Politically Exposed Persons
As part of their KYC procedure, financial firms submitted to AML regulation must list and apply higher vigilance standards to their PEPs. This exercise can be complicated as the criteria are broad: different international standards and FATF often publish updates in these recommendations.
What is a Politically Exposed Person (PEP) ?
Persons who are more exposed to particular risks because of the essential public functions (political, jurisdictional or administrative) that they exercise or have exercised. They are susceptible to being involved in bribery or corruption because of their prominent influence, position or public authority. Moreover, any close associate or family member of such a person will also be considered at risk and may be added to a company's targeted list
What is an Adequate Risk Management ?
Anti-Money Laundering Directive and Belgian National act provide that financial institutions must have "adequate risk management systems, including appropriate risk-adjusted procedures, to determine whether the client, an agent of the client or the beneficial owner of the customer is or has become a politically exposed person ".
§ 2 of the same article indicates that these systems also entitle life insurance companies to identify the cases in which a beneficiary of a contract life insurance and, where appropriate, a beneficial owner of the beneficiary of such a contract is a PEP.
Thus, in terms of increased vigilance with regard to PEPs, the first obligation of financial institutions is to adopt a procedure and a device for detecting transactions or business relationships in which one or more persons meet the criteria. This device must, on the one hand, allow this detection during the execution of occasional operations or when entering into business relationship, but it must also allow, on the other hand, the detection of the relations of business in which one or more of the persons involved in one of the qualities listed above has acquired the status of PEP during the course of the business relationship.
Introduction of National PEP
For its fourth amendment the AML Directive adopted the concept of national pep. The directive provides a non-exhaustive list of public prominent functions:
- heads of state, heads of government, ministers and secretaries of state;
- parliamentarians or members of similar legislative bodies;
- members of the governing bodies of political parties;
- members of supreme courts, constitutional courts or other high courts, including administrative courts, whose decisions are not subject to appeal, except in exceptional circumstances;
- members of the courts of accounts or councils or executive boards of central banks;
- ambassadors, consuls, charge d'affaires and senior officers of the armed forces;
- members of the administrative, management or supervisory bodies of public companies;
- directors, deputy directors and board members of an international organization, or persons holding an equivalent position within it.
Pideeco: Customer due diligence investigation platform
Within a continuous dynamic environment it might quickly become impossible for human analysts to follow the evolving track of worldwide politically exposed persons and their family and business relatives.
At Pideeco we decided to revolutionize manual approaches and human interaction, inconsistent with modern vision.
We focus on developing grounded solutions that help real business professionals to make the best assessment supported by the best information at their side.
Pideeco Screening solution provides advanced monitoring of unstructured and structured data sources to identify existing risk signals better. Our solution includes the verification of all mandatory risk evaluation criteria. The database is updated continuously with (inter-)national official and another relevant listing of sanctioned individuals or entities. Furthermore, Pideeco holds the property of a Belgian National list of politically exposed persons and performs daily updates of the information it contains.
Pideeco Customer Due Diligence platform provides a wide variety of resources and workflows and allow you to centralise your customer risk appreciation and developments in one secured location.
Insurance/reinsurance companies play an important role for the European economy. Many European countries, among them Belgium, are listed in the top 20 OECD countries with the highest gross insurance premiums, with Belgian premiums reaching around 30 billion US dollars ...Read more Author What else ?