Understanding PEP (Politically Exposed Person) Regulations — What Is PEP?
If you’re interested in learning about Know Your Customer (KYC) and Anti Money Laundering (AML) regulations, due to an upcoming crypto project or financial venture, you may be wondering what a “Politically Exposed Person”, or PEP is — and what this has to do with KYC and AML.
In this article, we’ll discuss the definition of a PEP, the history of the term, and why PEPs are often subjected to increased banking scrutiny.
What Is A PEP?
PEP is a term used in the industry of financial regulation, to describe a person who has been entrusted with a prominent public function. An ambassador to a foreign country, for example, or a high-ranking official in the US government, could be a PEP. The term is often used with the term “Senior Foreign Political Figure.”
The precise definition of a PEP depends on the country in which the PEP is being monitored.
However, a PEP can be generally defined as any individual who maintains a prominent public position or important function in any government body, either inside or outside of their home country.
This definition could also extend to any immediate associates or close family members.
The History Of PEPs
The term PEP was first introduced in the late 1990s, when Sani Abacha, a Nigerian dictator, stole billions of dollars from the Nigerian central bank over a period of years, and transferred the funds to accounts in the UK and Switzerland.
After Abacha was deposed, the government that succeeded him tried to recover the money and had difficulties recovering it — leading to the concept of a “Politically Exposed Person”. In October, 2003, the UN Convention against Corruption entered effect — and became EU law in 2004.
What Is The Purpose Of PEP Regulations?
PEP regulations help financial institutions recognize potential cases of fraud, corruption or embezzlement from government officials. As part of Know Your Customer screenings, PEP screenings are performed as part of initial due diligence, and the information of an account holder is checked against a list of millions of PEPs.
In turn, these regulations have made it easier to identify accounts that may have stolen assets, and prevent corrupt officials from stealing money, or laundering it with a foreign account.
Verifer — Offering KYC, PEP, And AML Services Worldwide
At Verifer, our KYC and AML platform includes support for the identification of PEPs. If you are in any business where you must conform to KYC regulations, our products are sure to help. Learn more at our website, or participate in our ICO to get started.
Verifer is offering 1 month of Free KYC for all companies, read more here: https://verifer.io/kyc_1month_campaign .
Try a month for free. Contact at sales@verifer.io
Let’s discuss on any of our social media channels or telegram:
https://twitter.com/Verifer_io
