It is important to understand the term PEP and its categories. A PEP is a person who is entrusted with an important public function, has power over or can influence government spending.

PEPs include persons in the following positions: heads of government of any country, high-ranking politicians, high-ranking government officials or high-ranking officials of a political party, active or retired judicial and military officials, and high-ranking executives of state-owned enterprises.

The term “PEP” also includes immediate family members, spouses and children, as well as close business partners and is considered an “associated PEP”.

To understand who is considered a PEP, it is important to know the three categories of PEP: domestic PEP, foreign PEP, and heads of international organizations. Domestic PEPs are individuals who hold an important public function in their own country. Foreign PEPs are individuals who hold an important public position abroad. Heads of international organizations are individuals who hold an important public position in an international or prestigious organization that serves the entire world, such as the United Nations.

Not all #PEPs are automatically considered involved in financial crime just because they hold public office or have influence over government funds. It is important to consider the following parameters before classifying a PEP or a PEP associated with them as “high risk”: 1. PEP must be a natural person and not an entity. 2. PEP must be entrusted with an important public function to have influence or power over public funds and policy making. 3. Once an individual no longer holds an important public function, their status as a PEP depends on their existing power or influence over government decision-making.

Now that we understand the basics of PEP, we will now discuss how to manage ML/FT risk when dealing with a PEP or associated PEP. Given the link between the PEP and access to government funds, it is recommended that all PEP or associated PEP be considered high-risk individuals and that #EnhancedDueDiligence be conducted alongside the standard 'KYC' process.

As part of #KYC, verify the PEP's identity and establish the legitimacy of identification documents. In addition, #EDD measures include: 1. Look for details on the source of money and assets and verify their legitimacy. 2. Inquire about the purpose of the business relationship. 3. Verify the PEP's professional or financial background. 4. Be aware of negative media reports using reliable, independent sources. 5. Insist that the first payment of the transaction is made from the customer's own bank account. 6. Obtain approval from senior management.

Once a business relationship has been established with a PEP, the company must increase the frequency of ongoing monitoring of that relationship and the transactions carried out with the PEP.

Trust that PEP insights will help mitigate the risk posed by PEP clients. Stay tuned for more videos on the AML/CFT framework. Thank you!

Time stamp:
0:00 PEP introduction
0:25 Who is PEP?
0:44 related PEP
0:54 3 categories of PEP
1:06 Domestic PEP
1:12 Foreign PEP
1:18 Head of the International Organization
1:29 High risk
1:38 Factors to be considered in determining PEP
2:11 MLFT risk with associated PEP
2:34 KYC and EDD
2:41 Treated as high risk
3:15 Regarding PEP

#AMLUAE #politically exposed persons #Pepscreening #UAE #AML #anti-money laundering #AMLCompliance

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