What is and how do I screen a PEP?
PEP stands for Politically Exposed Person. Due to their influential position, a higher risk of money laundering, for example, is assumed. They can get accused of acts like bribes, tax evasion and terrorist financing. Now you are probably wondering: “When is someone a PEP and how do I check?” We provide the answer on this page.
When is someone a PEP?
Someone is labelled a Politically Exposed Person if he or she holds a (high) political or official position. Or if he or she previously held a prominent political position. Direct relatives or acquaintances are also among this group. This applies to both foreign and domestic politically exposed persons. If you are dealing with a PEP, you must conduct enhanced Customer Due Diligence (CDD).
Some examples of Politically Exposed Persons (Article 2 of the AML Implementing Decree 2018) are:
- Ambassadors, chargé d'affaires or senior officers of the armed forces
- Heads of state, government leaders, ministers and deputy ministers and members of parliament of state secretaries
- Member of the board of a political party
- Directors of international organizations
- Member of Supreme Court and Constitutional Court
- Members of audit offices
- Member of the Governing Council of Central Bank
- Members of supervisory or management body or governing body of state-owned enterprises.
How do you proceed if you are (or suspect you are) dealing with a PEP?
Do you believe you are dealing with a PEP? Because an extra duty of care is required for a PEP, the origin of the assets must, among other things, be verified. It is often thought that extensive investigation, in the case of a long-term relationship, is no longer necessary. This is incorrect, as risks may also reside in the PEP’s suppliers. It is therefore important to also screen the PEP’s suppliers. Ask your client to issue a PEP statement based on a clear explanation and (updated) substantiation. In addition, ask your organization’s senior management for permission to maintain the relationship or transaction.
RegLab for screening a PEP
Do you also spend a lot of time on a Know Your Customer (KYC) and Customer Due Diligence policy to comply with AML requirements, including the PEP investigation? Despite the frustrations they may generate, the KYC principles are becoming increasingly important. RegLab helps organizations to quickly, safely and easily comply with Know your Customer policy laws and regulations.
Themed file: fully prepared for the supervisor’s audit
This article is part of a number of articles and downloads that will help you prepare yourself for the supervisor’s visit. This content is based on a supervisor's FAQs during an audit. Do you want to be 100% AML-proof and ready for the supervisor’s visit? Find all FAQs in our Knowledge Centre.