What is a Domestic Prominent Influential Person (DPIP)?
The Financial Intelligence Centre (FIC) provides the legal definition that is used in South African law:
“A domestic prominent influential person is an individual who holds, (including in an acting position) for a period exceeding six months, or has held at any time in the preceding 12 months in South Africa, a prominent public function as listed in Schedule 3A of the FIC Act.” – FIC.
A DPIP is a type of Politically Exposed Person (PEP). PEP is a broad term that refers to individuals who currently hold or have held political power (e.g., a member of parliament or head of state).
Due to the interwoven nature of politics and private capital, governments and financial institutions worldwide agree that PEPs represent an increased money-laundering risk. This is because individuals who hold political power can abuse their power to engage in money laundering and other financial crimes like corruption, bribery, embezzlement and the financing of terrorism.
To account for this risk, national regulators ensure that PEPs are subjected to Enhanced Due Diligence (EDD) procedures designed to scrutinize the connections between a PEP’s political power and their financial transactions with the aim of detecting illicit funds.
AML/CFT Regulatory Compliance for PEPs in South Africa
South Africa’s Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) legislation is structured around the Risk-Based Approach (RBA).
In short, an RBA entails that every Accountable Institution (AI) is responsible for designing its own system for risk management and risk mitigation, so long as it complies with a legal framework that is established by the FIC.
This general framework demands that Accountable Institutions check whether an individual is a PEP during the onboarding process.
PEP Checks for South Africa – KYC and Digital Onboarding
Most often, the process of checking whether or not an individual is a Politically Exposed Person will be done during the onboarding process and form part of the overall Know Your Customer (KYC) check.
When conducting KYC checks, a business, institution or organization will typically be verifying:
• That an individual exists
• Whether that individual is exactly who they claim to be
• Whether that individual is eligible to receive the product or service in question
• Whether that individual poses a threat of money laundering or other such crime
If an individual is detected to be a PEP, the business/financial institution is responsible for ensuring that the correct risk management protocols are put in place.
Identity Verification and Enhanced Due Diligence Tools for AML Compliance
Already complex, the global portfolio of legislation related to regulatory issues such as PEPs is further complicated by the fact that every country has its own specific laws and regulations, which are all funnelled through that nation’s specific regulatory bodies.
When doing business in a country and ensuring regulatory compliance, it is important to employ experts in the relevant country who are best equipped to operate within the nexus of legislation, law enforcement and economic realities while delivering high-quality and cost-effective solutions for ensuring regulatory compliance.
As South Africa’s leading provider of world-class due diligence and digital onboarding solutions, ThisIsMe is proud to be at the forefront of a trust-based and privacy-compliant digital world. To experience our full suite of advanced due diligence services, book a demonstration by contacting our team here.
