WIREDGOV

The war in Ukraine has unleashed a plethora of global sanctions against entities, politicians and businesspeople in Russia and Belarus.

While those in the public sector know there is a legal requirement to screen against growing sanctions lists, what about politically exposed persons (PEPs) and relatives and close associates (RCAs)?  

For a wider best practice approach to sanctions checks – to protect your organisation against potential fraud and avoid having a user who can damage your reputation - it’s important to obtain PEP and RCA data from around the world.

Politically exposed persons (PEPs)

First of all, what is a PEP? A PEP is defined as ‘an individual who is or has been entrusted with a prominent public function’. They could be a senior politician, civil servant or member of the judiciary, for example.

It is vital to know who these people are because if they abuse their position to defraud your organisation not only will there be a monetary cost, but it could cause significant damage to your reputation.

Screening for PEPs should take place in the early stages of any user onboarding activity, then regularly across your database on an ongoing basis. If you identify someone using your services who is a PEP, you should apply enhanced due diligence measures that are proportionate and effective, and inform those with the task of monitoring risk assessments at your organisation that a relationship with a PEP has begun.

It is worth noting that higher risk PEPs, those who are at a very senior level, could pose some risk after leaving office due to their activity and relationships built up during their time in the role. As a result, undertaking enhanced due diligence on these individuals for longer is recommended.

Relatives & Close Associates (RCAs)

What is an RCA? These people can be spouses, partners, children, uncles, aunts, cousins, parents and close friends of the PEP. It is essential to screen for this audience because they may be vulnerable to bribery, blackmail and corruption due to their relationship with someone in a position of authority and influence. To deal with the risk posed by RCAs, screening for these people should take place prior to them being a user of your services, and periodically throughout the relationship via ongoing monitoring.

Adverse media screening

As a key part of PEP and RCA monitoring activity it’s essential to use technology that enables adverse media checks to take place. Such technology will keep you abreast of the latest news and alerts in real-time on any arrests or court cases, for example, against your users who may be PEPs and RCAs, and others who could have a potential negative regulatory, financial, or reputational consequences to your organisation. It’s critical that the tools used to undertake adverse media checks scan the credible global news media for maximum reach.

When there is negative news against a user of your services they should be ranked as high risk, with further due diligence required, which may lead to the termination of the relationship.

Adverse media checks shouldn’t just be used to monitor existing users, but for best practice due diligence at the user onboarding stage.

Integrated sanctions technology  

It is best to source and use an up-to-date sanctions list, also called a watchlist, which as part of the service can deliver data on PEPs and RCAs, along with adverse media checks. The technology behind the watchlist should automatically collect and synthesise sanctions data from a wide range of trusted sources worldwide in real-time, such as governments, regulators, and credit agencies, for maximum reach and accuracy.

Electronic ID verification (eIDV)

Such a service works well as part of a wider, more comprehensive approach to automated know your citizen (KYC) and anti-money laundering (AML) operations. It is why there is mounting interest in using an eIDV platform, which as well as having access to comprehensive sanctions data, including those on PEPs and RCAs, is able to cross-check user-provided details against reputable data streams to ensure individuals are who they say they are in real-time.

While it’s only a legal requirement for financial institutions to screen for PEPs in the UK, those in the public sector should be accessing the appropriate technology that delivers data on PEPs, RCAs and undertakes adverse media checks, for sanctions best practice. Doing so will not only help protect their precious budgets from fraud, but also their reputation.

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