AML and politically exposed persons: “good practice” recommendations from the Bank of Italy for policies and procedures to be implemented

Abstract

Purpose The purpose of this paper is to provide guidelines and inputs for the implementation of policies and procedures governing transactions and business relationships with politically exposed persons (PEPs) under the anti-money laundering (AML) legal framework. Design/methodology/approach This paper reviews AML PEPs’ regime in the perspective of the European Union Directive (EU) 2015/849 of May 20, 2015; the Italian Legislative Decree no. 231 of November 21, 2007; and the “good practice” recommendations issued by the Bank of Italy. In particular, it provides an overview of EU and Italian legislation in connection with PEPs and describes “good practice” recommendations provided by the Bank of Italy to implement policies and procedures to properly perform transactions with PEPs and comply with AML legislation. Findings Bank of Italy’s “good practice” recommendations are an important tool for credit and financial institutions managing transactions and business relationships with high-risk counterparties such as PEPs. They shall help determine how to properly implement policies and procedures for an enhanced identification and verification of PEPs. Originality/value This paper provides useful information on how to draft policies and procedures in order to be compliant with AML legislation related to PEPs.