The emergence of the digital era has increased the efficiency of criminal activities, making it essential for businesses to revamp their fraud and money laundering defence strategies – and Politically Exposed Person Screening
, often referred to as PEP Screening, is just one of many steps in the approach to safeguarding your business. This process is an essential combative measure used when onboarding and establishing business relationships with PEPs in order to maintain Anti-Money Laundering compliance
, also known as AML compliance, and effectively protect business from financial crime.
What it Means to be AML Compliant
is not just a once-off onboarding procedure. Remaining AML compliant requires the continuous use of AML practices throughout the duration of all business relationships, ensuring the timeous avoidance, identification and reporting of suspicious behaviour. For the initial onboarding process, the customer is required to present their ID document/foreign passport, proof of address, a liveness detection scan, and more depending on the onboarding solution. Or, in the case of a business, it is necessary for the client to produce proof of the company name, company registration number, and company address. Once this information is obtained, it is up to the business to verify the details, identify the status of the individual/business, develop transactional activity profiles, assess the risk they pose, monitor their accounts against international watchlists, investigate any suspicious activity, and document their findings. Taking the sheer scope of requirements into account, incorporating digital AML
procedures is essential to enhance the speed and accuracy of these processes. With the assistance of automated procedures, AML compliance becomes simpler, allowing efficiency in continuously updating and reviewing PEP information.
PEP Screening and AML Compliance: The Purpose
AML compliance is not simply an act of business protection, but rather a crucial element of a functioning society. The purpose of these regulations is to hinder criminals from using illegally obtained funds, diminishing acts of theft, fraud, corruption and other crimes. An AML PEP Check
is a valuable tool in this crusade, offering a way for businesses to identify and monitor PEPs via international watchlists, and determine their risk score – a useful factor for secure onboarding. Once the PEPs have undergone the screening process, businesses will be able to monitor their activities to prevent them from engaging in illegal acts.
The Data Gathering Process
Gathering the relevant data is vital when determining PEP risk scores. A digital PEP screening process
can easily scour and pull the applicable information from a range of diverse government sources, including sanctions lists, FBI watchlists, interpol watchlists, political lists and more. As the PEPS are cross-referenced against these lists, the screening software will accurately scan for associations with money laundering, terrorism, financial fraud and more. Armed with this information, companies can then keep a watchful eye on any onboarded PEPs, noting and acting on red flags as they are discovered.
PEP Red Flags
Identifying an individual as a PEP does not necessarily mean that a business should not take them on as a client, only that they’ll have to keep a close eye on their activities. An individual with PEP status is not undoubtedly involved in criminal activities; however, their position of power does come with a higher risk. Therefore, stringent screening processes such as PEP screening are necessary during customer onboarding as a preventative strategy against these criminal activities. This initial screening process will allow a business to establish a base, ascertaining information such as the PEPs standard transactions. By doing so, it becomes a lot easier to determine suspicious behaviour such as large transactions and spikes in activity. These efficient defence tactics allow businesses to act quickly before having to deal with any financial implications, maintaining their AML compliance.
An Armoured Approach to PEP Onboarding
The ideal way to mitigate risk in these situations is to detect and manage high risk client accounts before the relationship is even initiated. Automated software solutions allow businesses to identify PEPs, calculate the risk they pose to your business, and remain AML compliant all through a real-time digital risk scoring service. Receiving a comprehensive PEP report
, containing the PEP’s verified personal information, a risk score, applicable watchlist types, and a watchlist status summary, businesses will always be ahead of the game when it comes to combatting criminal activities. Empower your business to confidently onboard PEPs with solutions that provide you with information to make better and safer onboarding decisions and keep you informed.