Mortgages – Politically Exposed Foreign Person

Often when I review mortgage documents with clients, I have to determine whether my clients are “Politically Exposed Foreign Persons” (PEFP). What does this mean, and why is it important?

Who is a PEFP?

You are a politically exposed foreign person if you hold or you have ever held one of the following offices or positions in or on behalf of a foreign country:

• a head of state or government;
• a member of the executive council of government or member of a legislature;
• a deputy minister (or equivalent);
• an ambassador or an ambassador’s attaché or counsellor;
• a military general (or higher rank);
• a president of a state-owned company or bank;
• a head of a government agency;
• a judge; or
• a leader or president of a political party in a legislature.

You are also considered a politically exposed foreign person if you are a family member of an individual described above.

http://www.fintrac.gc.ca/publications/brochure/06-2008/1-eng.asp

Why does the lender need to determine if you are a PEFP?

This relates to the efforts of the Financial Action Task Force (on Money Laundering) (FATF), established by a G7 initiative in 1989, to combat money laundering and terrorism financing. Since September 11, 2001, over 100 countries have changed their rules for financial services regulation. Lenders may now view a PEFP as a potential compliance risk.

http://en.wikipedia.org/wiki/Politically_exposed_person

What if you are a PEFP?

I have yet to encounter a client that could be categorized as a PEFP. Clients are often curious as to what this all means. If a client was found to be a PEFP, my duty requires me to notify the lender. The mortgage application will be delayed as the lender will have to perform additional screening and due diligence.

Please contact NW Calgary Law if you have any questions about PEFPs.

Peter Robinson (56 Posts)

Peter G. Robinson is an accomplished and skilled general practice lawyer in Calgary, Alberta. Over his 20 year career, Peter has carved out his niche in Residential Real Estate, Wills & Estate Planning, and Probate Applications.

Uniquely available to his clients, Peter is a calm and patient communicator who easily puts his clients at ease with straight-forward explanations of legal concepts. Blogging is his latest venture to cultivate awareness of NW Calgary Law, a law firm where he is the hands-on leader of an enthusiastic team dedicated to prompt and efficient service.

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The content contained in these blogs is intended to provide information about the subject matter and is not intended as legal advice.

If you would like further information or advice on any of the subjects discussed in this blog post, please contact the author at NW Calgary Law at 403.265.3010 or probinson@nwcalgarylaw.com.


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