Draft guidance
Key terms used in ‘politically exposed person’
definition
Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act)
Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No. 1)
(AML/CTF Rules)
1.
Introduction
The purpose of this draft guidance is to assist reporting entities in understanding key
terms which are used in the ‘politically exposed person’ (PEP) definition (the PEP
definition) contained in Chapter 1 of the AML/CTF Rules (relating to key terms and
definitions).
Once public consultation is complete, the final guidance will be incorporated into the
AUSTRAC compliance guide.
2.
What is a politically exposed person?
A PEP is defined by the Financial Action Task Force (FATF) as an individual who is or
has been entrusted with a prominent public function. FATF is an international intergovernmental body (of which Australia is a founding member), which sets standards
and promotes effective implementation of legal, regulatory and operational measures
for combating money laundering, terrorist financing and other related threats to the
integrity of the international financial system. AUSTRAC supports the use of the FATF
guidance on PEPs by reporting entities.1
Due to their position and influence, it is recognised that many PEPs are in positions
that potentially can be abused for the purpose of committing money laundering
offences and related predicate offences, including corruption and bribery, as well as
conducting activity related to terrorism financing. The potential risks associated with
PEPs justify the application of additional anti-money laundering and counter-terrorism
financing measures, designed to prevent and detect this conduct.
1
FATF Guidance, Politically Exposed Persons (Recommendations 12 and 22), June 2013.
Draft guidance: Key terms used in 'politically exposed person' definition
First round public consultation: January 2015
Second round public consultation: August 2015
Page 1 of 15
However, it is noted that if a person is a PEP, this does not mean that there is an
automatic link to criminal activities or abuse of the financial system. The additional
AML/CTF measures applied in the case of PEPs are preventative, and should not be
interpreted as stigmatising PEPs as being involved in criminal activity; rather these
measures recognise the increased risk, including opportunity, associated with holding
this type of role.
PEP is defined in Chapter 1 of the AML/CTF Rules and included at Attachment A. In
brief, a politically exposed person is an individual who holds a prominent public
position or function in a government body or an international organisation, their
immediate family members and close associates.
The AML/CTF Rules require reporting entities to identify PEPs before, or ‘as
soon as practicable after the designated service has been provided’.2 The term
‘as soon as practicable’ has not been defined in the AML/CTF Rules in order to
allow reporting entities to carry out the procedures in a manner which is
appropriate to the particular circumstances of each customer.
Reporting entities may use commercial databases in order to assist in the
identification of PEPs, although AUSTRAC notes that the exclusive use of a
commercial database cannot be a substitute for a thorough and comprehensive
risk assessment by the reporting entity. Such an assessment will include
training for frontline staff in identifying whether a person is a PEP.
Over-reliance on such databases may increase the risk that reporting entities
will wrongly assume that if a name is not in the database, then the customer is
not a PEP. Commercial databases also have limitations of which reporting
entities should be aware, for example, the database:

may not be as comprehensive or reliable as is believed;

may not align with the PEP definition used in Australia if it is a ‘global’
database;

