Important Things to Know About PEP Screening

Banks and financial institutions need to make sure their PEP screening processes are thorough and up to date. But what is PEP screening and how does it work? Read on to learn more.

What are PEPs?

PEP is a shorthand for politically exposed person. When a person does business with a bank or financial institution, they are screened for any potential financial risk. Politically exposed people are considered risks and are watched more closely due to their higher likelihood of being exposed to financial corruption, bribes, money laundering, and more. Due to this, PEP screening has become a standard process for financial institutions.

Who are PEPs?

PEPs are people who are entrusted with public functions. People can still be considered PEPs if they continue to hold influence after leaving their position. For the most part, PEPs fall under one of the following categories:

• Public officials and representatives
• Party functionaries
• Former PEPs
• Current or former official in branch of a foreign government
• Senior executives of corporations or foreign owned commercial entities
• Publicly know close associates or friends of a PEP
• Immediate family members of PEPs

These are general guidelines, but the final risk assessment is up to the financial institutions itself.

How Does PEP Screening Work?

In general, PEP screening is more in-depth than the typical customer screening process. First, the bank or institution must approve them as a new client. They must also do identity verification measures. Enhanced due diligence will also be part of the process including, but not limited to, verifying an individual's source of wealth and funds. After the PEP becomes a client, enhanced monitoring and periodic review will be required on an ongoing basis.

If a bank or financial institution has done extensive PEP screening, they will be much more likely to prevent financial crimes such as corruption and terrorist funding. That's why it's important for banks to make sure that they're staying on top of the latest PEP software and procedures. It ensures the safety of potential victims of financial crimes and it protects the institution from a legal standpoint.

Author Resource:-

Eldon Broady writes about identity verification and business verification service. You can find his thoughts at screening solution blog. To know your customer compliance and more information in this regard, visit the website.