understanding politically exposed persons
TRANSCRIPT
Understanding Politically Exposed Persons to Mitigate Your Firm’s Risk
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SPEAKERBecki LaPorte, CFCS, CAMS
Compliance OfficerCSI Regulatory Compliance
Financial Crime Prevention and Anti-Money Laundering professional with 20 years of experience in the financial
services industry. Wide range of experience including compliance, conducting investigations, developing and delivering comprehensive training, and consulting on
program development and implementation.
WHAT IS A PEP?
• Senior official in the executive, legislative, administrative, military, or judicial branches of a foreign government (whether elected or not)
• Senior official of a major foreign political party
• Senior executive of a foreign government-owned commercial enterprise
• A corporation, business, or other entity that has been formed by, or for the benefit of any such individual
WHAT IS A PEP?
Immediate family includes:• Spouse• Parents• Siblings• Children• In-Laws
Close associates include:• A person who is widely and publicly
known to maintain an unusually close relationship with him/her
• A person who is in a position to conduct substantial domestic and international financial transactions on his/her behalf
DOING BUSINESS WITH PEPS
• Once a PEP, always a PEP
• Verify they are not on other lists (e.g. OFAC)
• Determining your firm’s risk appetite
- What about “lower” political figures?
• Added layer to program designed to detect and report transactions that may involve foreign corruption
WHAT IS FOREIGN CORRUPTION?
The regulation defines foreign corruption as:
“Any asset or property that is acquired by, though, or on behalf of a senior foreign political figure through misappropriation, theft, or embezzlement of public funds, the unlawful conversion of
property of a foreign government, or through acts of bribery or extortion, and shall include any other property into which any such assets have been transformed or converted.”
WORLDWIDE IMPACT OF CORRUPTION
Erodes trust in public
officials
Increases other crimes
Impacts the world economy
(unbalanced supply/demand)
Increases poverty
Depletes a country’s natural
resources
DETERMINING RISK
Holistic and Ongoing Review
Geographic Risk
Reputational Risk
Proper Controls
• Ongoing reviews• Proper technology
and staffing
DETERMINING RISK
Geographic Risk• High Risk Jurisdictions
• Transparency International (www.transparency.org)
Reputational Risk• Can change daily
• Adverse media screening
• Determination based on risk appetite
DETERMINING RISK
Proper Controls• Your institution has PEP Risk
Reasonable and Adequate Program• Screening tool
• Transaction Monitoring
• Proper staffing to manage EDD
WHAT ABOUT DOMESTIC PEPS?
• Regs speak to foreign individuals and foreign corruption
• Corruption risk exists with Domestic PEPs as well
• Should be included in risk profile- Consider heightened monitoring- Ongoing adverse media screening
• Include entities where beneficial owner
KEY TAKEAWAYS
Nearly every financial institution has PEP Risk –regardless of geographic customer base
Determine your Firm’s risk appetite for working with this client base
US Federal Regulations require Enhanced Due Diligence of PEPs
Recommend a screening tool to review your Firm’s books for customers who are PEPs
ABOUT CSI
Managing today’s complex regulatory requirements can be challenging for any business, and CSI backs a variety of industries including financial services, import/export, insurance, payments and transportation services. Through innovative technology and personal service, CSI provides a full range of compliance solutions for the requirements of OFAC, BSA/AML, GLBA, USA PATRIOT Act, Reg E and more. To learn more about our solutions, visit www.csiweb.com.
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