may not catch certain names or may exclude certain categories of PEPs;
and
may contain inconsistent transliterations and spellings of names which may
affect a reporting entity’s ability to match names.3
Not all terms used in the PEP definition will be the subject of guidance as it is
considered that some are self-explanatory. This guidance is not intended to be
exhaustive and it is anticipated reporting entities will refer to other guidance published
by bodies such as the FATF, the International Monetary Fund, the World Bank, Global
Witness and Transparency International.
2
Chapter 4, paragraph 4.13.1.
Further information on this issue can be found in the FATF Guidance, Politically Exposed Persons (Recommendations 12 and
22), June 2013, pages 15 and 16.
3
Draft guidance: Key terms used in 'politically exposed person' definition
First round public consultation: January 2015
Second round public consultation: August 2015
Page 2 of 15
3.
Assessment of PEP money laundering and terrorism
financing risk by reporting entities
The PEP definition is not intended to exhaustively list the type of PEPs which should
be subject to identification, verification and risk management by reporting entities.
Persons not listed in the definition may be considered as a PEP by reporting entities if
those persons fall within the concept of a person entrusted with a prominent public
position or function in a government body or international organisation.
Effective due diligence and risk assessment procedures put in place by reporting
entities not only identify persons who are PEPs, but will also assist reporting entities to
detect any suspicious transactions or behaviour related to money laundering and
related predicate offences.
Further guidance on transactions and behaviour is available in the FATF
Guidance, Politically Exposed Persons (Recommendations 12 and 22),4 and in
the AUSTRAC Strategic analysis brief, PEPs, corruption and foreign bribery.5
AUSTRAC’s approach is to provide guidance on principles that may be applied by
reporting entities to identify individuals who are PEPs rather than to develop an
exhaustive list of PEPs.
‘Source of wealth and source of funds’
Although this term is not specifically used in the PEP definition, guidance is provided in
regard to its use as it is directly relevant to the assessment of ML/TF risk for PEPs.
FATF states that ‘source of wealth’ refers to the origin of the PEP’s entire body of
wealth (the total assets), which in turn will give reporting entities an indication of both
the volume of wealth the customer would be expected to have and how the PEP
acquired that wealth.
‘Source of funds’ refers to the origin of the particular funds or assets which are the
subject of the business relationship between the PEP and the reporting entity, such as
the amounts being invested, deposited or transferred.
The purpose of ascertaining such information is to ensure that the reason for the
business relationship is commensurate with what a reporting entity could reasonably
expect of the PEP in the particular circumstances relating to that customer.
What constitutes a ‘reasonable expectation’ may relate to the PEP’s current income
and sources of wealth and funds that could be explained from previous positions,
business undertakings or family estates. When the source of wealth and funds do not
appear reasonable when the circumstances of the PEP are considered, then this
would be relevant to the ML/TF risk assessment by the reporting entity of that
customer and may be an indicator of corruption.6
4
Pages 27 - 32.
Page 12.
6
See, by way of reference for risk assessment: FATF Report: Specific Risk Factors in Laundering the Proceeds of Corruption:
Assistance to Reporting Institutions, June 2012.
5
Draft guidance: Key terms used in 'politically exposed person' definition
First round public consultation: January 2015
Second round public consultation: August 2015
Page 3 of 15
A public source of information that may inform a reporting entity’s assessment of
wealth and funds can be obtained through legal requirements to publicly disclose
assets, such as a Register of Member’s Interests (or equivalent) which apply to
politicians at the Commonwealth, State and Territory levels in Australia.
The Commonwealth ‘Statement of Registrable Interests’, for example, requires the
disclosure of information relating to shareholdings in public and private companies,
family and business trusts, real estate, directorships, partnerships, liabilities, savings
or investment accounts, bonds, debentures, substantial sources of income and any
assets valued at over $7,500.
These categories can in turn be further investigated by the reporting entity, if
considered appropriate in its ML/TF risk assessment of the customer, through the use
of other publicly available resources, such as registers relating to companies which
could provide information about a PEP’s wealth and funds. A reporting entity might
also request information from the customer such as evidence of insurance payouts,
bequests, gambling wins or asset sales.
The extent of investigation expected of a reporting entity in relation to the
source of wealth and source of funds for the PEP is determined by the use of
‘reasonable measures’,7 which is defined in Chapter 1 of the AML/CTF Rules as
‘appropriate measures which are commensurate with the money laundering or
terrorist financing risks’. The investigation by a reporting entity must be
‘reasonable’ in the context of the circumstances under consideration, and this
may vary from case to case. Accordingly a definitive explanation of what is
‘reasonable’ cannot be given.
If a reporting entity is unable to determine the source of wealth and the source
of funds after undertaking a demonstrated investigation, then the reporting
entity may consider whether it is appropriate to continue the business
relationship, or if the relationship does continue, whether to submit a suspicious
matter report for that particular PEP.
The Parliament of Australia 'Parliamentary Remuneration' web page provides
information about asset disclosure requirements at the Commonwealth, state and
territory levels.
Information about international public figures and financial disclosure has been
collated in the World Bank's Financial Disclosure Law Library.
‘Senior management approval’
Although this term is not specifically used in the PEP definition, guidance is
provided in regard to its use as it is directly relevant to the development of
ML/TF risk management systems for PEPs.
Part 4.13 of the AML/CTF Rules requires ‘senior management approval’ where
the risk is high for domestic and international PEPs and for all foreign PEPs, in
regard to whether a business relationship should commence or continue or
whether a designated service should be provided or continue to be provided.
7
AML/CTF Rules, Chapter 4, paragraph 4.13.3(3).
Draft guidance: Key terms used in 'politically exposed person' definition
First round public consultation: January 2015
Second round public consultation: August 2015
Page 4 of 15
The appropriate time frame for senior management consideration is a matter for
the reporting entity.
It would be assumed that in the assessment of such relationships, with their
potential for high ML/TF risk, senior management consideration would be
provided in a timely manner, as an inordinate delay may have impacts both on
the potential customer and the business of the reporting entity.
For example, the senior management assessment may be crucial for the
provision of a designated service relating to a significant loan amount, as
without that assessment the reporting entity may be exposed to potential
financial risk with that high ML/TF risk customer.
Likewise, in circumstances where this designated service has been provided to
