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Our automated platform uniquely equips you to carry out sanction searches and check PEP lists for PEPs and RCAs. If our software finds a match for your client, we’ll filter out false positives, and alert you once the match has been confirmed. Here’s how PEP checks, PEP lists and sanction search works…
PEP and Sanction searches are part of the Customer Due Diligence (or KYC) process; individuals and businesses are identified and verified, and then their details are checked against sanction and PEP lists.
PEP list and sanction searches are a crucial component of any business’s commitment to anti money laundering. It is illegal to work with anyone on a sanctions list and while it is not illegal to work with PEPs, they pose a greater risk to businesses. Therefore, all companies need to know if a customer has been identified on a sanctions list or as a PEP, so they can assess the legalities and/or risk of working with them.
RCA stands for Relatives and Close Associates, defined as any individuals or businesses that are either related to or closely associated with a PEP. It’s important to identify RCAs as they may be vulnerable to bribery, blackmail and corruption due to their relationship with someone in a position of authority and influence.
PEP lists are publicly available, but there is no central source, so keeping records up to date manually is almost impossible. The best way to conduct a sanction search is via an electronic AML platform with daily monitoring. SmartSearch uses the Dow Jones WatchList which has access to more than 1,100 PEPs and sanctions lists and is updated daily.
We can create a tailor-made package to fit your needs and budget without compromising on functionality and service to ensure our unique AML solution is affordable to all businesses.
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Anti-money laundering (AML) compliance is an imperative duty for regulated firms, but the right technology and tools can help simplify the process.
Explore SmartSearch's advanced TripleCheck solution. Combining three of our most advanced technologies; market-leading AML checks, sophisticated facial recognition techniques and robust fraud checks, enabling firms to quickly and efficiently onboard new clients. Your business will benefit from:
You’ll benefit from real-time monitoring capabilities with automated alerts to notify your compliance team of any sanction or PEP changes daily. Any changes in individuals or entities will then trigger Enhanced Due Diligence, allowing you to take proactive measures to prevent potential threats.
Our software has advanced analytics capabilities, which allow you to map out transactions to determine risk scenarios and provide detailed reports outlining suspicious activity. This ensures you remain compliant with money laundering and transactional monitoring regulations.
Our user-friendly platform requires minimal training, delivering a modern and intuitive interface. What's more, our dedicated account managers are on hand to answer any questions and ensure you have the most cost-effective licence and service growth headroom.
We host The Dow Jones Factiva Watchlist database in-house, which offers a dependable data source featuring more than 1,100 international sanction and PEP lists that are refreshed daily. This screening process simplifies monitoring and makes it simple to implement any required adjustments to adhere to global regulations or local laws.
Sanctions are restrictions used to stop individuals and entities who are involved in – or suspected of – illegal activities from engaging in certain industries. Government bodies and financial authorities both issue sanctions lists; these can be used to screen individuals and organisations for financial sanctions.
A PEP, or Politically Exposed Person, is someone who holds a prominent position in public life – for example, a senior member of government or law enforcement – making them more vulnerable to bribery and corruption.
Sanction searches and PEP screenings are a central component of your AML checks, as they confirm that your client doesn’t present a money laundering risk.
The SmartSearch system completes Sanction and PEP screening on every AML check you perform, automatically triggering Enhanced Due Diligence on any matches. It then screens all customers every night and alerts you of any changes.
There’s no official source that lists all sanctions, PEPs and RCAs, so manual screening is challenging. What makes SmartSearch screenings so accurate? We use the Dow Jones WatchList – a combination of over 1,100 databases, updated daily.
SmartSearch offers a one-stop shop for all your firm’s AML requirements. The user-friendly system enables staff at any level to successfully run AML checks, and we are constantly updating and improving the platform to ensure it remains the leading AML solution on the market.
PEP checks are intended to discover Politically Exposed Persons or PEPs. PEPs are individuals who hold prominent political positions or have been given high-profile public roles in the past 12 months. Given the high-ranking posts they occupy, these people possess a greater risk of engagement in money laundering or terrorist financing.
