Source: OJ L, 2024/1624, 19.6.2024Current language: EN
- Anti-money laundering
Basic legislative acts
- Anti-money laundering regulation (AMLR)
Article 42 Specific provisions regarding politically exposed persons
Summary What does Article 42 of the Anti-money laundering regulation (AMLR) say?
This article sets out the enhanced due diligence obligations that obliged entities must apply on top of the standard customer due diligence measures from Article 20, specifically when dealing with politically exposed persons (PEPs).
It covers three core additional requirements: getting senior management sign-off, establishing the source of wealth and funds, and conducting enhanced ongoing monitoring.
The article also tasks AMLA with issuing guidelines by 10 July 2027 to help clarify how to identify close associates and assess risk levels across different categories of PEPs, family members, and former PEPs.
Important points:
- Obtain senior management approval before carrying out any transaction or establishing or continuing a business relationship with a politically exposed person.
- Establish the source of wealth and source of funds involved in any business relationship or occasional transaction with a politically exposed person, and apply enhanced ongoing monitoring to those relationships.
- AMLA is required to issue guidelines by 10 July 2027 on identifying close associates and assessing risk levels for different categories of politically exposed persons, including those who have ceased to hold a prominent public function.
Springlex's summary of the article, a reading aid, not a substitute for the legal text.
In addition to the customer due diligence measures laid down in Article 20, obliged entities shall apply the following measures with respect to occasional transactions or business relationships with politically exposed persons:
obtain senior management approval for carrying out occasional transactions or for establishing or continuing business relationships with politically exposed persons;
take adequate measures to establish the source of wealth and source of funds that are involved in business relationships or occasional transactions with politically exposed persons;
conduct enhanced, ongoing monitoring of those business relationships.
By 10 July 2027, AMLA shall issue guidelines on the following matters:
the criteria for the identification of persons known to be close associates;
the level of risk associated with a particular category of politically exposed person, family member or person known to be a close associate, including guidance on how such risks are to be assessed where the person is no longer entrusted with a prominent public function for the purposes of Article 45.
Springlex and this text is meant purely as a documentation tool and has no legal effect. No liability is assumed for its content. The authentic version of this act is the one published in the Official Journal of the European Union.
Definition
senior management
Definition
politically exposed person
- in a Member State:
- heads of State, heads of government, ministers and deputy or assistant ministers;
- members of parliament or of similar legislative bodies;
- members of the governing bodies of political parties that hold seats in national executive or legislative bodies, or in regional or local executive or legislative bodies representing constituencies of at least 50 000 inhabitants;
- members of supreme courts, of constitutional courts or of other high-level judicial bodies, the decisions of which are not subject to further appeal, except in exceptional circumstances;
- members of courts of auditors or of the boards of central banks;
- ambassadors, chargés d’affaires and high-ranking officers in the armed forces;
- members of the administrative, management or supervisory bodies of enterprises controlled under any of the relationships listed in Article 22 of Directive 2013/34/EU either by the state, or, where those enterprises qualify as medium sized or large undertakings or medium sized or large groups, as defined in Article 3(3), (4), (6) and (7) of that Directive, by regional or local authorities;
- heads of regional and local authorities, including groupings of municipalities and metropolitan regions, with at least 50 000 inhabitants;
- other prominent public functions provided for by Member States;
- in an international organisation:
- the highest ranking officials, their deputies and members of the board or equivalent functions of an international organisation;
- representatives to a Member State or to the Union;
- at Union level:
functions at the level of Union institutions and bodies that are equivalent to those listed in points (a) (i), (ii), (iv), (v) and (vi);
- in a third country:
functions that are equivalent to those listed in point (a);
Definition
parent undertaking
- for groups whose head office is located in the Union, an obliged entity that is a parent undertaking as defined in Article 2, point (9), of Directive 2013/34/EU that is not itself a subsidiary of another undertaking in the Union, provided that at least one subsidiary undertaking is an obliged entity;
- for groups whose head office is located outside of the Union, where at least two subsidiary undertakings are obliged entities established in the Union, an undertaking within that group established in the Union that:
- is an obliged entity;
- is an undertaking that is not a subsidiary of another undertaking that is an obliged entity established in the Union;
- has a sufficient prominence within the group and a sufficient understanding of the operations of the group that are subject to the requirements of this Regulation; and
- is given the responsibility of implementing group-wide requirements under Chapter II, Section 2 of this Regulation;
Definition
family member
- a spouse, or a person in a registered partnership or civil union or in a similar arrangement;
- a child and a spouse of, or a person in a registered partnership or civil union or in a similar arrangement with, that child;
- a parent;
- for the functions referred to in point (34)(a)(i) and equivalent functions at Union level or in a third country, a sibling;
Definition
property
Definition
express trust
Definition
legal arrangement
Definition
management body
Definition
terrorist financing
Definition
group
Definition
money laundering
Definition
third country
Definition
person known to be a close associate
- a natural person who is known to have joint beneficial ownership of legal entities or legal arrangements, or any other close business relations, with a politically exposed person;
- a natural person who has sole beneficial ownership of a legal entity or legal arrangement which is known to have been set up for the de facto benefit of a politically exposed person;
Definition
funds
Definition
business relationship
Definition
management body in its management function