Robert Mitchell, from Riskscreen, has posted his personal list for profiling Politically Exposed Persons (PEPs) that compliance officers will find instructive; he calls it "TIGHT."and I highly recommend its use:
- 'T’ – the Type and extent of any interactions the PEP has with officials. You need to employ identification using a world-class database such as Dow Jones or Refinitiv World-Check. In addition, ask lots of questions to discover who they are and see if there are any adverse media associated with them? Find out how did they got to their position, how they earned so much money, and what is their source of funds?
- ‘I’ – the Industry that earned the PEP their money. You also need to include any family members or business associates that are linked to the PEP. Keep a special look out for higher risk sectors such as Mining, Hydrocarbons, Armaments, Telecoms, Construction, Water Resources, Healthcare, Railways, Construction etc.
- ‘G’ – the Geography and jurisdictions involved. Most PEPs who have been investigated for illegal financial activities come from corrupt countries. As a result, pay close attention to PEPs in countries that sit in the lower quartile of Transparency International’s Corruption Perception Index.
- ‘H’ – the History of the PEP. Has the PEP, or the introducer or any family members, had any previous allegations made against them? Find out if there have been any public compliance failures at the businesses involved in the transaction, if there have been any previous wrongdoings or internal controls issues, or if their lawyer has been under investigation by the Solicitors Regulatory Authority?
- ‘T’ – the Transaction. Examine the details of the transaction and all the parties involved – the beneficiaries, trustees, lawyers, advisors and even the agents.
Using these five steps, you can more accurately monitor and remediate PEP risk – before it becomes an issue. Our thanks to Rob for making it available to all on the blog. https://www.riskscreen.com
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