The process of monitoring, compliance, and risk management is a very critical subject, while PEPs are considered to be at higher risk of bribery, corruption, and money laundering due to their position and influence factors compared to ordinary nationals.
During client selection, financial institutions and banks conductPEP screening to investigate any red flags regarding PEP information and their affiliations in order to determine with whom to do business.
Banks can be fragile - therefore, they attempt to maintain compliance across their large-scale operations. To verify the identity of their customers and monitor transactions for suspicious activities, KYC and AML regulations are required by banks to protect the financial system as a whole.
In this digital age, the importance of a bank account can not be denied, as without it, financial transactions can be difficult and life can become difficult, from travelling to paying for little expenses. 💲
It is important for PEPs to pass the 𝐊𝐘𝐂 𝐚𝐧𝐝 𝐏𝐄𝐏 𝐬𝐜𝐫𝐞𝐞𝐧𝐢𝐧𝐠 𝐩𝐫𝐨𝐜𝐞𝐬𝐬𝐞𝐬; otherwise, they may be denied the right to open an account or have their accounts terminated for not meeting regulatory requirements.
🔎 𝐍𝐢𝐠𝐞𝐥 𝐅𝐚𝐫𝐚𝐠𝐞's account was terminated without explanation. The closure may have been associated with his prior political background and classification as a politically exposed person (PEP).
🔎 Former UK Chancellor 𝐉𝐞𝐫𝐞𝐦𝐲 𝐇𝐮𝐧𝐭's account was denied by an online bank, Monzo, prior to his appointment as chancellor in 2023, and prior PEP history might have been considered as a factor during his application process.
Ongoing PEP screening and monitoring is very important to ensure compliance, increase transparency, and protect their trust with their clients while minimising the risks related to PEPs.