AMLR Articles 44–46 on beneficiaries, former PEPs, and close associates

In this part of the blog series on the EU AMLR, we examine Articles 44, 45 and 46, which complement the framework governing politically exposed persons (PEPs). These provisions deepen the regulation of enhanced measures by specifically addressing PEPs as beneficiaries of insurance policies, the treatment of persons who cease to be PEPs, and the application of the rules to family members and known close associates. For further reading on how the AMLR regulates enhanced measures in cases of high geographical risk, see an earlier part of the series on enhanced measures for high-risk customers. The AMLR raises complex PEP and high-risk assessments, where legal interpretation, risk classification and AML governance must operate together. In practice, specialist expertise in risk assessment and AML governance is often required to ensure that measures are proportionate, documented and robust from a supervisory perspective.

Article 44 – Politically Exposed Persons as Beneficiaries Under Insurance Policies

Article 44 provides that obliged entities must take reasonable measures to determine whether beneficiaries of life insurance or other investment-related insurance policies are PEPs. The provision also covers situations where the beneficiary’s beneficial owner is a PEP. These measures must be taken no later than the point of full or partial payout under the policy or upon assignment of the policy.

Where the risk assessment indicates that a high risk exists, obliged entities must, in addition to the customer due diligence measures set out in Article 20, apply additional enhanced measures. These measures include informing senior management before the insurance proceeds are paid out and intensifying scrutiny of the entire business relationship with the policyholder.

Article 44 therefore reinforces the need for systematic PEP and high-risk assessments within the insurance sector. Obliged entities must ensure that their internal procedures allow for the identification of PEP status in relation to beneficiaries and that risk classification is updated before any payout is made.

Article 45 – Measures Concerning Former Politically Exposed Persons

Article 45 addresses the situation in which a person no longer holds a prominent public function. Under paragraph 1, obliged entities must consider whether a person who no longer holds a prominent public function in the Union, a Member State, a third country or an international organisation still presents a risk of money laundering or terrorist financing. Obliged entities must then assess the risks in accordance with Article 20. Article 45(1) makes clear that PEP status does not cease to be relevant merely because the formal function has ended.

Under Article 45(2), obliged entities must apply one or more of the measures set out in Article 34(4) on enhanced customer due diligence in order to mitigate the risks. Those measures must be applied for at least twelve months after the person has ceased to hold a prominent public function. At the same time, the obligation is not limited to twelve months where the risks remain, and the measures must continue until the risks referred to in Article 45(1) no longer exist.

Article 45(3) also provides that the obligation referred to in Article 45(2) applies in the same way where an obliged entity carries out an occasional transaction or enters into a business relationship with a person who previously held a prominent public function.

Article 46 – Family Members and Known Close Associates of Politically Exposed Persons

Article 46 states that the measures under Articles 42, 44 and 45 must also be applied to family members and known close associates of politically exposed persons. The provision is of systematic importance because it prevents the framework from being circumvented through connected persons. The AMLR provides that close private or professional relationships under Article 46 may be used and misused for money laundering or terrorist financing.

Systematic and Practical Implications

Taken together, Articles 44–46 deepen the structure established by Article 42 on specific provisions for PEPs. The framework shows that political exposure may be relevant from several perspectives: through status as a beneficiary, through the temporal extension of measures after a mandate has ended, and through the expansion of relevant relationships to include family members and known close associates.

For obliged entities, this means an ongoing need for well-founded, documented and proportionate enhanced measures integrated into the wider AML governance framework. Internal policies should clearly set out how PEP status is identified and updated over time. Articles 44–46 underline that the assessment of PEPs and RCAs must be dynamic and subject to continuous review. Risk assessments may change in light of changing political circumstances or the end of a public mandate.

At Morling Consulting, our lawyers provide specialist advice on anti-money laundering regulation and support organisations across Europe in developing sustainable structures for risk assessment, governance and control in line with the EU’s new AML framework.