RBI defines ‘politically exposed persons’ to comply with FATF norms

The Reserve Bank of India has updated Know Your Customer (KYC) norms for politically exposed persons (PEPs) who transact with regulated entities (REs), seeking to comply with the recommendations of intergovernmental organisation Financial Action Task Force (FATF),

PEPs are individuals entrusted with prominent public functions by a foreign country, including the heads of states/governments, senior politicians, senior government or judicial or military officers, senior executives of state-owned corporations and important political party officials, said the RBI.

This change is expected to provide more clarity to undertake Customer Due Diligence (CDD), said the RBI in a communication to REs.

REs have the option of establishing a relationship with PEPs (whether as customer or beneficial owner). REs have to perform the regular customer due diligence and also follow additional conditions prescribed by the RBI to transact with PEPs.