian Transaction Reports and Analysis Centre (AUSTRAC)PO Box 5516West Chatswood NSW 1515

Telephone: 1300 021 037Facsimile: 02 9950 0071Website: www.austrac.gov.auEmail: [email protected]


mailto:[email protected]

http://www.oaic.gov.au/

http://www.oaic.gov.au/

mailto:[email protected]

Attachment A

The PEP definition contained in Chapter 1 of the AML/CTF Rules is reproduced below:

politically exposed person means an individual:

(1) who holds a prominent public position or function in a government body or an international organisation, including:

(a) Head of State or head of a country or government; or

(b) government minister or equivalent senior politician; or

(c) senior government official; or

(d) Judge of the High Court of Australia, the Federal Court of Australia or a Supreme Court of a State or Territory, or a Judge of a court of equivalent seniority in a foreign country or international organisation; or

(e) governor of a central bank or any other position that has comparable influence to the Governor of the Reserve Bank of Australia; or

(f) senior foreign representative, ambassador, or high commissioner; or

(g) high-ranking member of the armed forces; or board chair, chief executive, or chief financial officer of, or any other position that has comparable influence in, any State enterprise or international organisation; and

(2) who is an immediate family member of a person referred to in paragraph (1), including:

(a) a spouse; or

(b) a de facto partner; or

(c) a child and a child's spouse or de facto partner; or

(d) a parent; and

(3) who is a close associate of a person referred to in paragraph (1), which means any individual who is known (having regard to information that is public or readily available) to have:

(a) joint beneficial ownership of a legal entity or legal arrangement with a person referred to in paragraph (1); or

(b) sole beneficial ownership of a legal entity or legal arrangement that is known to exist for the benefit of a person described in paragraph (1).

(4) In these Rules:

(a) domestic politically exposed person means a politically exposed person of an Australian government body;

(b) foreign politically exposed person means a politically exposed person of a government body of a foreign country;


(c) international organisation politically exposed person means a politically exposed person of an international organisation.

(5) In this definition international organisation means an organisation:

(a) established by formal political agreement by two or more countries and that agreement has the status of an international treaty; and

(b) recognised in the law of the countries which are members of the organisation.

Note: The term de facto partner is defined in the Acts Interpretation Act 1901 and the terms ‘foreign country’ and ‘government body’ are defined in the AML/CTF Act.


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