a PEP or a business relationship has been established, it would also be prudent
for senior management approval to be obtained ‘as soon as practicable’ after
the commencement of that relationship for the same reason.
The guidance noted above at paragraph 3.3 may aid reporting entities in
assessing the circumstances in which a business relationship should be
established or maintained.
4.
Key Terms used in the PEP definition
‘Prominent public position or function’
This term relates to functions which may exist at the Commonwealth, State and
Territory or municipal levels or foreign equivalent. The meaning of ‘prominent’ may be
determined through the size of the function in relation to the number of affected
persons, the budget and relevant powers and responsibilities.
The FATF guidance provides examples8 of positions which are covered, such as
Heads of State or of government, senior politicians, senior government, judicial or
military officials, senior executives of state-owned corporations, important party
officials, or, in relation to international organisations, directors, deputy directors and
members of the board or equivalent.
Such positions commonly hold specific powers in relation to approving government
procurement processes, budgetary spending, development approvals and government
subsidies and grants.
It is noted that although FATF considers that a prominent public function may
extend to the municipal or local government level, it is generally considered that
this will only apply to persons who have the substantive powers noted in
paragraph 4.3 above, relevant to this level of government.
The definition of ‘domestic politically exposed person’ in the AML/CTF Rules
limits such persons to those who hold a position in an ‘Australian government
body’, which is defined in the AML/CTF Act as extending to the Commonwealth,
In the definition of ‘politically exposed persons’ in The FATF Recommendations, February 2012. Further detail is also provided in
the FATF Guidance, Politically Exposed Persons (Recommendations 12 and 22), June 2013.
8
Draft guidance: Key terms used in 'politically exposed person' definition
First round public consultation: January 2015
Second round public consultation: August 2015
Page 5 of 15
State or Territory levels. This definition does not capture the local government
or municipal level.
This is not the case with the definition in the AML/CTF Rules of ‘foreign
politically exposed persons’ who hold positions in a ‘government body’, which
is defined more broadly in the AML/CTF Act to include the ‘government of part
of a country’.
Accordingly, domestic customers of reporting entities at the local government
or municipal level and who would otherwise be considered PEPs if they were
foreign customers, are not required to be treated as PEPs under Part 4.13 of the
AML/CTF Rules. However, the normal obligations relating to customer
identification in Chapter 4 and ongoing customer due diligence in Chapter 15
will apply to such persons.
The Heads of Government List provides details on the names and titles of heads
of state, heads of government, foreign ministers, trade ministers and in some
cases, ministers responsible for development assistance.
‘Government body’
In summary, the AML/CTF Act defines ‘government body’ as an agency or authority of
the government or the government of a country, or an agency or authority of the
government or the government of part of a country.
The AML/CTF Act also defines ‘Australian government body’ as the Commonwealth, a
State or Territory or an agency or authority of the Commonwealth, State or Territory.
Such bodies are created for a public purpose and come under the power of
government, whether at the Commonwealth, State or Territory level. This description
is also relevant for foreign government bodies, with ‘public purpose’ being the key
indicator in determining the categorisation.
The Government Online Directory provides details of government bodies at the
Commonwealth, State and Territory levels.
‘International organisation’
‘International organisations’ for the purposes of the PEP definition are organisations
established by formal political agreement between countries, where the agreement
has the status of an international treaty, and the organisation is recognized in the law
of the countries which are members.
The examples provided by FATF include: the United Nations and affiliates such as the
International Maritime Organisation; regional international organisations such as the
Council of Europe, institutions of the European Union, the Organisation for Security
and Co-operation in Europe, the Organisation of American States, military international
organisations such as the North Atlantic Treaty Organisation and economic
organisations such as the World Trade Organisation.
Draft guidance: Key terms used in 'politically exposed person' definition
First round public consultation: January 2015
Second round public consultation: August 2015
Page 6 of 15
‘Government Minister or equivalent senior politician’
Government Minister
In Australia, a government minister (at the Commonwealth, State or Territory level) is
an elected person who holds an executive office in the government and is responsible
for administering one or more departments. A Parliamentary Secretary may be
considered the equivalent of a minister.
For foreign PEPs, there may be situations where the government minister or
equivalent is not an elected person but may be appointed directly by the government
(for example, Cabinet Secretaries in the United States) with all the relevant or
equivalent powers which ministers within Australia hold.
Equivalent senior politician
The term ‘equivalent senior politician’ includes ‘shadow’ ministers in the opposition and
will include persons such as the Leader of the Opposition and the leaders of parties in
Parliament. At the local government level, Mayors and local councillors may be
considered equivalent senior politicians.
In situations where the government does not have a clear majority and therefore relies
upon members of other parties to pass legislation implementing its policies, politicians
who would not fulfil the requirements of being ministers or have sufficient seniority,
may be considered to fall within this category due to the power they have to influence
the Government of the day through the casting of their votes.
The 'ElectionGuide' website provides a worldwide overview of elections, including
details of senior politicians.
‘Senior government official’
The criteria noted above in regard to ‘prominent public position or function’ are also
relevant to determining whether a person is a ‘senior’ government official.
These include the size of the function in relation to the number of affected persons, the
budget and relevant powers and responsibilities, including the approval of government
procurement processes, control over regulatory approvals including the awarding of
licenses or concessions, budgetary spending and government subsidies and grants.
Reporting entities may also consider positions at lower levels if those persons are in
roles which have powers and responsibilities which are equivalent or similar to those
of senior government officials (for example a Chief Financial Officer and Chief
Information Officer with significant procurement or other budgetary responsibility or
oversight).
The roles of senior government officials in foreign countries may vary widely from
those in Australia. The following may assist reporting entities in determining whether a
person is a foreign senior government official.
Does the official have:
Draft guidance: Key terms used in 'politically exposed person' definition
First round public consultation: January 2015
Second round public consultation: August 2015
Page 7 of 15

