One of the most critical points for a bank when it comes to conducting activities regarding the prevention of risks that are directly or indirectly linked with money laundering, bribery, and related crime is taken as the step of PEP screening as per the analysis of compliance experts.
Today in this article we will be studying about the PEP identification and strength that particularly gains from the overall PEP screening procedure.
Understanding the Criteria for PEP Status
Modern features of PEP tend to highlight the importance of banking organizations having a thorough understanding of their respective clients. One of the most important steps in the screening procedure for PEP is finding a PEP. Every institution related to the field of finances advises that every client is obliged to thoroughly investigate in order to determine whether they meet the requirements to be considered a PEP.
Ability to correctly identify someone up front is considered to be quite an essential component of the PEP status check as it helps in signifying the hazards that these PEPs may provide and are the reason for the entire PEP screening procedure as well. According to the data, over half a million people worldwide are classified as PEPs by 2024 which is a 10% increase from the year before.
Comparing Automated and Manual PEP Screening
The manual nature of examination regarding every customer file served as the foundational role of the PEP screening procedure for many years. A big chunk of the financial institutions are now using the automated screening methods which are taken as a necessary component of their overall PEP identification and status check as a result of the client number to which they are serving.
This whole procedure will ultimately support the ongoing client monitoring against PEP data sources so that compliance teams are fully equipped to receive timely notifications and notices about any high risk individuals. It has been noticed that the efficiency of screening which is powered by artificial intelligence has increased by 35% in recent years.
Discover the client’s PEP status
Evaluation of PEP data in an additional manner is somewhat necessary in the sort of cases when a potential customer is identified during the initial PEP screening process. Final confirmation in terms of formally classifying the position of an individual is done as low, medium, or high risk in relation to the roles involving politically exposed persons. Financial firms are somewhat obliged to precisely assess the risk rating of the respective client in order to decide what level of continuous monitoring would be appropriate for the PEP identification of a new client. The whole process of such a nature tends to guarantee that the adhered-to-stated rules are in accordance with the company’s PEP Screening Procedure.
Establish If a customer is PEP
A financial institution must thoroughly examine all of the information provided by a recently discovered potential client in order to classify their risk level throughout the PEP screening procedure. This would include their profile as a Politically Exposed Person that would include the position they held and any other pertinent details that could affect their likelihood of corruption. This was expanded in the year 2024 to mandate that businesses update their PEP categories every six months.
Continue to screen for PEP.
Businesses or companies must also continuously screen all of their current consumers for PEP as per the financial legislation. Modern features of PEP screening tend to keep an eye out for the respective modifications to a Politically Exposed Person profile or risk classification by regularly checking the PEP data sources as well.
Recurring PEP checks are made easier by the automated screening tools that further keep an eye on the current clients who might take on higher-risk positions. Their degree of surveillance needs to be appropriately adjusted for this.
Strong PEP screening procedures’ advantages
- Businesses or companies are particularly advised to maintain the element of compliance with the expectations of the regulator for monitoring the whole PEP lifecycle simply through conducting regular PEP checks and continuing evaluations of PEP data as well.
- A corporation can perform the checkbox of Know Your Customer and identify PEPs who are connected to Politically Exposed Persons in ways that carry surprisingly high exposure by thoroughly identifying the PEPs both initially and continuously at the same time.
- The compliance team is further reassured by the explicit escalation and protocols under the PEP screening that help in guaranteeing that matches discovered through the PEP check are taken into consideration to continue preventing potential consequences by high-risk individuals.
AML Watcher offers advanced PEP screening features to help financial institutions identify, monitor, and manage politically exposed persons efficiently. With automated tools and real-time updates, ensure compliance, mitigate risks, and streamline your client onboarding and monitoring processes. AML Watcher simplifies risk management, empowering your compliance team to focus on high-priority tasks with confidence.
