Sanctions screening has been something that’s been top of mind for many counter fraud and compliance teams in the public sector. This is largely due to the plethora of global sanctions against individuals and organisations from Russia and Belarus.
While many are effectively screening for those who are sanctioned, as they are legally obliged to, are they taking a best practice approach to the process?
Are they also screening against politically exposed persons (PEPs) and relatives and close associates (RCAs) of PEPs, and undertaking adverse media checks, prior to onboarding a new user to their services, and using these tools to screen those on their existing database?
It’s vital to undertake these checks to protect your organisation against potential fraud and avoid having a user who can damage your reputation.
Politically exposed persons (PEPs)
A PEP is defined as ‘an individual who is or has been entrusted with a prominent public function’. This could be, for example, a senior politician, civil servant or member of the judiciary.
Knowledge of who these people are is so important because if they happen to abuse their position and defraud you, not only will there be a monetary cost, but it could cause significant reputational damage.
PEP screening should occur at the early stages of any user onboarding activity, then regularly across your database on an ongoing basis. Once a PEP is identified enhanced due diligence measures need to be applied that are proportionate and effective. Also, notify those with the task of monitoring risk assessments at your organisation that a relationship with a PEP has begun.
It’s worth bearing in mind that PEPs at a very senior level could pose some risk after leaving office, due to their activity and relationships built up during their time in the role. As a result, undertaking enhanced due diligence on these individuals for longer is advised.
Relatives & Close Associates (RCAs)
RCAs can be spouses, partners, children, parents, cousins, uncles, aunts and close friends of the PEP. The reason to screen for this audience is because they may be vulnerable to bribery, blackmail and corruption due to their relationship with someone in a position of authority and influence. To address the risk posed by RCAs, screening for these people should take place at the onboarding stage, and periodically against those with access to your services via ongoing monitoring.
Adverse media screening
An additional best practice approach to screening is to use technology that enables adverse media checks to take place. Doing so will keep you abreast of the latest news and alerts, in real-time, on any arrests or court cases, for example, against your users who may be PEPs and RCAs, and others who could have a potential negative regulatory, financial, or reputational consequence to your organisation. Source those that can scan the credible global news media for maximum reach.
If there is negative news against someone with access to your services they should be ranked as high risk. After carrying out further due diligence it may be necessary to stop the individual from accessing your services.
For best practice purposes it’s important to undertake adverse media checks at the user onboarding stage, as well as against existing users.
Integrated sanctions technology
It is essential to source and use 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 checks. Ideally, the technology behind the watchlist should automatically collect and synthesise sanctions data from a wide range of trusted sources worldwide in real-time, such as governments, regulators, and credit agencies, for maximum reach and accuracy.
Electronic ID verification (eIDV)
Such a service works well as part of a wider, more comprehensive approach to automated know your citizen (KYC) and anti-money laundering (AML) operations. It is why there is growing interest in using an eIDV platform, 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, for sanctions best practice those in the public sector should be accessing the appropriate technology that delivers data on PEPs, RCAs and enables them to undertake adverse media checks. This will not only help protect their precious budgets from fraud, but also their reputation.
Barley Laing, UK Managing Director at Melissa
Barley Laing joined Melissa in 2014 during an exciting expansion phase of the California headquartered company.
As UK Managing Director, with 19 years of 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 Office (FCO), GCHQ, the Medicines and Healthcare Regulatory Agency (MHRA), BAE Systems, GSK, Caterpillar and Mars.
