A PEP include Heads of State or government, senior politicians, judicial or military officials, and close associates/family members of the Politically Exposed Person. Because of the PEP’s influence or position, there is a higher risk for potential involvement in bribery and financial crimes such as money laundering. PEP screening is a process used by banks and other financial institutions during client onboarding as part of their Know Your Customer (KYC) initiatives.
Why is PEP Screening Important?
Since there are potential risks in doing business with PEPs, financial organizations must have a system in place to assess and mitigate those risks. This is where Customer Due Diligence (CDD) comes into play. CDD or KYC policies are essential in building an effective Anti-Money Laundering (AML) program. By properly assessing a customer’s risk prior to onboarding, financial organizations can apply the preventive measures necessary to protect the organization and PEP’s business relationship.
The CDD Rule has four core requirements as outlined by the Financial Crimes Enforcement Network (FCEN). It requires covered financial institutions to establish and maintain written policies and procedures that are reasonably designed to:
- Identify and verify the identity of customers
- Identify and verify the identity of the beneficial owners of companies opening accounts
- Understand the nature and purpose of customer relationships to develop customer risk profiles
- Conduct ongoing monitoring to identify and report suspicious transactions and, on a risk basis, to maintain and update customer information
Why Melissa?
To avoid violations and costly fines and penalties, you need to have a comprehensive view of compliance across your enterprise. Personator, Melissa’s Identity Verification service, provides PEP (Politically Exposed Person) and watchlist tools to consolidate screening and easily integrate with your existing technology infrastructure. Personator allows you to choose from our proprietary Personator AML Data Feed which includes comprehensive sanctions lists (OFAC, UK, UN, EU) PEP and other U.S. government and international restricted party watch lists.