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Everything you need to know about PEP Checklist

PEP Checklist

There are higher chances that individuals in prominent administrative positions are directly or indirectly involved in financial crimes such as bribery, corruption, and money laundering. This is why financial institutions or regulatory bodies designate politicians, judges, high-ranking military officers, their immediate relatives, or close associates as politically exposed persons (PEPs), and monitor them.

This underscores the importance of PEP screening services in today’s rapidly evolving business landscape. The PEP screening solutions help mitigate illicit financial activities such as corruption, bribery, and money laundering. 

This really highlights how crucial it is to have PEP screening services in today’s fast-changing business world. These screening solutions are super helpful in tackling sneaky financial activities like corruption, bribery, and money laundering.

The PEP checks ensure you avoid doing business with any entities that could threaten your well-reputed image or expose you to unethical activity. So, before delving into politically exposed persons checks, let’s understand who PEPs are and who falls into that category.

Decoding PEPs and its Three Types 

Politically exposed persons are individuals who have previously held or currently hold influential public office or a position that involves decision-making power. The list includes politicians from treasury benches, individuals associated with the judiciary, or military officers. PEPs are not limited to a specific state or country; they could hold public office either domestically or internationally. 

There are three main categories under which all PEPs fall.   

1. Foreign PEPs 

Well, you would find it difficult to read any official definition that could define foreign PEPs, so like most companies, we will also align it as laid out by FATF, which defines that ‘any individual who holds a prominent public function on behalf of a foreign country known as Foreign PEP.’ The positions of these people are not akin to government positions. According to FATF, the following individuals are Foreign PEPs.

  • Head of State/ Heat of Governments
  • Senior politicians from Treasury benches 
  • Senior Judges or military officers 
  • Executive of state owned corporations or a senior official of prominent political party 

2. Domestic PEPs

Unlike foreign PEPs, individuals who currently hold or have previously occupied influential public offices within their own country fall under this category. These individuals may vary from state to state depending on the style of government the country operates under, but possible domestic PEPs include public office holders, senior judges, and senior armed officers.

3. International organization PEPs 

Any individual who is currently or has previously been appointed as head, director, or deputy of international organizations is largely known as Internal Organization PEPs. Those international organizations are the United Nations, IMF, World Bank, and other major global institutions.

Four most important steps included in PEP checks 

A thorough check of politically exposed persons provides vital information necessary to comply with AML obligations and obtain detailed information regarding whether the person is politically exposed. If so, it reveals the risks a PEP can pose to your organization.  

Gather General Information 

The general information of any individual includes everything from their first and last name, date of birth and place, nationality, occupation, family, close associates, and associated entities. Begin with their full legal name, aliases, or names the individual might be known by. PEP screening systems include checking nationality to differentiate people with the same name but different nationalities. To avoid inaccuracies, cross-reference the individual with their latest visual image.

Use Dependent and authentic Database 

The authenticity and reliability of the information you desire to gather heavily rely on the database you utilize. Therefore, choosing a comprehensive and updated database that has the ability to capture the latest information about PEPs globally is necessary. AML Watcher provides a database that streamlines your PEP check process and helps you navigate professional partnerships with transparency and integrity.

Conduct a comprehensive check on Politically Exposed Persons.

Once you gather necessary general information and select a dependable database, you now need a systematic approach to ensure accuracy and thoroughness. And to ensure that you need to begin your search with the database scan. Input all the necessary information you gathered in the first phase. This information will likely provide you with a list of PEPs matched to your information.

Here are some additional checks you should conduct for accurate results. 

1. Analyze match

To ensure accuracy, cross-reference the information you’ve collected earlier—name, date of birth, place, alias, and other distinguishing features. Not every match will be genuine, so it’s crucial to verify thoroughly.

2. Cross-referencing with other sources

Examining each individual in comparison to your provided information will provide insight into why they are on the PEP list. This will aid in risk assessment for your business.

3.  Contextual understanding 

To ensure the accuracy of your findings, it’s essential to cross-check with other reliable databases. This extra layer of vigilance is necessary to further minimize the risk of obtaining false results.

4. Risk Assessment 

Negative results are those that at first indicate that the individual isn’t a PEP, but in reality, they are. Therefore, initial results must be approached with caution, and it’s crucial to double-check the input data and cross-reference with other reliable databases.

5. Verify Negative Results

The purpose of a PEP check isn’t solely to gather information but to evaluate risk assessment. A risk profile must be created of each individual PEP which involves considering the potential implications of engaging with such individuals, taking into account their role, location, and record. 

Stay Updated with the Latest Changes 

Due to the dynamic nature of politics and business, the list of PEPs continually changes over time. Therefore, to stay updated with the latest PEP screening list, you need to regularly review and monitor your existing customers and clients.  

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