What’s New to Know About Politically Exposed Persons Lists in 2024

PEPs whom we commonly call as politically exposed persons have been the converging focus of regulators and compliance officers against their fight of money laundering and other corrupt practices. PEP status has been highly dynamic in the past few months Due to elections going on and unpredictable changes in status of politically exposed persons, the challenge of abiding by authorized politically exposed persons list is becoming unbearable to beat. 

Due to such fast dynamic changes, the overall status of regional politics, PEP search process and  PEP regulations are changing at a pace faster than ever. 

In the world of fintech and financial industry in general, money related crimes are on the rise which makes it even easier for PEP, politically exposed persons to exercise their power and influence to make their dirty money change into white. 

So the question which remains is what is a politically exposed person and whether PEP risks are dangerous and  really harmful to onboard? Let’s get into knowing what PEP screening is and how AML pep screening can help!

Find out if PEP is harmful for your business in 2024! 

A simple answer to this question is that we cannot call PEP as naturally bad or corrupt people, rather the adverse consequences vary from person to person and region to region. 

As we read everywhere, “ there is no mutually agreed upon universal definition of the exact danger a PEP can pose to the business, there are risk measures defined to control the intensity of threat they can pose to your business” is typically true about Politically exposed persons. 

Due to highly dynamic and unpredictable political situations all across the globe, we cannot assume a  A PEP falling at level 1 to remain at the same position for five years. Rather they may drop down to level 4 or vice versa in a matter of seconds 

Does The Phrase “Once a PEP, Always a PEP” Apply in 2024?

A clear answer to this question is that duration and risk of a person which is accounted as PEP depends on the unique jurisdictional laws and regulation of each state or region. For instance, PEP in one region may not be as risky for another state or vice versa. But you may say that PEP is known as PEP as long as he remains exposed and performs the duties in action. 

As reported, “However, in some regions, PEP status and scrutiny don’t end with leaving the public position. Individuals would still be accounted for and treated as PEP, during what we call as a “cooling off” period.” 

Despite the wide range of opinions that belong to each jurisdiction, what remains a consistent need is the need to implement AML/CFT screening measures to manage the risk level associated with PEPs by PEP Screening Solutions. 

What’s New to Know About PEP Lists in 2024? 

As per FATF, new implementations were launched that had to be effective from January 10th, 2024 and the new regulations are targeting UK based PEPs. The new PEP list search regulations are meant to revise the regulations set for UK based politically exposed persons.

These new regulations are a perfect example of how dynamic these regulations are and how difficult it may get to adhere to due diligence requirements of AML compliance. 

Key Takeaways from New Developments in Regulations

The new regulations are modifying the way businesses have been dealing with politically exposed persons all across the United Kingdom. The new steps to undertake are as follows:

• Domestic PEPs are usually considered as low risk as compared to international PEPs, the new regulations have discarded the differences, mandating the conduct of comprehensive risk assessments irrespective of the differences in nature and status of the PEPs. 
• The revised policies emphasize keeping a watchful eye out on all politically exposed persons under the regulation of 35(3), irrespective of the status of whether an individual is a domestic PEP, international PEP, relative or close associate to politically exposed individuals. 
• The new regulations are not mere standardized measures rather put forth the obligation to assess the PEPs with a very risk-based approach of PEP Checks, making the entire process of AML/CFT compliance less stringent or draining for compliance or reporting officers. 

How To Assess PEP Risk With These Limitations?

As quoted “In the fastly evolving financial landscape with millions of cases moving around, it is nearly impossible to offer the same level of focus and attention to all the PEPs that encounter your business in the first place.”

In order to balance the requirement of AML/CFT compliance without wasting resources on low-risk PEP individuals, a risk-based approach to analyzing risk is more beneficial for the ecosystem and business requirements of compliance. 

When we talk about the risk-based approach it involves modifying the security measures based on the individual’s ability to exercise their power utilizing the influence provided by the position. 

What to expect in the future?

With PEP list screening being completely dynamic, adopting a risk-based approach can make it easy to analyze the risk level associated with each individual, thus fostering informed decision-making, without reducing resources on an already high-risk subject during PEP Screening Services.