Generally, PEPs are considered to be prone to bribery and financial crimes due to their influential position, wealth, and access to funds and sensitive information. As such, regulated firms and other organisations must take extra steps to ensure that they are not engaging in any suspicious activities.
Under UK regulations, UK Politically Exposed Persons (PEPs) are considered low-risk unless a firm has identified other factors that pose a higher risk. Therefore, firms must apply Enhanced Due Diligence requirements to UK PEPs and their families, as well as known close associates. However, when determining how best to handle the risk, firms should take into account the nature of the PEP's responsibilities.
It can be difficult to determine and recognise a PEP since it varies between countries. However, the UK considers the following individuals as PEPs:
Those close to high-profile individuals, like family members, friends, or business associates, may also be considered RCAs (Relative and Close Associates) as they could become used as leverage by criminals.
Identifying PEPs, their associates, and their connections is a vital part of KYC and AML protocols in order to detect or prevent possible money laundering.
Once you've determined that your customer is a Politically Exposed Person (PEP), it's crucial to assess their risk level, as well as consider the type of business they may be requesting from you. This will ensure that your due diligence is risk-appropriate, thorough, and ultimately effective.
PEP identification and monitoring is an essential step for avoiding money laundering. It is essential to monitor your business activities to prevent money laundering and other financial crimes. Once the initial due diligence process is complete, these checks should be conducted periodically for both identified PEPs and other customers.
Here are just some processes and procedures your organisation can implement to manage PEP relationships:
It's essential to check regularly, as a person's PEP status can change quickly. If a customer who was formerly lower in ranking gets promoted to a job that requires them to be on the politically exposed person list, it is your responsibility to monitor this situation.
An electronic verification solution, such as SmartSearch, that automates the ongoing monitoring process, sends alerts when any changes occur in a client's PEPs status, and assists with remaining compliance, is the most reliable method to make sure no records slip through.
TripleCheck is a powerful KYC software developed by an experienced security engineering team. It offers advanced features such as face-matching technology, document authentication, and optical character recognition.
With TripleCheck, completing a KYC check only takes two seconds. All you need to do is enter some basic information such as name, address and date of birth into the system - it's that simple. And since all data is processed securely via SSL encryption, you can rest assured that all personal details are kept safe from potential threats.
The first step with digital KYC is to verify government-issued ID documents for any forgery or other issues as per organisation policy guidelines. To do this, a customer will be asked to upload an image of their ID documents for further examination. Optical Character Recognition (OCR) technology helps automate the process of identity verification. OCR algorithms are used to analyse documents such as passports or bank account statements in order to extract relevant data for further verification purposes. Additionally, AI techniques are employed to scan through digital documents for specific patterns or discrepancies that could indicate fraud.
Your customer will then be sent a link via email to upload an image of themselves to enable further checks. To make sure that customer data is legitimate, liveness detection technology is used to compare the ‘real person’ (the selfie) with a document provided. Recently, Selfie Liveness Video (SLV) has been used as a preferred method of facial verification due to its ability to detect fraudsters more accurately and quickly.
TripleCheck helps companies recognise fraudulent identities and compliance risks by cross-checking data from the customer or taken from a document to reliable international sources such as credit databases, PEPs, sanctions, and negative media watchlists. If any irregularities are spotted or there is a failure to verify customer details, our system will automatically trigger Enhanced Due Diligence for further inspection.
TripleCheck creates a comprehensive report that allows your compliance personnel to assess the provided fraud risk score, PEP status, and any applicable sanctions. Our all-encompassing, innovative AML compliance solution covers all the bases to help your business comply with regulations and battle financial crime and fraud.
In the UK, regulated businesses must adhere to AML regulations and carry out enhanced due diligence (EDD) on all domestic and international Politically Exposed Persons (PEPs), as well as their family members and close associates, both current and former.
A more thorough investigation, known as Enhanced Due Diligence (EDD), is a KYC process conducted when activities appear to pose a greater risk of money laundering and terrorism financing. Simply put, this is an extended version of standard Customer Due Diligence that digs into more data and information about an individual or business.
