Why Are PEPs Considered High Risk?

Is a celebrity a pep?

A celebrity or a prominent member of public may be a person of influence but are generally not classed as PEPs..

Why are PEPs high risk?

PEPs are higher-risk clients for institutions and financial firms to onboard, simply because they are exposed to more opportunities to accept bribes, be involved in corruption by virtue of their position and launder money.

How long is a pep considered a PEP?

12 monthsRegulation 35(9)(a) and (b) provides that a person who is a PEP should continue to be treated as a PEP for a period of at least 12 months after the date on which that person ceased to be entrusted with that public function; or for such longer period as the relevant person considers appropriate to address risks of money …

What is AML screening?

Name screening or AML name screening is one of the methods used for risk assessment of existing or potential customers of organizations under the AML obligation. … Businesses must plan a risk-based control process to identify crimes such as money laundering and terrorist financing.

Should domestic PEPs and foreign PEPs be treated the same?

Not all PEPs have the same level of risk. You must treat every foreign PEP as a high-risk customer. Some domestic PEPs or international organisation PEPs are also high risk, but others are low-to-medium-risk customers.

How do you check if a person is a PEP?

Businesses are not required to perform extensive investigations to determine if an individual is a PEP. Rather, this can be achieved via a simple AML check which includes a screen against a register of publicly known individuals with public functions, their associates and close family.

Are PEPs high risk?

PEP Risk Relationships with PEPs may represent increased risks due to the possibility that individuals holding such positions may misuse their power and influence for personal gain or advantage, or for the personal gain or advantage of close family members and close associates.

What is PEP KYC?

In basic terms, a Politically Exposed Person is someone who, through their prominent position or influence, is more susceptible to being involved in bribery or corruption.

What is the difference between source of funds and source of wealth?

We are clear that ‘Source of Funds’ describes the activity that generated the funds used in a business relationship, whereas ‘Source of Wealth’ describes how a customer obtained their total wealth.

How do you do a sanction screen?

TOP TIPS for effective sanctions screeningPrepare your customer data well. Financial crime compliance costs have escalated, requiring greater focus on operational efficiency in KYC/AML. … Use proven, reliable technology to support sanctions screening. … Screen against high quality and comprehensive sanctions data.

What’s a pep?

Politically Exposed Person (PEP) FAQs. A Politically Exposed Person (PEP) is defined by the Financial Action Task Force (FATF) as an individual who is or has been entrusted with a prominent public function.

Are state owned entities PEPs?

5. Should government-owned/state-owned enterprises be considered PEPs? No, but senior management and boards of directors of such enterprises are.

What is considered a politically exposed person?

A politically exposed person (PEP) is defined by the Financial Action Task Force (FATF) as an individual who is or has been entrusted with a prominent public function. … The FATF first issued mandatory requirements covering foreign PEPs, their family members and close associates1 in June 2003.

What are PEPs and sanctions?

Organizations need to perform a detailed politically exposed person (PEP) and sanction check when onboarding new customers, as well as during the ongoing review of clients, to ensure that the organization’s reputation, revenue and capital are protected. …

Are judges PEPs?

Domestic PEPs: individuals who are or have been entrusted domestically with prominent public functions, for example Heads of State or of government, senior politicians, senior government, judicial or military officials, senior executives of state owned corporations, important political party officials.

What to do if your client is a PEP?

If your client is a PEP, you should apply enhanced due diligence measures….Handling PEP clientsget senior management approval for the business relationship.take adequate measures to establish the source of wealth and source of funds.closely monitor the business relationship throughout.