standards politically exposed persons are high risk customers because they are in positions that can be potentially abused for the purpose money laundering. proof of Sources of Funds (SOF) are requested precisely for this reason.
Let's identify a customer that is a PEP. We must first establish if they are a local or foreign PEP, then their identity as a PEP; a congressman, a politician, a chief of staff. We then establish if this PEP holds their current position. We must also find out how long they held such position and so on. Nevertheless, we have to make the EDD decision while taking into account AML regulations
regarding such PEPs.
A major problem during EDD is understanding how much information about a customer is necessary. The solution to this problem is KYC risk rating and reasonable assurance. Regulators have consistently favored this approach on compliance from organizations.
KYC reasonable assurance are basically anti-money laundering policies that makes it easier for companies to make the decision and report to regulators in times of regulatory reviews.
Sometimes the sheer amount of Adverse Media
online makes it impossible to process and structure all the risk-relevant data. Filtering this negative news can help you wade through the controversies EDD presents and at the same time serve your usual clients without interference. To this end, we listed all factors or possible red-flags for EDD below.