Businesses experience a number of threats per day and need to protect themselves against these threats to avoid legal issues, protect their customers, protect themselves, avoid spending money unnecessarily, protect their reputation, perform due diligence, make sure they're in compliance with regulations and more. This is especially true when a business is dealing with a politically exposed person. If you are wondering what is the definition of a politically exposed person and how they can affect me, read on!

What Is the Definition of a Politically Exposed Person?

A politically exposed person is referred to as a “PEP.” A PEP is a person or entity that is involved with fraud schemes, which can include terrorism financing, payoffs or money laundering. To be considered as a PEP, the person must have served or currently serves a highly public function or role. It could be a military officer, government official or company director. PEPs can be either foreign or domestic.

Why Is it Important to Know Who Could Be a PEP?

A business needs to protect itself and its customers from criminal activity. They also need to ensure that they are in compliance with all applicable PEP regulations. Financial institutions need to have screening measures that help to prevent money laundering and other criminal financial activities. These screening measures can apply to a PEP’s close relationships as well. In addition to an adherence to PEP regulations, a financial institution must both require enhanced due diligence (EDD) and customer due diligence (CDD). This requires that a business use screening measures that work.

This Is What You Can Do About PEPs

You need to use a screening tool that will help your business identify who PEPs are as well their close relationships or associates in real time and one that pulls information that can change daily from trusted sources.

Read a similar blog about screening solution here at this page.