PEP Screening For Nordic Countries – How Is It Done?
KYC screening is a big part today of anti money laundering strategies in many countries. The idea of customer due diligence has helped preempt and prevent cases of money laundering and as such, many banks and financial institutions are placing more effort in KYC screening and customer due diligence. One of the key areas of customer due diligence are PEP screening. PEP is simply the short form of Politically Exposed Person and it is used to refer to people who have been entrusted with a public office and therefore their risks to commit financial crimes is relatively high. The politically exposed persons may also be considered foreign nationals who are deemed as government person and exposed to financial crimes such as corruption and money laundering.
PEP Screening In Financial Services
PEP screening is an important part of KYC in the financial services sector. It is used to identify and assess the risk of politically exposed persons to commit financial crimes. There are many definitions of PEPs and most of them are defined in financial regulation acts in many countries. In the EU and most of the Nordic countries, a PEP is defined as any of the fowling people:
- Foreign PEP – just as the name suggests, a foreign politically exposed person is a foreign national who holds a opposition in public service and is entrusted with handling various duties on behalf of the public. The risk involved in dealing with such nationals is based on the fact that they can use their opposition to siphon out funds and launder the money through European banks and other financial institutions.
- Domestic PEPs – domestic politically exposed persons are basically the exact opposite of foreign PEPs. In this particular case, these are people who hold domestic public offices and have been entrusted with certain duties within the public administration system. The risk defined with such people is also based on the fact that because of their position, they are exposed to corruption and money laundering. Politically exposed people are also going to be analyzed in relation with their families. People who are related to PEPs also pose some level of risk and banks must take action to ensure these risks are mitigated.
How To Mitigate Peps Risk
The most advanced solution in mitigating the risk of PEPs is based on transaction monitoring. Once the risk is identified and a transactional behavioral profile is created, there has to be regular monitoring to ensure that there are no issues at all. Without real time monitoring, then it’s very difficult to decide which risky individuals are playing by the rules and which ones are not. In addition to automatic real time transaction monitoring, review of customer information on a regular basis is also recommended. Most transaction monitoring systems providers will also offer effective KYC solutions too.
Political exposed persons are always in the radar if banks and other financial institutions and with advanced transactions monitoring systems, it is now possible for banks to ensure that exposure to financial crimes is reduced. You can visit Trapets for more information on this.