OUR

POSTS

Insight Into PEPs. Commercial Databases

Three insights

1. Better identification, classification/definition and risk rating of UK PEPs is needed

2. EU definition of prominent public function as definitive guide

3. FCA guidance on the use of commercial PEP databases must be followed


POLITICALLY EXPOSED PERSONS [PEPs]


FCA Finalised Guidance on the treatment of political exposed persons for anti-money laundering purposes [FG17/6]


FCA view on the use of commercial PEP databases


It is this firm’s view that many commercial databases are not closely aligned with current Guidance. This produces not only false positives but also often neglects to identify individuals who clearly are PEPs.


‘2.11 … [a firm] may choose, but is not required, to use commercial databases that contain lists of PEPs … A firm … would need to understand how such databases are populated and will need to ensure that those flagged … fall within the definition of a PEP … as set out in the Regulations and this guidance.’


Our own limited research using the names of individuals who are PEPs (using FCA definitions in the Guidance) as well as though as those who are not PEPs produced very disappointing results.


Firms who use commercial PEP databases


The Guidance is clear that firms need to know how a commercial database is populated and to be clear that the results produced by a PEP search meet the FCA definition of prominent public function.


Complaints to the FOS


The FCA make it clear that wrongly classified PEPs or those disgruntled with ‘intrusive’ CDD investigations may have recourse to the FOS.

2.2 The Financial Ombudsman Service will consider complaints from PEPs, their family members or close associates – and will take the guidance into account when deciding what is fair and reasonable in all the circumstances of a complaint.


EU initiatives