People who hold prominent public positions or have held prominent roles in the country are called politically exposed persons (PEPs). They are considered high-risk clients due to their influence, power, and authority in different sectors.
They can misuse their power to gain personal benefits and are involved in illegal activities such as corruption and bribery. Financial organizations and regulated businesses are mandated to conduct AML checks to identify the financial risks. One of the AML checks is PEP checks, which is performed through PEP screening.
PEP lists are a database of known PEPs. PEP who are involved and were engaged in illegal activities like money laundering and terrorist financing. Transactions of high-risk clients can be linked with suspicious activities, and those clients are cross-checked against PEP lists.PEP lists determine who is more risky and who poses low risks. Your client was involved in which crime, and for how long can be known through PEP list screening.
The use of AI made PEP screening more efficient and accurate, and gave results quickly. AI pep list screening allows you to identify risk changes in real time and provides you with a global pep list.Local and foreign PEPs are screened with the blink of an eye due to AI PEP list screening, and AML compliance is assured.
Significance of a PEP list and its details
A detailed global PEP list covers all types of PEPs across the world who are linked or have been associated with higher positions. Renowned people from different sectors, like judges, lawyers, army officers, heads of state, politicians, and CEOs.Not all PEPs can be linked to financial crimes, but they are expected to be involved in illegal activities due to their power. The PEP list is a global database with complete records and details about politically exposed persons.
These lists are issued, compiled, managed, and maintained by government, regulatory bodies, and law enforcement bodies.Third-party compliance providers offer AML solutions that provide global PEP lists. These PEP lists are taken from differnt sources and countries to give a detailed look at financial risks related to PEPs.
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Ensure compliance with PEP Screening.
PEP screening is an aml/CFT compliance requirement and is performed in onboarding clients and throughout the business relationship. Financial organizations, fintech companies, healthcare departments, and other regulated businesses are mandated to perform a PEP list screening.
The purpose of the PEP list screening is to make sure that your company doesn’t involve itself with people who are associated with financial crimes. All the associates, relatives, and family members linked with politically exposed persons are also screened as they are also categorized as PEPs.If businesses are not checked for clients using the politically exposed persons list, then their failure leads to heavy penalties, sanctions, and legal repercussions like license suspensions.
Businesses may face reputational damage and client loss due to the failure of ai pep list screening.PEP screening is mandatory to ensure AML/CFT compliance.
Challenges of Traditional PEP List Screening
There are two types of PEP list screening: Manual and traditional list screening. Manual PEP list checks require more time, and there are risks as they can lead to errors. False positive results compromise the efficiency of PEP checks.
Compliance time is spent on manual checks, by spending hours, and is still unable to verify actual risks.Moreover, keeping PEP lists updated is a challenging task to do manually. Status and rank of politicians change with time. Some new people get hired, some resign, and some get involved in legal cases.An outdated politically exposed persons list compromises your compliance with AML/CFT laws.
Advantages of AI PEP List Screening
AI PEP list screening ensures that financial organizations automate and streamline the PEP screening process. AI Pep list screening ensures fewer false positive results, faster speed, and detection of real-time changes.AML software provides a global PEP list, which gives real-time updates extracted from different sources, websites, news, and public records. It offers an NLP integrated system that gives you results in any language to verify and provides authentic data.
False positive results are reduced, and a risk score is assigned to politically exposed persons based on their status, positions, country, and other factors.
How to perform PEP screening
- Use automated AML software tools that offer you AI PEP list screening, which saves your time and gives results with accuracy.
- Always make sure to use a global database that your compliance provider offers. The list should be updated regularly and include data from multiple countries.
- Screen your clients and partners throughout the business relationship, not just on onboarding, to know evolving risks linked with PEPs.
- Customize your risk profile according to your industry, client, and risk type.
- Keep a record of all the data about your PEP screening for audits.
