Over the past few months, upheaval in the Middle East has resulted in the ouster of long-standing authoritarian rulers of at least two countries, Tunisia and Egypt. Once a ruler is forced out, the successor government may freeze the deposed rulers’ known assets and begin searching for hidden assets.1 Unfortunately, throughout history many deposed rulers have looted their government treasuries and secreted funds and assets in other countries. This may be a good time for banks, particularly large internationally active banks, to review the requirements for maintaining accounts for Politically Exposed Persons (PEPs). This month’s column will review the requirements for banks who maintain accounts for PEPs.
Kleptocracy
“Kleptocracy” is a word used to describe the theft by a government leader from the official funds or other property of the government for his or her own use. For these persons, there may be little distinction between personal and government funds. The United States and international organizations have developed international standards on how to deal with accounts established and maintained by PEPs.
Pre-Sept. 11, 2001
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