Alan Shatter (Dublin South, Fine Gael) | Oireachtas source

Section 9 substitutes section 37(4) of the Act of 2010, which is part of Chapter 3 of Part 4 of the Act, and deals with customer due diligence, CDD. Section 37 sets out the enhanced CDD measures to be taken by a designated person in relation to customers who are politically exposed persons, PEPs. For the purposes of the Act, a politically exposed person is a person residing outside the State who has been entrusted with a prominent public function at any time in the preceding 12 months. Section 37(10) lists the type of individuals to which this might apply, including a Head of State, Head of Government, Government Minister, Member of Parliament, member of the Supreme Court or of a high level judicial body and others.

It does not apply to a middle ranking or more junior official. Section 37 also provides that such enhanced CDD obligations must be applied to an immediate family member or a close associate, with both defined in section 37(10). The enhanced CDD measures which a designated person must apply to a PEP are obtaining approval from senior management for the business relationship and determining the source of wealth and funds for the transaction. This is crucial to ensure protection against money laundering.

Section 9 amends section 37(4) to provide that the enhanced customer due diligence measures must also be applied to an existing customer who subsequently becomes a politically exposed person. It also provides that enhanced ongoing monitoring must be applied to a business relationship with a person who is a PEP. There can obviously be a situation where an account exists for an individual who does not appear to be a prominent individual but who suddenly then stands for election and becomes a Minister. It also provides that enhanced ongoing monitoring must be applied to a business relationship with a person who is a PEP. These are requirements sought by FATF under FATF recommendation no. 6.

An amendment was made on Committee Stage in the Dáil to section 37(6), which previously provided that where the beneficial owner who is a PEP is connected with a customer or service, the enhanced CDD measures in subsection (4) must be applied. The amendment applies the same approach to this subsection as is now contained in subsection (4), that is, so the enhanced CDD measures must apply where such beneficial owner subsequently becomes a PEP.