Auditors and Accountants Assigned to Reveal Politically Active Individuals

Tazo Kupreishvili, Netgazeti

Georgian accountants and auditors starting from February of 2012 are going to become obliged to ascertain whether or not their client belongs to the category of politically active individual. In case of a positive response, they will be obliged to provide information to the Financial Monitoring Service of Georgia.

This obligation is envisaged by the #12 order of the head of Financial Monitoring Service of national bank of Georgia. Mikheil Roinishvili issued the order on adoption of Regulation on Receiving, Systematization, Processing and Transferring Information to the Financial Monitoring Service of Georgia by the Individuals Carrying out Accountant/Audit Activities on January 31st of 2012.

The article six of the order regards the theme of politically active individuals. According to this article, accountant/auditors are obliged to ascertain whether their client or beneficiary belongs to the category of politically active individual. If so, accountants/auditors are obliged to receive permission from the heads of their department to establish business relations with such individuals and also take measures to establish the origins of their property and financial assets and conduct intensive monitoring of business relations with these people.

According to the order of the head of Financial Monitoring Service, if the client (his/her beneficiary owner) becomes politically active individual after establishing business relations with the person carrying out accountant or audit activity, the accountant/auditor becomes obliged right when obtaining this information to conduct intensive monitoring of business relations with this individual in order to ascertain the origins of the financial assets/property.

New regulation also establishes that the accountant/auditor must have determined certain procedures according to which he/she will ensure to find information from the client and also from the public sources and the relevant databases in order to ascertain the politically active individuals and double-check the information.

The commercial banks operating in Georgia will also be imposed with the same obligation. The similar regulation regarding the commercial banks was issued by the head of Financial Monitoring Service of Georgia Mikheil Roinishvili on January 18th of 2012.

Roinishvili’s both orders define the term politically active individual.

Politically active individual is a citizen of a foreign country who according to the legislation of the relevant country holds the state (public) political post/performs significant state or political activity.

The regulation also states that the politically active individuals are: head of the state, the head of the government and government member, their deputies, the head of the government department, Member of Parliament, member of Supreme Court, member of Constitutional Court, the head of military, member of Council of national Bank, the head of the enterprise where government holds a share, member of executive body of a political party (union), a significant political figure, his/her family members and people in direct business relations with him/her. An individual is considered to be politically active for a year after leaving the job.