Recently, there has been a lot of talk around politically exposed persons (PEPs) and companies affected by financial sanctions checks after new guidelines were set by the Joint Money Laundering Steering Group (JMLSG). The rules state that every Financial Conduct Authority (FCA) registered company has to be fully aware of whom they deal with under AML and ‘Know Your Customer’ (KYC) guidelines. With a 30-40% increase every year in the PEPs list alone, it is important to screen new and existing clients to make sure they are compliant with the AML guidelines.
So what are PEPs and Sanctions?
PEPs and Sanctions checks allow you to see if a company has been sanctioned or if a politically exposed person is connected to the company. There is no global definition of a PEP, the criteria could vary from country to country or even company to company. A PEP doesn’t have to be a person in politics, it could include immediate family members, close business associates or even senior executives of state owned enterprises. These are important to check as a PEP presents a higher risk for potential bribery and corruption due to their position in society and the influence they may hold.
A Sanctions check is a bit different. If a company has been sanctioned they have been issued a penalty by law for failure to comply with a court order, law or regulation. It is illegal to deal with a sanctioned company, so it is important to run a check on them and be compliant with the current guidelines set in place. If your company deals with a sanctioned company, even if you are a limited company you are personally prosecuted for this and could risk going to jail.
Why do we need them?
It is the responsibility of the credit or compliance department to carry out proper due diligence when investigating new clients. Standard AML checks do not screen clients against Her Majesty’s Treasury (HMT) list, while PEPs are not necessarily included in financial sanction checks. FCA registered companies are required to run the checks as day-to-day due diligence, not only to reduce their own company’s risk exposure, but to also comply with the current guidelines and stay within the law.
Where can I get them?
Creditsafe have just launched a brand new international product for PEPs and Sanctions checking called Compliance Search. It is an aid to AML compliance allowing individual searches to be run on persons and entities against a wide range of databases, such as Sanctions, HMT sanction regimes, OFAC & Bureau of International Security and Non-Proliferation, UNSC Resolutions, EU Restrictive measures, plus many more.
Not only can businesses search for PEPs and sanctions, they can also monitor them through an on-going monitoring facility, where users can add individuals and businesses for review at any point.
If you would like to read more about our Compliance search, click here. Don’t do business without it!