13 Dec 2022
by Lewis Walmesley-Browne, Barley Laing

Guest blog: Tech solutions to identify Politically Exposed Persons (PEPs) and Relatives / Close Associates (RCAs) as a vital part of sanctions screening

By Barley Laing, the UK Managing Director at Melissa.

The war in Ukraine has unleashed a plethora of global sanctions against entities, politicians and businesspeople in Russia and Belarus.

While the vast majority of organisations know there is a legal requirement to screen against sanctions lists, what about screening for politically exposed persons (PEPs) and relatives and close associates (RCAs) of PEPs, prior to working with a new customer or client?

PEPs and RCAs could use their position and contacts, respectively, for illegal activity, and possibly defraud or damage the reputation of your brand.

While it’s not a legal requirement for many, for a wider best practice approach to sanctions checks it’s important to obtain PEP and RCA data from around the world, to protect your brand against potential fraud and avoid having a customer who can harm your reputation.

Politically exposed persons (PEPs)

A PEP is defined as “an individual who is or has been entrusted with a prominent public function”. They include senior politicians, judiciary and military officials, for example. It is ideal to screen for them in the early stages of any onboarding activity, and then on an ongoing basis across your customer base.

If your client is a PEP you should look at categorising them as lower or higher risk, as this will make sure that your enhanced due diligence is proportionate and effective. You should also inform those responsible for monitoring risk assessments in your firm that a business relationship with a PEP has begun.

It’s worth noting that higher risk PEPs - often those who are at a senior level - may still pose some risk after they leave office because of their activity and relationships built up during their time in the role. Because of this it’s recommended to undertake enhanced due diligence of these individuals over a longer period.

Relatives & Close Associates (RCAs)

As part of the PEP screening process it’s vital to flag relatives and close associates (RCAs) of PEPs. RCAs can be partners, spouses, children, parents, uncles, aunts, cousins and close friends of the PEP. It’s important to screen this audience because they may be vulnerable to bribery, blackmail and corruption due to their relationship with someone in a position of authority and influence. To deal with the risk posed by RCAs, screening should take place at the start of the business relationship, then on an ongoing basis.

Adverse media screening

As part of the PEP and RCA monitoring activity it’s essential to use technology that enables adverse media checks to take place. This technology flags if an individual has any negative news associated with them. It will keep you abreast, in real-time, of news on any arrests or court cases, for example, against your clients who may be PEPs and RCAs; along with other customers who could have potential negative regulatory, financial, or reputational consequences to your organisation. However, for adverse media screening to effectively take place it’s essential that the tool used scans the credible global news media.

If there is negative news against an existing client they should be ranked as high risk, with further due diligence required, which may result in ending the business relationship. Also, this screening shouldn’t only be used to monitor existing clients, but at the customer onboarding stage, as part of their customer due diligence.

Integrated sanctions technology

The best way to obtain information on PEPs and RCAs is to have access to technology that can provide an up-to-date sanctions list, also called a watchlist, which as part of the service can deliver data on PEPs and RCAs, along with adverse media screening. The technology behind the watchlist should automatically collect and synthesise sanctions data in real-time from a wide range of trusted sources worldwide, such as governments, regulators, and credit agencies for maximum reach and accuracy.

Electronic identity verification (eIDV)

Such a service works well as part of a wider, more comprehensive approach to automated know your customer (KYC) and anti-money laundering (AML) operations. It’s why there’s growing interest in using electronic identity verification (eIDV) technology, which as well as having access to comprehensive sanctions data, including those on PEPs and RCAs, is able to cross-check user-provided details against reputable data streams to ensure individuals are who they say they are in real-time.

While it’s only a legal requirement for financial institutions to screen for PEPs in the UK, every organisation should be accessing the appropriate technology that delivers PEPs, RCA data and adverse media screening for sanctions best practice. Doing so will protect their bottom line and their reputation, something that’s particularly important in these more challenging economic times.

This guest blog was written by Barley Laing, UK Managing Director at Melissa. To learn more about Melissa, please visit their LinkedIN and Twitter page.



Lewis Walmesley-Browne

Lewis Walmesley-Browne

Head of Programme: Market Access and Consumer Tech, techUK

Barley Laing

Barley Laing

UK Managing Director, Melissa

Barley Laing joined Melissa in 2014 during an exciting expansion phase of the California headquartered company.

As Managing Director, with 24 years of technology and data industry experience, his role is focused on meeting the customer onboarding, data quality and ID/compliance needs for organisations in the UK and worldwide.

The team that Barley heads up provides sales, data consultancy and technical support for their wide range of software solutions, which help organisations to achieve efficient data verification and management; and meet ID, Know your Customer (KYC) and Anti-Money Laundering (AML) requirements. 

Under his leadership Melissa’s UK office has experienced double digit growth over the last five years in a row, including 21% in 2021. Over this period he has significantly grown the UK client base, which includes: the Foreign, Commonwealth & Development Office; GCHQ; Financial Conduct Authority (FCA); BBC; BAE Systems; GSK and Mars.

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