The Challenges of Politically Exposed Persons (PEPs)

FATF explicitly emphasizes that its politically exposed persons (PEPs) requirements should not be interpreted in any way as an effort aimed at stigmatizing PEPs. Given the tens of thousands of domestic and foreign PEPs, de-risking at the slightest indication of a PEP is not a real possibility for financial and non-financial institutions. Doing business will inevitably mean having to onboard persons in prominent political positions. But while screening for PEPs is a crucial part of a financial institution’s AML program, it’s incredibly challenging to get it right.

In our guide we cover:

• The Origins of the Concepts of PEPs
• What Constitutes a PEP
• Relatives and Close Associates (RCA)
• PEPs and Risk
• Dealing with the PEP Risk Level
• Red Flags and Risks
• Time Limits
• The Use of Databases