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Politically Exposed Persons (PEPs) and Corruption

Publishing Date : 12 November, 2019

Author : PUSETSO MORAPEDI

Let’s Get Serious about Declarations of Assets and Transparency if we Want to Fight Tshenyetso Sechaba Bagetsho.

A politically exposed person (PEP) is defined by the Financial Action Task Force (FATF) as an individual who is or has been entrusted with a prominent public function. 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 (ML) offences and related predicate offences, including corruption and bribery, as well as conducting activity related to terrorist financing (TF).


PEPs, individuals who are or have been entrusted with prominent public functions, for example Heads of State or of government, senior politicians, senior government, judicial or military officials, senior executives of state owned enterprises (SOEs), important political party officials.


So, those who just got elected, you are a PEP. This means you become property of the public, it means being bestowed Honourable you ought to act with honour and integrity, these are the standards: on a daily, consistently adhere to shared norms and principles and to the promises to give your people. That’s what it takes to change people’s lives from bad to good, from poverty to riches. It is daily trying and giving it your all, for your people.


It means that you will be subject to scrutiny, not just you, but your family and close associates, particularly in the era of the mushrooming corruption cases in Botswana. It is a must to clean corrupt corners and recover assets stolen by public officials. We now know the extent to which family and friends are involved in the hiding of stolen public assets and funds. It is for this reason some countries are talking about PEPs scrutiny as an instrument to fight illicit enrichment, illicit financial flows and money laundering. This is just one of the many ways some countries are fighting money laundering and other corrupt acts, recognising the linkages in corruption and influential officials.


In the United Kingdom PEPs mechanisms are established to target grand corruption and to recognize that senior officials present specific risks and it now requires financial institutions to adopt risk mitigation measures for both domestic and foreign PEPs (Edmonds, 2017).
So, do not be surprised when you hear from civil society the talks on PEPs. Corruption is cancerous, it eats, it ravages, and it kills as it denies access to education, employment, healthcare and opportunities. This kills the growth and development of any nation. It must be fought with everything we have or can use, to ensure citizens benefit from public goods and services.


It is therefore important to know that in the near future a call for disclosure legislation will be robust requiring a certain range of public officials (MPs, heads of state, cabinet members, etc.) to declare their financial and business interests. Public servant right?
The reality is that corruption is devastating developing countries, with an estimated US$20-40 billion lost per year through corruption. 


It can be tough to get away from our silo-approaches and share information but we have to employ all measures that can help prevent and curb corruption. The scale of illegal wealth acquired by corrupt leaders and officials, particularly in jurisdictions where corruption within government and society is endemic, often contrasts starkly with the relative poverty of that particular country and/or its people.


Corruption by some government leaders and public sector officials invariably involves serious crime such as theft or fraud and has become an increasing global concern. The proceeds of such corruption are often transferred to other jurisdictions and concealed through private companies, trusts or foundations, or under the names of relatives (Serurubele Saga) or close associates (bo semangmang).

PEPs include (Edmonds, 2017):

Senior Political Figures: these are senior figures in the executive, legislative, administrative, military or judicial branches of a government (elected or non-elected),  A senior figure of a major political party, or a senior executive of a government owned corporation. It includes any corporate entity, partnership or trust relationship that has been established by, or for the benefit of, a senior political figure. Immediate Family typically includes the person's parents, siblings, spouse, children, in-laws, grandparents and grandchildren where this can be ascertained.


Close Associate typically includes a person who is widely and publicly known to maintain a close relationship with the senior political figure and includes a person who is in a position to conduct substantial domestic and international financial transactions on his or her behalf.
This means that a regime would have to be developed for Botswana to ensure that a President, Minister and other PEPs, their family (close and extended) and associates declare assets, finances and interests whilst the political figure is in the position of power.


It is a serious duty, being responsible for public goods, for you are responsible for the people, for whether or not they earn a dignified living, live a dignified life and what services they get. What people have been doing wasting an abusing must just stop, if we are to ensure inclusive growth and better living standards for the citizens of this beautiful country.


Therefore, let it not alarm you to hear and to see a political figure being scrutinised and lifestyle audited. It must, of course be done within predictable parameters of the law, policy and institutional frameworks. It is normal for the BURS to go knocking on your door if you cannot explain your wealth particular when you are politically exposed and are in position of power and influence.


Politically Exposed Persons regime must extend to the financial institutions, where institutions such as banks are obligated to do due diligence of their clients, to curb illicit financial flows and money laundering. Providing more information to financial institutions on who are PEPs and how to have better knowledge and understanding of these clients – and hold the financial sector accountable for its preventive role can make a difference. This is why Know Your Client (KYC) declarations are important. They stipulate one’s source (s) of income that should there be any inconsistent move, the bank should be able to flag it and duly act with the relevant authorities.

Consulted Works:

"https://www.fatf-gafi.org/media/fatf/documents/recommendations/Guidance-PEP-Rec12-22.pdf" https://www.fatf-gafi.org/media/fatf/documents/recommendations/Guidance-PEP-Rec12-22.pdf
Timothy Edmonds, Briefing Paper, 2017, House of Commons "file:///C:Users26772DownloadsCBP-7376.pdf" file:///C:/Users/26772/Downloads/CBP-7376.pdf

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