In Cyprus law a politically exposed person is three people: the holder of a prominent public function, an immediate close relative, and a person known to be a close associate. That is section 2 of L.188(I)/2007 talking, not a supervisor's directive.
Which is why the perimeter does not move when the supervisor does. A lawyer supervised by the Bar Association and an investment firm supervised by CySEC take the definition from the same section of the same Law. ICPAC's AML Directive, issued under section 59(4) of that Law, reproduces it in English at paragraph 1.1.1. Useful. Not the source.
The Law defines the office by list. A prominent public function means any of the following: head of State, head of government, minister, alternate minister and under-minister; member of parliament or of a similar legislative body; member of a governing body of a political party; member of a supreme court, a constitutional court or another high-level judicial body whose decisions are not subject to further appeal save in exceptional circumstances; member of a court of auditors and of the board of a central bank; ambassador, chargé d'affaires and high-ranking officer of the armed forces and of the security forces; member of an administrative, management or supervisory body of a State enterprise; director, deputy director and board member or holder of an equivalent position in an international organisation; and mayor. The proviso that follows closes the other end: those functions do not include a person holding an intermediate or low position in the staff hierarchy. The function may be held in the Republic or in another country, and section 64 attaches the same measures either way.
Close relative includes the spouse or a person treated as equivalent to a spouse; a child of the PEP and that child's spouse or spouse-equivalent; and the parents. Close associate has two limbs. A natural person known to be a joint beneficial owner of a legal entity or legal arrangement, or connected by any other close business relationship, with a PEP. Or a natural person who is the sole beneficial owner of a legal entity or legal arrangement known to have been set up for the de facto benefit of a PEP. The second limb is answered by the structure in front of you, not by a name.
Section 64(1)(c) is written in the present indicative, the mandatory voice. In transactions or business relationships with a PEP the obliged entity has in place appropriate risk-management systems, including risk-based procedures, to determine whether the customer or the customer's beneficial owner is a PEP. In a business relationship with such a person it obtains senior-management approval to enter into or maintain the relationship; takes adequate measures to ascertain the source of the assets and the origin of the funds concerned in that relationship or transaction; and carries out enhanced and continuous monitoring. Sub-paragraph (iii) applies both of those to close relatives and to persons known to be close associates.
Leaving office does not end it. The twelve months is a floor with a test attached, not an expiry. Where the person has ceased to exercise a prominent public function in the Republic, in a member state or in a third country, or to hold a prominent public position in an international organisation, the obliged entity takes into account the risk that person continues to pose and takes appropriate measures, proportionate to the degree of risk, for a period of at least twelve months, until it is considered that the person no longer carries the risk that specifically characterises politically exposed persons.
Keep the mechanisms apart. 64(1)(c) is its own trigger. 64(3) is the separate duty to apply enhanced diligence in other situations that by their nature present high risk, assessed against the indicative factors in Annex III, a list that does not name PEPs at all.
Then the file. ICPAC requires background screening against sanctions lists and PEP lists as part of initial CDD and at change-driven and routine updates, the results appropriately documented, with partial matches and false positives kept with an explanation of why they do not pose a concern. Section 68 keeps the client due diligence documents five years after the relationship ends. The decision you did not write down is the decision you did not make.
Not legal advice. Verify against the primary source before acting.
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