The smooth running of financial activities demands PEP Screening around the world. Everything related to financing should be done correctly. Listing these PEPs holds much importance in financial processes. Compliance with these PEP screening methods varies within different countries. Each region works on its regulatory framework and develops different strategies. These regulations are not limited to documents but are applied practically to run the financial sector transparently. Close monitoring ensures these procedures align with regional standards to reduce bribery and corruption-related issues. In this blog, we’ll discuss the PEP compliance factors that set the base of PEP screening.
PEP Screening Method
PEP screening is the process of checking if everything is okay with cash flow. However, PEPs are the high profile persons securing higher positions in government or other places. They have power and broad influence over the public, but there is a chance to misuse them. The PEP Screening method has the following steps:
- Basic Information collection
- Cross-checking PEP list Screening
- Assign Risk Number
- Regular Monitoring of PEP
- Submitting reports to higher authorities
- Taking necessary preventive actions
Sources of PEP Screening lists
Different PEP screening Software are used to add those Politically Exposed Persons (PEPs) into their databases. PEP Screening Software generates PEP screening lists. PEP list screening uses various sources to identify individuals having politically exposed status.
- Government Databases contain information about PEPs.
- Financial Action Task Force (FATF) maintains a list of international individuals involved in financial crimes.
- Government and international authorities publish sanctions lists against trading.
- Media like news articles and public records provide information about public positions.
- Government agencies maintain records of both national and international political appointments and services.
- Some companies compile information from all those sources in their databases, and financial institutes get access to these commercial services to stay updated.
Types of PEP Screening
PEP screening measures and PEP check vary according to the type of PEP Screening. PEP screening categorizes PEPs into categories It is necessary to find and check both types of PEPs with their family and friends. PEPs on an ongoing AML screening, developed this approach to handle risks and problems associated with connected people.
Foreign PEPs
These are the people who work from different countries. They may be government workers, diplomats, or big bosses globally. Monitoring Foreign PEPs and their close friends eliminates risks using rules like knowing your customer (KYC) and preventing money laundering (AML).
Domestic PEPs
This group includes people within the country. Either government workers, judges, or company bosses. They are most likely to be involved in corruption or illegal money activities. PEP Screening of such individuals and their connections saves the company’s reputation or financial penalties.
How long does an individual stay listed as a PEP?
Only the individuals securing higher positions are listed as PEPs. The PEP compliance program doesn’t set a time for when to be removed. A person remains on the PEP list as long as holds an influential position. It’s not like a timer that goes off after a specific time. This helps in monitoring risks associated with PEP individuals.
Essential factors to be Checked before Screening
- Check and verify the person’s job before considering it as PEP.
- Look for suspected PEP’s international connection. If so then proceed.
- Collect details about the duration PEP position and longer duration matters for PEP Screening.
- Gather authentic information about PEP’s connections.
- What type of risks may he be involved in?
- Verify that a person follows job rules. If not, do a good PEP screening.
Regional PEP Screening Compliance Standards
PEP Screening Solutions helps to comply with screening rules. PEP Screening Compliance Program has different criteria for different regions per their standards.
PEP Screening in the UK to reduce the risk linked to those high profiles. They monitor their sources of cash, property, luxury items, and tax statements.
Europeans check PEPs, their investments, relations with high-risk countries, and things they own. Middle Eastern countries like Oman, Yemen, and the United Arab Emirates mostly check both domestic and foreign PEPs. These countries have strict checks because of higher chances of issues like corruption and bribery. The United States and Canada report such individuals to a particular agency.
Conclusion
Countries and businesses need to understand and follow PEP list screening rules. Selection of proper PEP screening Software is equally important for a business. PEP screening Solutions for business consider factors like vendor, product scope, and methodology. Businesses should contribute to PEP Screening effectively to prevent financial crimes.