The enhanced due diligence provided for in Article 41 of the Anti-Money Laundering Law applies to three categories of persons: (i) PEPs, (ii) family members of PEPs, and (iii) persons known to be close associates of PEPs.  The Anti-Money Laundering Law specifies criteria determining under what conditions a person should be considered a PEP because of the prominent public functions he/she holds or has held him-/herself, because he/she is a close relative of a person who holds or has held such functions, or because of the fact that he/she is known to be a close associate of a person who holds or has held such functions.

1.1. PEPs

PEPs are persons who are exposed to particular risks because of the (political, judicial or administrative) prominent public functions they hold or have held. While the Law of 11 January 1993 limited the notion of PEPs to foreign residents, the Anti-Money Laundering Law also includes PEPs residing in Belgium. Thus, the distinction according to whether the PEP resides in Belgium, in an EEA Member State or in a third country is no longer made. It should also be noted that the notion of PEP refers to prominent public functions and not to middle-ranking or more junior functions.

More specifically, the term PEP is defined in Article 4, 28°, of the Anti-Money Laundering Law as a natural person who is or who has been entrusted with prominent public functions (not middle-ranking or more junior officials) and, in particular (non-exhaustive list):

1. heads of State, heads of government, ministers and deputy or assistant ministers;
2. members of parliament or of similar legislative bodies;
3. members of the governing bodies of political parties;
4. members of supreme courts, of constitutional courts or of other high-level judicial bodies, including administrative judicial bodies, the decisions of which are not subject to further appeal, except in exceptional circumstances;
5. members of courts of auditors or of the boards of central banks;
6. ambassadors, consuls, chargés d’affaires and high-ranking officers in the armed forces;
7. members of the administrative, management or supervisory bodies of State-owned enterprises;
8. directors, deputy directors and members of the board or persons in an equivalent function of an international organisation. International organisations are defined in Article 4, 32°, of the Law as associations of means or interests established by means of an international agreement between States, with joint bodies if necessary, with legal personality and subject to a legal system which is different from the one of its members.

In order to facilitate the practical application of this definition and to enhance legal certainty with regard to the identification of politically exposed persons in the European Union, Directive 2015/849 also requires each EEA Member State (i) to issue and keep up to date a list indicating the exact functions which it considers to be prominent public functions in accordance with its national laws, regulations and administrative provisions, and (ii) to request each international organisation accredited on its territory to issue and keep up to date a list of prominent public functions at that international organisation. Those lists may be made public and must be sent to the European Commission, which will issue, based on the lists received from all the Member States and its own list, a single list of the functions concerned and make it public. That publication occurred on 10 November 2023.

The list of the exact functions thus qualified by Belgium as prominent public functions is set out in Annex IV of the Anti-Money Laundering Law.

Pursuant to Article 41, § 4, of the Law, in conjunction with the definition in Article 4, 28°, the following persons in particular must therefore be considered as PEPs: natural persons who hold or have held one of the public functions:

• listed in Annex IV of the Anti-Money Laundering Law, and
• mentioned in the single list published by the European Commission (functions which qualify as prominent public functions in other Member States and international organisations).

The decision as to whether a customer, an agent of the customer or a beneficial owner of the customer is a politically exposed person in a third country should be based solely on the definition in Article 4, 28°, of the Law.

1.2. Persons holding comparable prominent public functions

In contrast to the Law of 11 January 1993, the list of public functions included in the new Anti-Money Laundering Law, although some of them are accurately listed in its Annex IV, is open-ended. For example, financial institutions could be led to conclude that persons holding prominent public functions comparable to those listed in Article 4, 28°, of the Money-Laundering Law or in Annex IV thereto should be considered PEPs.  To that end, financial institutions should assess the risk level associated with these persons as a result of the functions that are effectively held by them and which present a degree of risk exposure comparable to that of the functions listed in Article 4, 28°, of the Law.  For instance, although public functions performed at the regional or local level are not included in the legal listing of "important public functions”, it cannot be excluded that they generate comparable risks, particularly in view of the size of the regional or local entity within which these public functions are performed, of the prevalence of the corruption that is generally known to affect the jurisdiction concerned, of the inadequacy of the anti-corruption measures implemented in this jurisdiction, etc. 

Financial institutions should therefore, on the one hand, specify in their AML/CFTP policy (customer acceptance section) how they interpret “comparable prominent public functions”, taking particular account of the nature and scale of the risks, notably the risk of money laundering of proceeds of corruption, that could be linked to the business relationships with the persons holding such functions. It should be noted, for example, that prominent public functions performed at the local or regional level are not included in the legal definition of PEPs, which means the function of mayor is not considered a prominent public function. However, depending on the size of the city concerned and of the budgets managed, the function of mayor of this city could present risks of the same nature and the same scale as the function of head of government. It could therefore be advisable to qualify such a prominent public function performed at the local level as a “comparable prominent public function”.

On the other hand, in the context of the individual risk assessment according to Article 19 of the Anti-Money Laundering Law (see the page “Individual risk assessment”), financial institutions should also assess the risks linked to the performance of these comparable functions on a case-by-case basis, to determine whether their risk level requires the enhanced due diligence measures listed in Article 41 of the Law to be implemented.

1.3. Family members of PEPs

“Family members” are defined in Article 4, 29°, of the Anti-Money Laundering Law as:

• the spouse or a person considered to be equivalent to a spouse;
• the children and their spouses, or persons considered to be equivalent to a spouse;
• the parents.

