Background
Pursuant to our regulatory obligations under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, during our payments on-boarding process you will be asked whether you are a Politically Exposed Person (PEP), Head of International Organization (HIO), family member of one of those persons, or close associate of a foreign PEP?
Below we've cited/reproduced guidance from FINTRAC (source: https://fintrac-canafe.canada.ca/guidance-directives/client-clientele/pep/pep-eng#s1) explaining this.
Who is a domestic PEP?
A domestic PEP is a person who currently holds, or has held within the last 5 years, a specific office or position in or on behalf of the Canadian federal government, a Canadian provincial (or territorial) government, or a Canadian municipal government. Specifically, the person has held the office or position of:
- Governor General, lieutenant governor or head of government;
- member of the Senate or House of Commons or member of a legislature;
- deputy minister or equivalent rank;
- ambassador, or attaché or counsellor of an ambassador;
- military officer with a rank of general or above;
- president of a corporation that is wholly owned directly by Her Majesty in right of Canada or a province;
- head of a government agency;
- judge of an appellate court in a province, the Federal Court of Appeal or the Supreme Court of Canada;
- leader or president of a political party represented in a legislature; or
- mayor, reeve or other similar chief officer of a municipal or local government.
Who is a HIO?
A HIO is a person who currently holds or has held within the last 5 years the specific office or position of head of an international organization and the international organization that they head or were head of is either:
- an international organization established by the governments of states;
- an institution of an organization referred to in 1 above; or
- an international sports organization.
An institution established by an international organization does not have to operate internationally and it is possible that an institution only operates domestically, or in one jurisdiction.
The HIO is the primary person who leads the organization. For example, the HIO could be a president or CEO.
Who is a family member of a PEP or HIO?
If a person is a PEP or HIO, some of their family members are considered family members of PEPs or HIOs under the PCMLTFA and associated Regulations. These family members are:
- their spouse or common-law partner;
- their biological or adoptive child(ren);
- their mother(s) or father(s);
- the mother(s) or father(s) of their spouse or common-law partner (mother-in-law or father-in-law); and
- the child(ren) of their mother or father (sibling(s)).
Who is considered a close associate of a PEP or a HIO?
A close associate can be a person who is connected to a PEP or HIO for personal or business reasons. Examples of relationships that could indicate that someone is a close associate (personal or business) could include, but are not limited to, persons who:
- are the business partners of, or who beneficially own or control a business with, a PEP or HIO;
- are in a romantic relationship with a PEP or HIO;
- are involved in financial transactions with a PEP or a HIO;
- serve as prominent members of the same political party or union as a PEP or HIO;
- serve as a member of the same board as a PEP or HIO;
- carry out charitable works closely with a PEP or HIO; or
- are listed as joint on a policy where one of the holders may be a PEP or HIO.