The purpose of Enhanced Due Diligence is to provide an in-depth evaluation of the risk posed by high-risk clients to maintain compliance and minimise the risk of money laundering.
By law, all regulated firms must meet Anti-Money Laundering (AML) regulations and carry out Enhanced Due Diligence (EDD) when necessary. In cases when the risk for customers exceeds the scope of standard customer due diligence, Enhanced Due Diligence is required.
However, there are some situations that specifically trigger this procedure including:
These higher-risk scenarios would require EDD measures to be implemented. It should not be assumed that customers in these situations are involved in criminal activities, rather, they just have a greater risk factor that requires additional inspection or ongoing monitoring.
Screening against sanctions lists is a key component of the fight against financial crime, as it allows businesses to recognise transactions involving persons on sanction lists. That way you can avoid involvement with them or enabling their illegal financial activities.
Sanctions searching allows organisations to comply with international laws as well as protect against accidental involvement in money laundering events, terrorist financing operations and other financial crimes. This type of sanctions searching also reduces the potential risk of being on the receiving end of a financial crime when doing business with overseas entities.
By identifying individuals and businesses on sanctions lists quickly and efficiently your business can avoid costly legal action and reputational damages associated with violating these AML regulations.
Some of the following criminal activities can result in an entity or individual being placed on a sanctions list:
Sanctions screening - or Sanction search -is the process of ensuring that no transactions are performed with individuals or entities that have been banned from engaging in certain activities or dealings.
People and entities who have violated international law or posed a threat to global stability have been listed on sanction search screenings in computer-generated databases maintained by governments and international organisations.
Sanctions are a common form of punishment used by governments to penalise and force those individuals who appear on sanction lists to conform to compliance, also known as 'designated people'.
Sanctions are typically imposed in the form of economic, diplomatic, or political penalties. These measures also include:
Trade embargoes limit the flow of imports and exports from targeted countries. To impose a trade embargo, specific trade relations between two nations must be broken down entirely. As a result of reduced trade ties with the target country, businesses may not be able to source necessary products or materials and face financial hardship due to inflated prices for products within the embargoed country.
Prohibitions can also take the form of limitations on certain types of trade from a certain nation. For example, some nations have prohibited importing military supplies from certain countries that are deemed hostile. This restriction applies regardless if the particular arms manufacturer is responsible for prior issues in the region or not; any business tied to that nation is subject to such sanction unless explicitly noted by governmental authorities at home or abroad.
Asset freezes are an additional method used by governments to place economic sanctions on other nations. This type of sanction mandates the complete freezing of any banking accounts belonging to individuals or entities affiliated with another nation’s operations - whether they reside in that nation or another one - in an effort to further isolate them financially by depriving them access to funds secured within those accounts.
Travel bans restrict citizens’ activity inside a foreign nation's borders as well as deny entrance into one's own nation to individuals sanctioned.
Organisations must check if their clients are listed on a sanctions list before engaging in any type of financial transaction with them. By conducting stringent sanction searches with reliable databases and sources, they can ensure compliance with AML regulations.
Complying with AML regulations requires all organisations to conduct sanctions screening in order to prevent criminal activity, damage to reputation, and financial loss from participating in illegal trading transactions, money laundering, and terrorist financing.
It is impossible to apply a universal approach when dealing with the ever-evolving laws related to sanctions compliance, as each institution must create its own plan reflecting its particular business activities, geographic location and currencies used.
Navigating sanctions searches can be a daunting compliance task for businesses that handle large volumes of customers and transactions. To help simplify the search process, these businesses may find it useful to incorporate automated screening technologies, like SmartSearch's platform, into their search system.
At SmartSearch, we collaborate with you to identify the most effective way our software can be incorporated into your existing system. We provide tailored AML solutions to help strengthen your sanction search process.
In high-risk industries, it's not enough to only do a single sanction and PEP screening during the onboarding process. In order to meet the rigorous regulations in place, regular assessments must be completed to keep up with any changes.