1.4. Persons known to be close associates of PEPs

“Persons known to be close associates” are defined in Article 4, 30°, of the Anti-Money Laundering Law as:

• natural persons who have joint beneficial ownership of a legal entity or legal arrangement with a PEP or who are known to have any other close business relations with such a person;
• natural persons who have 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 PEP.

1.5. Cessation of a public function

Article 41, § 3, of the Anti-Money Laundering Law specifies that where a PEP is no longer entrusted with a prominent public function by an EEA Member State, a third country or an international organisation, financial institutions shall, for at least twelve months, take into account the continuing risk posed by that person and apply appropriate and risk-sensitive measures until such time as that person poses no further risk specific to PEPs.  Whether this person poses no further risk should be determined through a new individual risk assessment performed by the financial institution in accordance with Article 19 of the Law.  Thus, after the aforementioned twelve months have passed, there are several possible situations. For example, financial institutions may decide to stop applying enhanced PEP due diligence measures following this new assessment.  Conversely, they may decide to continue to apply these enhanced due diligence measures in certain cases, even though the person has not held a public function for more than a year, if the ML/FT risk still seems high. In these cases, they can decide to perform a new individual risk assessment at a later moment, for example after another year or after six months.

Article 41, § 1, of the Anti-Money Laundering Law stipulates that financial institutions should have “appropriate risk management systems, including adequate risk-based procedures, to determine whether the customer with whom they establish or have a business relationship or for whom they carry out an occasional transaction, an agent of the customer or a beneficial owner of the customer is or has become a politically exposed person […]”. To be able to fully implement the obligations laid down in § 2 of the same Article 41 of the Law as well, these systems should also enable life insurance companies to identify cases where a beneficiary of a life insurance policy and/or, where appropriate, a beneficial owner of the beneficiary of such a policy is a PEP.

As regards enhanced PEP due diligence, the primary obligation for financial institutions is to adopt a procedure and a system that enable them to detect transactions or business relationships in the context of which one or multiple persons meeting the criteria to be qualified as PEP are involved in one of the capacities listed above.  This system must make it possible to detect such transactions or business relationships while occasional transactions are being carried out or at the start of a business relationship, but it should also allow to detect business relationships during which one or multiple persons involved in one of the capacities listed above obtained the status of PEP.

3.1. Detection at the start of the relationship

The NBB expects financial institutions:

1. to lay down, in their AML/CFTP policy (customer acceptance section), the main principles of the methodology to be applied to determine whether a customer, his agent, the beneficiary of a life insurance policy or a beneficial owner is a PEP (see the page “Policies, procedures, processes and internal control measures”); 
2. to determine whether their customers meet the definition of PEP by comparing their data with reliable sources of information, by using their forms for requesting the execution of a transaction or the establishment of a relationship or, in the case of life insurance, by using the precontractual documents to be completed by customers, or by any other means.  In this regard, they may provide that customers should be asked contractually at the start of a business relationship to identify themselves as a PEP or ask questions to ensure that the person in question is not a PEP (direct questions to obtain a spontaneous identification as PEP and/or indirect questions when there is no such spontaneous identification).  However, these questions must proportionate to the purposes of the Anti-Money Laundering Law and the information received may only be used for the sole purpose of implementing the Law, to avoid having this information gathering constitute an excessive intrusion into customers’ private lives. In particular, any use of this data for commercial purposes is prohibited (see Article 41, § 4, third paragraph, of the Anti-Money Laundering Law); and
3. to define, in their procedure relating to customer and transaction due diligence measures (section “identification and verification of the identity of customers, agents and beneficial owners), the special rules to be followed, depending on the level of ML/FT risks associated with the products or services for which they were called on by the customer, with the distribution channel used and with the geographical areas concerned, to check the information provided by the customer against certain reliable sources of information and ensure that the customer does not belong to the category of PEPs. In this respect, financial institutions are expected to take all information available to them into account in their analysis and to state in their procedures that customers should be asked specific additional questions when the sources of information consulted seem to indicate, contrary to the information provided by the customers, that they themselves or another person involved in the transaction or business relationship has the status of PEP.

3.2. Detection during the business relationship

The NBB draws the attention of the financial institutions to the fact that the enhanced due diligence obligations listed in Article 41 of the Anti-Money Laundering Law also apply when a customer, his agent, the beneficiary of a life insurance policy or a beneficial owner obtains the status of PEP during the business relationship. Moreover, these obligations also apply to existing business relationships (which were established before the entry into force of the Anti-Money Laundering Law), in this respect also considering the expansion of the notion of PEPs, particularly to include persons residing in Belgium. 

For example, in the framework of updating the information they hold about their customers, their agents, the beneficiaries of life insurance policies and the beneficial owners (see the page “Due diligence on business relationships and occasional transactions and detection of atypical facts and transactions”), financial institutions are expected to implement risk-proportionate measures that enable them to identify which of their customers have become PEPs, either because they hold new public functions or because the legal definition of PEPs has been modified, and which of them have become family members of PEPs or persons known to be close associates of them.  

When a PEP is identified as such during the business relationship, the financial institution’s internal procedures should stipulate that the decision to maintain the business relationship should be made by the management committee or by the person authorised to do so (see below).  It this decision is positive, the other enhanced due diligence measures described hereinafter apply (see Article 35, § 1, third paragraph, of the Anti-Money Laundering Law).