Editor’s Note
This article highlights the enhanced due diligence requirements for high-value cash transactions, particularly concerning Politically Exposed Persons (PEPs) and their associates. It serves as a reminder for businesses, especially in luxury goods, to implement robust anti-money laundering protocols and customer identification procedures to ensure regulatory compliance.
Companies can also have due diligence obligations regarding money laundering.
Vienna. Being a so-called PEP clearly has disadvantages. One must primarily expect indiscreet questions. For example, where one got the cash to buy an expensive watch from a jeweler. PEP stands for “Politically Exposed Person,” referring to certain officeholders – including heads of state, ministers, parliamentarians. But not only them: those close to such persons are equally affected. This includes family members, as well as close business partners.
The reason is the regulations for preventing money laundering and terrorist financing (see also the adjacent article). These rules obligate not only financial institutions, legal advisory professions, or auditors, but also other companies. For example, those trading in high-value goods.
This is part of their compliance. And it applies not only when they identify someone as a PEP. Quite generally, there is an obligation to identify the customer for high cash payments. The 4th Money Laundering Directive lowered the threshold for this from €15,000 to €7,500 – meaning such cases could become more frequent.
“High-value items” include, for example, watches and jewelry, but also art objects and cars – so the topic could also become more relevant for used goods dealers. For payments from an account, things are simpler: For accounts in an EU country, one can rely on the identity verification by the bank. Otherwise, a threshold of €15,000 still applies.
But how should a dealer know if someone – especially a walk-in customer from abroad – belongs in the broadest sense to this circle?
The crucial thing is to be able to prove
Furthermore, there are other due diligence obligations that can affect every company – for example, concerning the beneficial owner of legal entities. This can be particularly tedious for exporters. Planned registers are intended to help in the future – although these are legally not uncontroversial.
An opinion he does not hold alone: The European Data Protection Supervisor has also expressed skepticism in a statement regarding the extent of planned data processing.