Substantial authority over or access to state assets and funds, policies and
operations?

Control over regulatory approvals?

control or influence over decisions that would effectively address identified
shortcomings in the AML/CTF system of the country?

Access, control or influence over government accounts?
Is the official involved in state industries such as:

The arms trade and defence industry?

Banking and finance?

Construction and large infrastructure?

Government procurement?

Mining and extraction?

The provision of public goods and utilities?
‘Judge of a court of equivalent seniority in a foreign country or international
organisation’
The PEP definition specifies courts of equivalent seniority to the High Court of
Australia, the Federal Court of Australia or the Supreme Courts of a State or Territory.
Supreme courts are the highest court in the judicial hierarchy of each State or
Territory; the Federal Court covers almost all civil matters arising under Australian
federal law, including some summary and indictable criminal matters; while the High
Court deals with cases which originate in the High Court and is the highest court of
appeal in Australia on all legal matters.
Further information can be accessed from the Attorney-General's Department courts
web page, which can also be used to find the details of judges for relevant
courts such as the High Court and the Federal Court.
Accordingly, the relevant principle in respect to foreign country courts is whether the
court is one of the superior courts within its relevant jurisdiction (such as a State or
Territory), or whether it is the highest within the country.
The PEP definition also refers to judges of ‘international organisations’. Not all
international organisations will have judicial or similar functions, however, examples
include the International Court of Justice and the European Union Court of Justice.
In these examples, the term ‘judge’ may not be used, however, their role (and
therefore their title) may be the equivalent of a judge as those persons are required to
determine matters through the application of a legal remedy.
Draft guidance: Key terms used in 'politically exposed person' definition
First round public consultation: January 2015
Second round public consultation: August 2015
Page 8 of 15
‘Governor of a central bank or any other position that has comparable
influence to the Governor of the Reserve Bank of Australia’
Central banks oversee the monetary system of a nation and have a wide range of
responsibilities, from overseeing monetary policy to implementing specific goals such
as currency stability, low inflation and full employment. They may also issue currency,
function as the bank of the government, regulate the credit system, oversee
commercial banks, manage exchange reserves and act as a lender of last resort. The
Reserve Bank of Australia (RBA) is a ‘central bank’ and has legislated functions to
contribute to the stability of the Australian currency, full employment and the economic
prosperity and welfare of the Australian people. The Governor of the RBA manages
the bank and its operations.
Identifying the central bank of a foreign country and the position equivalent to the
Governor of the RBA can usually be achieved by an internet search. For example, in
the United States the central bank is the Federal Reserve, with the equivalent position
being the Chairman of the Board of Governors. In the United Kingdom, the Bank of
England is the central bank with the equivalent position being the Governor and in
Indonesia, Bank Indonesia is the central bank and it is led by the Governor.
The Bank for International Settlements website provides a comprehensive overview of
world central banks.
‘Senior foreign representative, ambassador or high commissioner’
The foreign postings of the Australian Government include:

