Banks, financial and non-financial institutions have for decades been plagued with understanding risk and playing a balancing act with knowing and understanding risk exposure and how to mitigate such risks.
One such area which is a constant “bone of contention” is simply addressing the key questions of who is your client and do you know the risk associated with that client? This principle leads to yet another dilemma when it comes to compliance management and that is understanding “who or what exactly is a PEP”?
With the added pressure of not necessarily having a universally accepted definition, PEP risk exposure is best managed by adopting a risk based policy definition in line with best practices that tackles key issues such as “who is a PEP, how do we identify a PEP, when do we check, how do we check, how do we address source of wealth issues etc.?
Understanding and balancing these concepts; where PEP’s are concerned, is an on-going problem for most institutions when it comes to fulfilling their AML regulatory requirements of undertaking effective due diligence processes.
Why do you think this is a problem for the banks and other financial and non-financial institutions? Do you have a different view?