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universally observed definition for PEPs, but most organisations use guidance
set out by the Financial Action Task Force. The FATF defines PEPs as ‘individuals who are or have been entrusted domestically with prominent
public functions.’ Some examples of positions which qualify as PEPs are as follows:
Senior executives in
government-owned businesses, like the BBC
Leaders of political parties
Senior members of religious
High-ranking military officials
Consuls and ambassadors
Members of the House of Lords
Members of parliament
Close friends or relations of
any of the above
organisations might filter these roles into different categories to determine
the level of risk, SmartSearch treats every match with equal importance. Our cutting-edge automated PEP screening
software can even identify Politically Exposed Persons who are logged under nicknames, aliases and abbreviations, so a thorough search is guaranteed.
12 of the FATF guidance, it states that ‘the handling of a client who is no longer entrusted with a prominent
public function should be based on an assessment of risk and not on prescribed
In other words,
this is usually subject to interpretation. Anyone who has been a PEP in the
past might still qualify as a PEP years after they leave the high profile
position they occupied, if they’re still relatively well-known within their
field. Once a past or present PEP has been identified, deciding how to proceed is at your
discretion, but vigilant
ongoing monitoring will enable you to manage the risks involved.
The FATF guidance
makes the specific distinction between PEPs in the UK and PEPs overseas, who
must also be considered during your AML checks. A PEFP, or Politically Exposed Foreign Person, is defined by the FATF as any ‘individuals who are or have been entrusted
with prominent public functions by a foreign country.’
operates on a global scale, and our sophisticated screening software
enables us to identify PEFPs just as easily as PEPs, so you can be sure we’ll never
miss a beat.
amongst your potential clients and customers is half the battle – it’s crucial
that you’re able to spot PEPs when carrying out your AML checks, as they
drastically increase the money laundering risk to your business.
identified a PEP you’ll need to investigate further,
building a solid profile
around their public role,
and establishing how they might make your company more vulnerable. These
details will allow you to make an informed decision about whether or not to have dealings with them.
If you do decide to
work with a PEP, they will require more intensive ongoing monitoring than a normal client or customer. As well as Enhanced Due Diligence, your ongoing monitoring process should
involve measures like keeping a close eye on all future transactions, frequently reviewing their PEP status, and setting clear business boundaries.
Our complete AML
solution is a comprehensive
platform that can easily
identify PEPs and PEFPs, using unparalleled resources like the Dow Jones WatchList, which is updated daily.
Carry out all your
AML checks in one place, from initial checks to sanctions
screening and ongoing monitoring – AML compliance has never been easier. Our automated system
allows you to ensure that no stone goes unturned, so you’ll always get all the information available
about your potential client or customer.
to the Financial
a PEP is an individual who is (or has been) ‘entrusted domestically with
prominent public functions.’ Simply put, anyone in a high-profile position
within the public sector can qualify as a PEP. Some politically exposed person
examples include members of parliament, high-ranking military officials, and
senior executives in government-owned organisations, like the BBC or NHS.
the context of AML, to be politically exposed is
to be in a prominent public position, generally resulting in significant wealth
or influence. When a person is politically exposed, they present a greater risk
of involvement with bribery, corruption and other forms of financial crime, so
they require monitoring more closely. This is what PEP
who qualifies as a PEP is automatically a high-risk customer. This is because
PEPs – by the very nature of their positions – are exposed to more
opportunities to be involved in different forms of corruption, like accepting
bribes, tax evasion, fraud or money laundering. This is why PEP lists are so
important, as they enable you to identify and monitor politically exposed
persons, before going into business with them.