Ambassador – Head of an embassy which is the main representative office of
one country in the capital city of another.

High Commissioner – Head of the High Commission, a main representative
office of a Commonwealth country in the capital city of another Commonwealth
country.
The following Australian Government foreign postings may be characterised as ‘senior
foreign representatives’:

Consul-General – Head of the Consulate or Consulate-General, a lower level
representative office, usually located in a city outside the capital city.

Deputy Head of Mission – The deputy to the ambassador.

Charge d’affaires – An official placed in charge of diplomatic business
during the temporary absence of the ambassador.

Honorary Consul – Head of the Honorary Consulate. This is usually a private
businessperson (usually an Australian citizen) who agrees to perform limited
consular functions, in a city where Australia does not have an Australia-based
representative.
The Department of Foreign Affairs and Trade's Embassies and consulates web page
provides details of persons in the above roles. Equivalent terms used by foreign
countries include: Head of Mission, Chief of Mission, Minister and Minister-
Draft guidance: Key terms used in 'politically exposed person' definition
First round public consultation: January 2015
Second round public consultation: August 2015
Page 9 of 15
Counsellor, Deputy Chief of Mission, Nuncio, Chargé d'affaires, Permanent
Representative and minister plenipotentiary.
Other titles regarding diplomatic postings may be considered by reporting
entities as being PEPs if the person has a prominent public position or function.
‘High ranking member of the armed forces’
In Australia the ‘armed forces’ refer to the Australian Army, the Royal Australian Navy
and the Royal Australian Air Force. However, foreign armed forces may vary in regard
to the services which exist.
In Australia, the following may be considered to be ‘high ranking’ and are listed in
descending order of seniority:
Australian Army
Royal Australian Navy
Royal Australian Air
Force
General
Admiral
Air Chief Marshall
Lieutenant General
Vice Admiral
Air Marshall
Major General
Rear Admiral
Air Vice Marshall
The seniority of a rank is generally based upon two elements: what the rank may
command in the field (or equivalent) in times of conflict, and the executive role which
they may undertake. For example, a Major General may command a division
(approximately 10,000 to 15,000 soldiers) and hold an executive appointment such as
Special Operations Commander – Australia.
The Australian Government Department of Defence's website provides details on
senior appointments in the Australian Defence Force.
‘State enterprise’
In Australia, a ‘state enterprise’ is usually known as a government business enterprise
(GBE) and may exist at the Commonwealth, State or Territory level. It is characterised
by the relevant Government controlling the body; the body being principally engaged in
commercial activities; and the body having a legal personality separate to a
department of government. It may be a body corporate established by legislation for a
public purpose (state-owned or statutory corporations), or a company established
under corporations law in which a state or territory government has a controlling
interest.
Examples of current Commonwealth GBEs are ASC (formerly known as Australian
Submarine Corporation), Australian Postal Corporation, Australian Rail Track, Defence
Housing Australia and NBN Co Limited. Details about Commonwealth GBEs may be
accessed at the Department of Finance's website.
The Australian Government Organisations Register is produced by the Department of
Finance.
Draft guidance: Key terms used in 'politically exposed person' definition
First round public consultation: January 2015
Second round public consultation: August 2015
Page 10 of 15
In foreign countries, GBEs may be known as a crown corporation, government-owned
corporation, state-owned company, state-owned entity, state enterprise, commercial
government agency or public sector undertaking.
As noted in the PEP definition, a PEP in such organisations is the board chair, chief
executive, chief financial officer or any other position which has comparable influence
in the organisation.
‘Immediate family member and close associate’
The FATF Recommendations require that family members and close associates of
PEPs should be treated as PEPs because of the potential for abuse of the relationship
for the purpose of moving the proceeds of crime, or facilitating their placement and
disguise, as well as for terrorism financing purposes. For the assessment of risk by the
reporting entity, it is the identified links between the PEP and the close associate
and/or family member which will determine the level of risk.
The close associate category does not purport to capture any person who has been
associated with a PEP, such as friends or colleagues. A close associate is an
individual who is known (having regard to information that is public or readily available)
to have joint beneficial ownership of a legal entity (e.g. a company) or legal
arrangement (e.g. a trust) with the PEP, or sole beneficial ownership of a legal entity
