Question: Why Are PEPs Considered High Risk?

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.


What does PEP mean?

: brisk energy or initiative and high spirits. pep. verb. pepped; pepping.

How do you check if a person is a PEP?

You can check to see if your name is on a PEP register by viewing your Multi Agency Credit Report with checkmyfile.

What industries are considered high risk?

Here is a list of popular industries that typically most lenders view as a high-risk investment:Accounting.Agriculture.Alcohol.Construction.Financial services.Food.Insurance.Media.More items…•

Is a high court judge a politically exposed person?

A politically exposed person is someone who holds a prominent public position or function, such as a Head of State, senior government official, High Court of Australia judge, high-ranking member of the armed forces or the Chair or CEO of an organisation that influences state or federal organisations.

What is the purpose of sanction screening?

The purpose of sanction screening is to determine if an individual or entity is excluded from participating in federal health care programs. Thus, organizations need to monitor state and federal exclusion databases to avoid the risks associated with hiring or working with excluded individuals or entities.

What is a sanction check?

Sanctions checks are specialized searches that include a number of government sanction databases that identify individuals who are prohibited from certain activities or industries.

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 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 …

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.

Which banking products are at the highest risk?

Card-present transactions are lowest in risk while card-not-present (CNP) transactions get progressively riskier. Subscriptions or recurring billing are considered some of the highest risk. Annual billing is of particular interest to the banks.

What is PEP status?

In financial regulation, a politically exposed person (PEP) is one who has been entrusted with a prominent public function. A PEP generally presents a higher risk for potential involvement in bribery and corruption by virtue of their position and the influence that they may hold.

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.

What are high risk customers definition?

Higher Risk Customers are those who are engaged in certain professions or avail the banking products and services where money laundering possibilities are high. … Financial Institutions conduct enhanced due diligence (EDD) and ongoing monitoring for the higher risk customers.

What is CDD and EDD?

The second step is Customer Due Diligence (“CDD”) which requires the bank to obtain information to verify the customer’s identity and assess the risk. … If the CDD inquiry leads to a high risk determination, the bank has to conduct an Enhanced Due Diligence (“EDD”).

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.

What are red flags in AML?

Red flags include: A significant amount of private funding from an individual running a cash-intensive business. The involvement of a third party private funder without an apparent connection to the business or a legitimate explanation for their participation.

What is a pep analyst?

• Gather information about PEP and High Risk customers in accordance with. Group policy and regulatory requirements. • Responsible for identifying and remediating any gaps in client KYC information. and obtaining through customer contact strategy. • Investigate, analyse and recommend whether the customer relationship …