Close persons and other connections to PEPs

Close persons extend beyond spouses and children

Section 4(5)(b) refers to close persons, a broader Czech Civil Code concept. It includes particularly direct-line relatives, siblings and spouses or partners, and other qualifying relationships. A narrower foreign questionnaire is not the complete Czech scope. Less obvious relationships require facts, rather than automatic classification of all distant relatives.

Explain the relevant relationship being assessed. Do not request intimate details unrelated to the statutory purpose. Retain relationship type and evidence rather than unrestricted family information. A shared surname or address may prompt a question but does not establish a statutory connection.

Business connections have their own logic

The Act covers a shareholder or beneficial owner of the same entity or trust and another known close business relationship. Guideline 7 interprets shareholder narrowly: an interest exceeding 25%, similarly to the direct PEP from whom status derives. Small shared interests therefore do not themselves mean automatic transfer. Another close business relationship under Section 4(13) depends on material interconnectedness and perceiving the other person’s gain or loss as one’s own.

For this purpose, Guideline 7 interprets beneficial ownership narrowly: a material owner owns or controls; a formal owner under Section 6 of the Beneficial Ownership Registration Act is included where the obliged entity determines this based on risk. A fallback owner under Section 5 of that Act is excluded from this transfer branch. Formal and fallback roles are not synonyms. Guidance similarly narrows owners of structures known to be created for a direct PEP’s benefit.

An ordinary customer, accountant or employee is not automatically connected solely by serving a company with a PEP. Long-term joint business may require assessment without family ties. Do not extend status from a connected person to every further acquaintance without analysis. Ground each decision in the direct PEP connection and statutory branch.

Assess consequences proportionately

Apply required PEP measures and assess the transaction once the connection is confirmed. Do not equate a relationship with proven suspicion or sanctions. When the direct PEP leaves office, assess continued measures under Section 54(8) and residual risk; a title change or family declaration alone does not justify automatic removal.

Evidence the relevant link proportionately

If shared business is the reason, map roles simply: client, direct PEP, shared company or trust, and other known links. State the ownership or partnership evidence and date. For family links, record the relationship type to the necessary extent. The purpose is not a public family tree but explaining the specific statutory reason for measures. Restrict access as with other AML evidence.

Assess a changed relationship individually. Divorce, departure from a company or dissolution of a trust may change facts, but an assertion without timing and context does not resolve every relevant link. A close business relationship or another statutory branch may continue. Distinguish what ended, what remains and how the change affects measures for the specific transaction or existing relationship.