Protecting-Your-Business-With-Transaction-Screening-Practices

Rebecca Siggers

Best Tips For Screening Politically Exposed Persons in 2024

AML screening

Screening for Politically Exposed Persons is vital to KYC and AML screening. The increased scrutiny is due to the higher risk attached to PEP and RCA. 

While every PEP is a possible risk, not every PEP poses a threat to the business. The goal of AML screening is to identify the level of risk associated with each individual, their media reputation, and the probability of damaging your business. 

AML screening software is the only pathway known to compliance officers to ensure enhanced due diligence and effective risk mitigation to make informed decisions. 

However, organizations face the challenge of minimizing risk without losing a loyal customer base. In today’s digital age, financial crimes are no longer confined to traditional ways of tax evasion, stealing, or theft. Criminals have modified their means of money laundering which are extending into bank frauds, corrupt crypto practices, and much more. 

 PEPs due to their influence and positions within an organization, give them the power to exercise this influence for illicit or personal gains, here are modern approaches to expect in 2024 for more informed and accurate PEP screening

This blog will talk about technological advances and revamped ways of screening politically exposed individuals without compromising on a loyal customer base. 

Is PEP List Screening Still Relevant in 2024?

 total of $5 billion is laundered under the label of “dirty money” in Australia every year. Australia’s effort to combat money laundering is indeed applaudable yet the figure of money lost to corrupt practices highlights the need for ongoing PEP screening are more relevant than ever. 

While there is no universally agreed upon definition of PEP and information about how PEP and RCA’s must be screened, FATF (Financial Action Task Force) classifies PEP as: 

  • Individuals who have been entrusted with prominent public positions in government, public organizations, or international corporations. 
  • According to MLR (Money Laundering, Terrorist Financing and Transfer of Funds Regulations of 2017, organizations should also include family members and close associates as RCAs in their increased scrutiny against money laundering due to their increased risk and propensity to commit money laundering. 

Having said that, it’s important to note that the definition of FATF is just a preventive recommendation, not a declaration. Thus, every industry may have its own set of rules and regulations for PEP screening methods for more precise and industry-specific PEP screening solutions. 

Read ahead to learn about trending strategies to expect in 2024. 

Technological Advancements for PEP Screening in 2024 

In today’s digital age, no sector of human life is devoid of technology. Tech advancement has taken all of us by surprise. Not long ago, only screening was powered by technology; however, the situation is reversed today. Criminals are more equipped and familiar with technology, let alone the AML sector. 

2024 is a high time for regulatory bodies, the public and private sectors to revamp their internal controls and automate the processing for quick, efficient and, simplified AML operations without siffling through unnecessary noise of fake alerts. Here are the technological advancements to equip with: 

Biometric Onboarding 

Biometrics are the set of physical characteristics that are unique to each individual. These sets of characteristics may include fingerprints, facial features, iris and palm impressions, and many more. 

 As the digital space is all about fast processing, biometric technology facilitates faster onboarding by allowing organizations to quickly tap into the background information of each politically exposed person. 

With a single-tap image upload, AML software is now equipped to screen the image to fetch all background information and entity linking, yielding quick analysis for informed decision-making. 

Custom Risk Scoring

Screening millions of politically exposed persons with no risk scoring results in several false positives and false negatives which are difficult to navigate in terms of their validity and relevance. 

The new advancement of custom risk scoring allows for setting unique risk thresholds for your industry. Any PEP surpassing the risk threshold set by the internal compliance team will generate an alert. Having this feature instilled not only reduces the burden of consistent manual overseeing but also reduces the chance of false positives and fake alerts. 

An efficient AML screening software can help you set custom PEP levels, whereby level 1 consists of PEP with the most high level of risk associated with them and level 4 marking politically exposed persons with minimal risks. 

Exact Name Matching 

While planning to run global operations, name matching across multiple dialects, diverse sets of languages, and multiple variations of spelling, identifying PEPs and extracting their background information remains a consistent challenge. 

AML software is now equipped with multilingual capabilities that overpower the barriers that happen due to language analysis and translation issues. 

Sentiment Analysis 

 When it comes to the PEP screening process, adverse media analysis is undeniable. Sentiment analysis enables quick identification of credible adverse media with automated keyword analysis ultimately minimizing false positives to a minimum. 

To Sum It Up: 

While technological advancements have simplified the process of AML screening, there are emerging concerns about the efficiency of artificial intelligence. However, it can be deduced that a combination of human reasoning and AI capabilities can revolutionize AML screening in 2024. 

 

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