The role of politically exposed persons in financial crime regulatory framework
Politically exposed persons are considered high risk in today’s regulatory environment because individuals who hold a prominent public function present greater integrity and corruption risks.
Corrupt practices such as bribery and fraud are often foundations for money laundering offences. Therefore PEPs feature significantly in most anti-bribery and anti-money laundering regulations.
Organisations have been imposed with very heavy AML fines for conducting business with PEPs without sufficient Know Your Customer (KYC) checks and Enhanced Due Diligence processes. However, determining that a client is a PEP does not prejudge a link to criminal activities and Financial Action Task Force (FATF) Guidance states that a PEP classification should not stigmatise the individual or prevent a business relationship. Instead it should form part of a wider risk evaluation process.
Companies also need to carefully examine foreign and domestic business partners that are either themselves PEPs, or who maintain close relationships with PEPs. You can download this whitepaper which discusses patterns of political corruption involving PEPs and how due diligence obligations can be addressed in line with the risk-based approach.
Politically Exposed Person List
To assist you with your Enhanced Due Diligence and AML PEP processes, our market leading WorldCompliance™ Data contains a PEP list with over a million politically exposed persons and foreign officials. This extensive source of information about higher risk individuals will help you determine whether your clients are politically exposed or a family member and close associate of a PEP.
You can access and search our PEP list with a free trial** of WorldCompliance™ Online Search Tool. Alternatively, complete the form below to discuss our batch and API screening solutions.
79% of AML professionals use political exposure as part of their customer risk rating
- Geographic Location 86%
- Political Exposure 79%
- Transaction History 68%
- Adverse Media 57%
- Business Associates 56%
- High Value Property Owned 19%
Source: ‘Current Industry Perspectives into AML Risk Management and Due Diligence’ – a 2015 survey of 800+ AML Compliance professionals. Research conducted by LexisNexis® Risk Solutions and ACAMS®.
Identifying who is a PEP can be a challenging process with so many types of classifications and regulatory context. Test your knowledge of who should or should not be classified as a politically exposed person with our short, interactive PEP Quiz, which features 3 levels of difficulty. How many can you get right?
Political corruption and the assessment of politically exposed persons
What are the patterns of political corruption and how can due diligence obligations be addressed in line with the risk-based approach?
Request a free trial** of WorldCompliance™ Online Search Tool
To request a free trial** of our PEP list search tool or for more information on how we can help you with your compliance obligations, please call 029 2067 8555 or fill in your details below and a member of our team will be in touch shortly.