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Precision in Risk Screening: Your Vital Guide to Accurate PEP Assessment
A recent study by Moody’s Analytics has uncovered a need for more public awareness regarding Politically Exposed Persons (PEPs) and their financial risks. The research was conducted globally, encompassing Europe, the United States, and the Asia-Pacific region. The survey’s findings revealed that out of more than 7,500 respondents, only 45% could correctly identify the definition of a PEP.
Politically Exposed Persons (PEPs) seeking financial services pose a substantial risk of Money Laundering and Terrorist Financing (ML/TF) to regulated entities. It is essential to note that definitions and regulations pertaining to Politically Exposed Persons (PEPs) vary globally.
Therefore, organisations should consider these differences when developing a risk-based strategy to combat financial crimes. For example:
The European Union (EU) maintains a consistent Politically Exposed Person (PEP) screening policy across its member states, established through periodic Anti-Money Laundering Directives. Non-EU countries often align their PEP policies with the EU’s standards. Consequently, individuals with PEP status, whether in Germany, France, Spain, or other EU/EEA nations, are subject to identical screening regulations. PEP screening in the EU adheres to a risk-based approach for Anti-Money Laundering and Counter Financing of Terrorism (AML/CFT), with the EU adopting the FATF’s definitions of PEPs and Risk and Control Assessment (RCA). Some European countries may warrant more extensive PEP scrutiny. For instance, FATF designates Albania as a high-risk jurisdiction and previous EU Anti-Money Laundering Directives have identified Bosnia and Herzegovina as high-risk.
Regarding the Middle East, which has a diverse AML/CFT landscape, Persian Gulf states, Israel, Jordan, Lebanon, Turkmenistan, and Afghanistan require comprehensive PEP screening. In contrast, Iran and Syria have specific requirements. Due to governmental corruption, some Middle Eastern countries are at high risk for AML/CFT. PEP screening should reflect this elevated risk, and firms must account for naming conventions and duplication challenges to ensure accurate identification of PEPs.
Globally, there are approximately 2.3 million PEPs and an additional 1.3 million known aliases, potentially presenting a money laundering risk to your business. Surprisingly, many regulated firms have yet to harness PEP lists’ power and continue relying on manual PEP screening.
WiseBOS Customer Screening enables you to effectively address the challenges associated with PEP screening and using PEP lists. Regulators require banks and financial institutions to incorporate PEP screening into their AML programmes. While PEP status doesn’t imply wrongdoing, it triggers vital compliance obligations worldwide. Organisations must understand local PEP regulations and consistently apply AML/CFT measures during customer onboarding and throughout the business relationship.
Enhancing customer due diligence means going beyond customer-provided data and includes screening against PEP lists and various news sources, both online and traditional media. Incorporating technology and software into AML compliance solutions can significantly improve efficiency and accuracy. WiseBOS Customer Screening empowers AML/CFT teams to manage PEP data and compliance responsibilities effectively, enabling customer segmentation into risk-based groups, streamlining data collection and analysis, and minimising the risk of human errors.
WiseBOS Customer Screening stands out as a top-tier customer screening solution in the market. WiseBOS Customer Screening is powered by Bureau Van Dijk, a subsidiary of Moody’s Analytics, providing you with access an exceptionally comprehensive database of risk profiles and events. Moreover, it provides access to an extensive risk database covering adverse media, sanctions, watchlists, and PEPs, spanning 240 countries and available in over 70 languages. It empowers businesses with a wealth of information for robust risk assessment and compliance.
The database includes 2 million Politically Exposed Persons (PEPs) categorised by position, level, and country and monitors over 1,000 sanctions and watchlists. Our offering ensures comprehensive due diligence. Moreover, it scans through a staggering 120,000+ trusted global media sources and maintains 13 million risk profiles, focusing on 45,000 profiles related to international sanctions and regimes.