What is PEP According to FATF?
3 Types of Political Exposed Persons Defined By FATF
PEP Risk Levels Based on FATF Guidelines of Red Flags
- Supranational or international business officials, senior functionaries
- Mayors and local, state district, and urban assemblies members.
- Head officials of judiciaries, banks, military, law enforcement
- Senior members of state agencies
- High-ranked civil servants and religious organizations
- Heads and government members
- Parliament members
- Head officials of judiciaries, banks, law enforcement, military and religious organizations
- Prominent political party members.
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Red Flags to Watch Out for in FATF
- Assigning legal ownership to somebody
- Abnormally or constantly interacting with intermediaries
- Using corporate vehicles without valid business reasons or for confusing involved ownership and industries
- Being secretive or uncomfortable about the source of funds and wealth
- Providing false, inaccurate, or insufficient information
- The information doesn't match with publicly available data
- Eagerness to explain the reason behind their business in the country's DNFBP or financial institution
- PEP has been denied an entry visa
- Funds belonging to PEP move from one country to another
- A steady flow of wire transfers or cash out
- No credible explanations or details for certain business relationships, transactions
- Access, authority, and control over the corporation's funds, operations, and policies
- Informal/formal ability to control mechanisms against TF/ML
- Influence/control over government or corporate accounts
- Having authority or ownership over DNFBP for financial institutions.
The Industry: Industries are considered high-risk depending on the place, and the risks vary from nation to nation.
- Banking and finance
- Military and defense
- Businesses that work with the government or state agencies
- Construction; Mining and extraction
- Public goods provision
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FCA clarifies its PEP's manual on how companies should use PEP definitions in MLRs in the UK context.
PEP Screening compliance has some differences according to countries. Would you like to learn about requirements of your region?
Approximately $ 1 trillion in bribes are processed each year, and the amount of corruption is estimated at almost 2.6 trillion. These numbers have serious implications, so financial institutions prevent these crimes.
- The account shows ongoing activity in a short period after a long period
- Private banking demands
- Wire transfers without economic explanation or lacking beneficiary information
- Anonymous payments or transactions received from an unknown third party
- Funds are moved constantly from one account to another or between financial institutions without a business rationale
- Steady cashflows, massive global funds transfers, or wire transfers
- Having and using multiple bank accounts without an apparent reason
- Businesses are catering to foreign clients
- Service and trust providers
- Concentration/correspondent accounts
- Real estate
- Dealers in high-value transport vehicles like ships, sports cars, planes, and helicopters
- Dealers invaluable stones, metals, and luxury goods
- Domestic or foreign high-risk country.
- A country with a high risk of corruption.
- Countries with mono-economies.
- A country that did not sign a relevant anti-corruption convention like the OECD Anti-Bribery Convention and the UNCAC.