or legal arrangement that is known to exist for the benefit of the PEP. This describes
close business cooperation which may be involved in or facilitate any dealings with
funds, and where the source of those funds may be a legitimate question.
The PEP definition specifies that an immediate family member includes a spouse, a de
facto partner, a child and a child’s spouse or de facto partner, and a parent.
The definition of an immediate family member is inclusive and therefore is not limited
to the relationships specified. However, the list indicates what is captured by the term
‘immediate family member’ and will be informed by what information is public or readily
available about the PEP. For example, it may be known that a particular PEP has a
history of dealings with a sibling, and a reporting entity may therefore consider that a
sibling relationship is sufficiently ‘immediate’ to fall within the term, even though not
specifically included in the definition.
The PEP definition also notes that the term ‘de facto partner’ is defined in the Acts
Interpretation Act 1901 (section 2D (References to de facto partners), section 2E
(Registered relationships) and section 2F (De facto relationships)) and this should
therefore be used for the purposes of the AML/CTF Rules. In summary, that definition
specifies that a person is a de facto partner of another person (whether of the same or
different sex) if:
(a) the person is in a registered relationship with the other person; or
(b) is in a de facto relationship with the other person.
A ‘registered relationship’ means that the relationship is registered under a law of a
State or Territory as a prescribed kind of relationship. A ‘de facto relationship’ means
that the persons:
(a) are not legally married to each other; and
Draft guidance: Key terms used in 'politically exposed person' definition
First round public consultation: January 2015
Second round public consultation: August 2015
Page 11 of 15
(b) are not related by family; and
(c) have a relationship as a couple living together on a genuine domestic basis.
5.
PEPs and other legislative requirements
In some cases, reporting entities may consider that the AML/CTF Rules
requirements relating to PEPs are inconsistent with obligations imposed upon
them by other legislation, in particular the provision of a designated service.
For example, Part 4.13 of the AML/CTF Rules requires ‘senior management
approval’ where the risk is high for domestic and international PEPs and for all
foreign PEPs, in regard to whether a business relationship should commence or
continue or whether a designated service should be provided or continue to be
provided.
In this instance, the AML/CTF Rules impose an obligation (the involvement of
senior management), but the decision to discontinue or not provide a
designated service to the PEP is made by the reporting entity.
In situations where a reporting entity is required to perform an action under
legislation (such as the acceptance or cashing out of superannuation
contributions to a high risk domestic or international PEP or a foreign PEP), the
reporting entity (after having obtained senior management approval and having
complied with its AML/CTF Program obligations), may consider providing a
suspicious matter report to AUSTRAC about that customer.
As the AML/CTF Rules do not prevent a reporting entity from providing a
designated service, AUSTRAC considers that there is no conflict between the
Rules and a Commonwealth law which requires the provision of a designated
service.
6.
When does a PEP stop being a Politically Exposed
Person?
Once a person no longer holds the prominent public position, they are no longer
considered a PEP. However, a reporting entity should continue to apply a risk-based
approach to determine whether an existing customer who is no longer a PEP should
continue to be treated as a high risk customer.
Higher risk PEPs are also more likely to continue to pose a ML/TF risk after they
cease holding a public position. As such, reporting entities may choose to undertake
enhanced customer due diligence for a longer period for a former PEP under the
enhanced customer due diligence provisions in Chapter 15 of the AML/CTF Rules.
7.
Privacy requirements – ‘sensitive information’
The definition of ‘sensitive information’ contained in the Privacy Act 1988
includes information or an opinion about an individual's political opinions or
membership of a political association (see section 6(1) of that Act).
Draft guidance: Key terms used in 'politically exposed person' definition
First round public consultation: January 2015
Second round public consultation: August 2015
Page 12 of 15
Sensitive information is generally afforded a higher level of privacy protection
under the Australian Privacy Principles than other personal information. This
recognises that inappropriate handling of sensitive information can have
adverse consequences for an individual or those associated with the individual.
8.
Further information
AUSTRAC officers are able to assist reporting entities, their staff and the public in
providing general information relating to the AML/CTF Act. Enquiries can be directed
to the AUSTRAC Contact Centre via:

