Politically Exposed Persons (PEPs) Screening

A PEPs screening determines whether customers qualify as individuals who are or have been entrusted with prominent public functions, including members of legislative bodies, government ministers, judges, high-ranking members of the Armed Forces, and senior officials of state-owned enterprises. A PEPs screening will also determine if a customer is a close associate (e.g. family member) of a PEP.

PEPs are deemed to carry a higher risk of money laundering due to their increased exposure to corruption. For this reason, under AML/CTF frameworks around the world, customers that qualify as PEPs are perceived to carry a higher risk of money laundering and, therefore, must be subjected to an enhanced customer due diligence process. This requirement derives from Recommendation 12 of the FATF Recommendations.

PEP Screening through Fractal ID

To assess whether the customer qualifies as a PEP, Fractal ID queries a proprietary collection of databases that covers high-ranking government officials in every jurisdiction. This database provides a comprehensive source of structured intelligence on PEPs and is based on multiple risk levels.

By default, if a customer is confirmed as PEP, a customer will not be granted approval to onboard to a Fractal ID client’s services. This default determination results from the requirement that a PEP must be subject to a set of enhanced due diligence measures that cannot be entirely delegated or performed by Fractal ID. Fractal ID clients are nonetheless still able to apply enhanced customer due diligence measures to such customers and approve their onboarding autonomously with the assistance of reports and determinations of KYC processes within Fractal ID supplemented by a client’s own AML program.