SmartSearch's advanced system is able to conduct automatic screening for sanctions, along with a rigorous anti-money laundering verification process. With access to the Dow Jones WatchList which comprises 1,100 databases around the world, we're able to match your potential client or customer's details with accuracy, even if they are registered under nicknames or abbreviations.
As financial crime continues to rise, it's becoming increasingly important to protect your business with the most effective anti-money laundering (AML) solutions on the market. Fortunately, there is now a cutting-edge AML platform that offers powerful capabilities and can help you stay compliant with regulations while optimising your process flow.
Our award-winning AML and compliance solution allows our customers to accurately and efficiently identify both UK and global individuals and businesses. It is the only KYC software with full sanction, PEP checking, and continuous monitoring services, meaning that clients can rely on this single tool for all their Anti-Money Laundering requirements.
Financial sanctions are legal restrictions, put in place by the government to limit or prevent entirely the trading of individuals, companies or whole countries. They are usually levied against people or corporations who have committed financial crimes and fall into one of three categories: the freezing of assets, specific restrictions on financial markets and orders to cease all trading.
Used by financial authorities and governments all over the world, sanctions lists are databases which detail all the financial sanctions that are currently active in a specific state, country or continent. Some of the most well-known examples in the industry are the United Nations list, the UK Consolidated list and the EU Consolidated list.
The UK Consolidated List, which is the most widely used official list of financial sanctions in the UK, details three types of sanctions. These are the following: targeted asset freezes, financial restrictions and directions to cease all business.
Every country is legally obliged to adhere to any financial sanctions levied against it if it’s enforced by the relevant authorities (for example, the Office of Financial Sanctions Implementation in the UK).
If you fail to include a Sanctions search when carrying out your AML checks, you could end up unwittingly entering into business with a client or customer who is currently sanctioned. In the UK, having dealings with any sanctioned business or individual is illegal if those dealings break the terms of the arrangement, except in very specific circumstances when a licence is required. If you’re found out, the consequences can include substantial fines or even a prison sentence, as it’s considered an AML compliance failure.
Depending on the jurisdiction, increasingly more industries are required to practise anti-money laundering compliance these days, whereas traditionally only regulated firms had to comply. This could include:
Firms looking to purchase and sell property
Businesses that sell high-value items such as antiques and expensive collectables
Firms that provide financial services, such as hedge funds or accountants
Online gaming and gambling companies
It is advised to contact your local regulatory body to determine if your company needs to abide by AML regulations.
Regardless of the circumstances, when collaborating with others, you must not partner with anyone who is sanctioned by the government. This includes their close family members and associates.
A PEP (Politically Exposed Person) check should be carried out when onboarding new customers to ensure that they are not linked to any form of financial crime. For example, if a customer is a government official or a family member of a government official, it is important to conduct a PEP check as such individuals may be involved in bribery or corruption. Additionally, a PEP check should be performed whenever changes are made that could trigger the need for additional verification. This could include changes in address, profession, or banking details which may indicate potential money laundering activity.
Organisations can legally provide services/products or choose to work with PEPs; it is their responsibility, however, to manage the risk associated with doing so.
Regulated industries, especially those in the finance sector, are required to conduct PEP checks and sanctions screening as part of their Customer Due Diligence (CDD) during onboarding. After conducting their checks, they may require further verification before making a decision on whether or not to accept the customer. CDD steps are just a part of the Know Your Customer process.
Failing to abide by the nation's AML protocols can result in financial penalties and even jail time.
The time frame a person is deemed to be a PEP may vary depending on their particular function, with designation potentially lasting up to a year after their official departure. To guarantee adherence and surveillance, a thorough assessment must be conducted into the individual and their prior connections before PEP status is cleared from them.
When onboarding a Politically Exposed Person according to Regulation 35 of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017), you must:
Secure approval from upper management for the business association.
Ensure the origin of assets and funding is adequately investigated.
Keep a close eye on the business relationship over time
Regulated businesses must ensure they meet KYC and AML regulations by performing PEPs and sanctions checks as part of their due diligence process.