email to [email protected].

telephone 1300 021 037 (a local call within Australia).
The information contained in this document is intended to provide a summary and
general overview on these matters. It is not intended to be comprehensive. It does not
constitute, nor should it be treated as, legal advice or opinions. This document may
contain statements of policy which reflect AUSTRAC’s administration of the legislation
in carrying out its statutory functions. The Commonwealth accepts no liability for any
loss suffered as a result of reliance on this publication. AUSTRAC recommends that
independent professional advice be sought.
The information contained herein is current as at the date of this document.
Reporting entities should note that in relation to activities they undertake to comply with the
AML/CTF Act, they will have obligations under the Privacy Act 1988, including the requirement
to comply with the Australian Privacy Principles, even if they would otherwise be exempt from
the Privacy Act. For further information about these obligations, please go to the Office of the
Australian Information Commissioner’s website or call 1300 363 992.
August 2015
© Commonwealth of Australia
Australian Transaction Reports and Analysis Centre (AUSTRAC)
PO Box 5516
West Chatswood NSW 1515
Telephone: 1300 021 037
Facsimile: 02 9950 0071
Website: www.austrac.gov.au
Email: [email protected]
Draft guidance: Key terms used in 'politically exposed person' definition
First round public consultation: January 2015
Second round public consultation: August 2015
Page 13 of 15
Attachment A
The PEP definition contained in Chapter 1 of the AML/CTF Rules is reproduced below:
politically exposed person means an individual:
(1) who holds a prominent public position or function in a government body or an
international organisation, including:
(a) Head of State or head of a country or government; or
(b) government minister or equivalent senior politician; or
(c) senior government official; or
(d) Judge of the High Court of Australia, the Federal Court of Australia or a
Supreme Court of a State or Territory, or a Judge of a court of equivalent
seniority in a foreign country or international organisation; or
(e) governor of a central bank or any other position that has comparable
influence to the Governor of the Reserve Bank of Australia; or
(f) senior foreign representative, ambassador, or high commissioner; or
(g) high-ranking member of the armed forces; or board chair, chief executive, or
chief financial officer of, or any other position that has comparable influence
in, any State enterprise or international organisation; and
(2) who is an immediate family member of a person referred to in paragraph (1),
including:
(a) a spouse; or
(b) a de facto partner; or
(c) a child and a child's spouse or de facto partner; or
(d) a parent; and
(3) who is a close associate of a person referred to in paragraph (1), which means any
individual who is known (having regard to information that is public or readily
available) to have:
(a) joint beneficial ownership of a legal entity or legal arrangement with a person
referred to in paragraph (1); or
(b) sole beneficial ownership of a legal entity or legal arrangement that is known
to exist for the benefit of a person described in paragraph (1).
(4) In these Rules:
(a) domestic politically exposed person means a politically exposed person of an
Australian government body;
(b) foreign politically exposed person means a politically exposed person of a
government body of a foreign country;
Draft guidance: Key terms used in 'politically exposed person' definition
First round public consultation: January 2015
Second round public consultation: August 2015
Page 14 of 15
(c) international organisation politically exposed person means a politically
exposed person of an international organisation.
(5) In this definition international organisation means an organisation:
(a) established by formal political agreement by two or more countries and that
agreement has the status of an international treaty; and
(b) recognised in the law of the countries which are members of the
organisation.
Note: The term de facto partner is defined in the Acts Interpretation Act 1901 and the
terms ‘foreign country’ and ‘government body’ are defined in the AML/CTF Act.
Draft guidance: Key terms used in 'politically exposed person' definition
First round public consultation: January 2015
Second round public consultation: August 2015
Page 15 of 15