Owning and running a business is a huge responsibility. There are many things that can either make or break your success. Complying with all the latest rules and regulations surrounding business law is essential. As corruption and financial crimes like money laundering and bribery are very common especially in the financial sector, it’s important to weed out politically exposed persons through PEP screening.
What are PEPs?
Politically exposed persons or PEPs are customers of financial institutions who are considered at greater risk of committing bribery or money laundering. These people are more likely to commit such crimes as a result of having more opportunities to do so. As a result, it’s important that these types of politically exposed people are identified and thoroughly screened by financial institutions. Determining the level of risk an institution possibly faces is important and can be done through PEP List Screening. This should be part of any good AML compliance program within an institution. If you need more details about various types of politically exposed people, visit this website.
What is the Importance of Identifying PEPs?
It’s absolutely essential to identify various types of politically exposed people due to bribery, money laundering and other corruption crimes being so widespread across the globe. These crimes can cost a whopping $1 trillion per year in money stolen and lost through bribery and money laundering. Corruption as a whole amounts to around $2.6 trillion each year. These are high numbers that can adversely affect financial institutions and tarnish their reputations. As a result, PEP screening must be done to identify potential risky customers. Such customers carry a much higher risk of committing these crimes and others such as terrorism. Institutions that don’t implement PEP screening also face significant penalties for failure to comply with local or international rules and regulations.
What is Needed for PEP Screening?
There are certain criteria needed by financial institutions for performing PEP screening on customers that might be politically exposed persons. Any electronic records of customers must be fully up to date and complete so that the screening process can be successful. At the minimum, the following information must be available for PEP screening:
- Customers’ full names
- Customers’ dates of birth, including the year
- Customers’ genders
- Customers’ country of political exposure
- Politically exposed roles and appointment dates, including years, of customers
- The date the PEP left their post
The right PEP screening policy can help your financial institution to identify PEPs that might pose risks. You can reduce those risks and comply with rules and regulations to ensure that your institution can continue successfully doing business.
Read a similar article about guide to CCPA here at this page.
