NCUA, along with the Federal Reserve Board, the Federal Deposit Insurance Corporation, the Financial Crimes Enforcement Network and the Office of the Comptroller of the Currency issued a joint statement clarifying that Bank Secrecy Act (BSA) due diligence requirements for customers who may be considered "politically exposed persons" (PEPs) should be commensurate with the risks posed by the PEP relationship.

The term PEP is commonly used to refer to foreign individuals who are or have been entrusted with a prominent public function, as well as their immediate family members and close associates. By virtue of this public position or relationship, these individuals may present a higher risk that their funds may be the proceeds of corruption or other illicit activity.

CUNA's CompBlog provides analysis on the statement, which clarifies:

• Like other credit union accounts, accounts held by PEPs are subject to BSA/AML regulatory requirements, including suspicious activity reporting, “customer identification program” (CIP), “customer due diligence” (CDD) and beneficial ownership, as applicable. 

• A credit union must apply a risk-based approach to CDD in developing a member’s risk profile (including a PEP's risk profile), and is required to establish and maintain written procedures reasonably designed to identify and verify beneficial owners of legal entity customers/members. 

• There is no regulatory requirement in the CDD rule, nor is there a supervisory expectation, for credit unions to have unique, additional due diligence steps for PEPs. Nevertheless, a credit union may choose to determine whether an individual is a PEP at account opening if deemed necessary for the development of the member’s risk profile. The credit union may also conduct periodic reviews with respect to PEPs, as part of or in addition to the required ongoing risk-based monitoring to maintain and update member information. 

• Not all PEPs are high risk solely by virtue of their status. The risk depends on facts and circumstances specific to the account relationship. For example, PEPs with a limited transaction volume, a low dollar deposit account, known legitimate sources of funds, or access only to products or services that are subject to specific terms and payment schedules could reasonably be characterized as having lower risk profiles. 

• When developing a PEP’s risk profile, credit unions may take into account such factors as a person’s public office (or that of the individual’s family member or close associate), the type of products and services used, the volume and nature of transactions, geographies associated with the member’s activity and domicile, the member’s official government responsibilities, the individual’s access to significant government assets or funds, and the overall nature of the account relationship.