Top 8 Features of PEP Screening Software

Have you ever considered how financial organizations detect and manage risks associated with (PEP) politically exposed persons? 

Former ex-minister of Malaysia, Najib Razak was captured in jail in August 2020 for a case of corruption linked to the 1 Malaysia Development Berhad (1MDB) government state funds and is currently facing imprisonment for 12 years.

Malaysian officials invaded his house and seized expensive goods worth $237 million. Captured goods include hundreds of expensive purses, more than 12,000 pieces of jewelry, and over 400 wristwatches.

The integration of PEP screening software in the compliance plan made the screening and monitoring of risk-associated individuals, such as politically exposed persons (PEPs) feel like a breeze.

PEP screening software allows you to reduce risks and strengthen AML compliance by integrating extensive databases, real-time monitoring, and complex algorithms.

PEP screening, also called PEP check, uses effective PEP software to screen people who misuse their positions to benefit themselves through illegal activities.

Picture PEP software as a protective barrier for your company. While assessing every incoming customer for their risk level across 4 distinct PEP levels, PEP screening software works to enhance the overall credibility and safety.

What is PEP Software and PEP screening?

PEP Software is a specialized tool designated to assess the risk level and potential threat associated with politically exposed persons (PEPs). Oftentimes PEPs are regarded as high risk solely on the title ascribed to them. Due to their impactful ranks, people who hold important positions are considered high-risk.

FCA has recently revealed a notice demanding financial institutions to improve treatment of politically exposed persons (PEPs).

It might be easy for them  to get involved in money laundering, terrorist funding, bribery, corruption and other similar crimes, however, this alone doesn’t account for unjust treatment.

PEP screening is a perfect getaway to maintain the right balance between scrutiny and unjust treatment for politically exposed persons and their relatives/ close associates.

While facilitating due diligence in financial organizations, the right solution for PEP Screening helps in assessing PEPs and their RCAs who might have been involved in illicit activities.

This blog will be a walkthrough of top features of PEP screening software, current challenges and market leading solutions to manage them.

Read Also:  How PEP Screening Works for Your Business.

Top Features of PEP Compliance Software

Effective PEP screening software ensures AML compliance. Integrating the right set of technological aspects, PEP screening software can smartly imply a range of features mentioned below to meet PEP screening and monitoring requirements.

Real-time Screening

With every next second, PEP levels are changing. How to keep track of continuous changes? The challenge doesn’t end here!

The regulations of PEP screening keep on changing. Take FCA’s call for improved treatment as one of the many examples. How to make sure your business complies with everything that’s new, current and relevant?

An efficient PEP monitoring software needs to be efficient enough to keep track of the expected and introduced changes.

Extensive Databases

PEP check software with limited capacity of databases can only help deal with a limited number of PEPs.

What strategy do you have in place for diverse risk factors?

PEP screening software integrated with extensive databases consisting of data for both local and international PEPs is the need of time to efficiently address risks.

We have a complete guide for businesses for effective risk assessment.

Enhanced Due Diligence

Surface level screenings aren’t as protective as they were a few months ago. With several fool-proof strategies devised, PEPs have the potential to surpass these checks without being caught.

The emergence of an increased trend towards money mules is a prominent example. Here are some more informal methods in practice by PEP and RCAs to avoid being caught in PEP screening software.

The feature of enhanced due diligence helps with digging deeper into the background which might involve complex network analysis and more detailed risk analysis.

AML Watcher has marked a breakthrough with a structured database that updates in real time and holds structured PEP data sorted in 4 categories, based on their unique risk levels.

Users can evaluate each PEP and RCA by keeping their job title, rank, country, global and regional risk level in view to analyze the amount of risk they can pose to your business.

Precision & Accuracy

It is necessary to thoroughly examine features specifically designed for accuracy and precisions that can help in reducing false positives and negatives.

Quality AML Software provides services for effective screening methods to detect crimes and ensure anti-money laundering compliance.

Name Matching in  PEP Screening

Name matching is crucial in PEP screening software. Advanced name matching algorithms that can identify AKA’s and Aliases in PEP screening to reduce false positives are critical in 2024.

Optimized integration function

Integration of PEP software into existing software can be challenging. However, PEP screening solutions that offer seamless integration through REST API without altering the current workflow are highly beneficial. Additionally, preferring integration via REST API rather than cloud-based options can enhance flexibility and control.

Effective Reporting Tools

Strong reporting tools are a key feature in PEP screening software, allowing financial organizations assistance in monitoring and managing complete trail of screening activities.

Improved Automation

Automation across PEP screening software speeds up screening processes. It allows large amounts of data to be collected at once by batch screening, saving time and reducing the need for a larger workforce.

User-Friendly Interface and Support

PEP check software must have an easy-to-use interface. Users should be able to browse the features and access them without difficulty.

Operational efficacy and user experience of a PEP screening software impact the effectiveness of AML screening.

Sequential Development of PEP Screening Tools

PEP screening used to be a tiring and time-consuming process. As technology evolved, so did PEP screening tools.

Quite similar to PEP screening, here is how AML technology has evolved throughout history.

Consequences of Inefficient PEP screening

Themis, Financial Crime Intelligence, said:

“If a bank is not AML compliant, it faces penalties. This could lead to a 5.2% decrease on the same day and a further decrease of up to 20.7% in the next 6 months.”

Here’s what other consequences may step in:

Imposition of Hefty fines

The Financial Conduct Authority (FCA) imposed a heavy fine on UK-based financial organization Gatehouse worth “$1.8/£1.5 million” in October 2020 for not conducting proper PEP screening and sanctions list checks.

Negative impact on reputation

Having a negative history or association with legal fines has a bad impact, as your clients or stakeholders will lose trust in you, affecting your organization’s credibility.

Top 4 Challenges in PEP Screening

Businesses can face a lot of difficulties that can influence the efficacy of PEP screening. Top 4 challenges include:

• PEP lists are mostly altered by adding new Individuals or removing Individuals who are no longer risky, so it’s important to confirm that PEP screening tools are
• PEP regulations and laws differ in different regions, which requires businesses to meet regulatory standards and stay aware of all updates to avoid possible law violations.
• Poor data quality in screening software can generate false negatives and expose the business to risks and fines.
• False positives generate alerts that cause transaction delays and enhance review procedure costs.

AML Watcher: PEP Screening Provider You Can Trust

AML Watcher stands out in the market by ensuring thorough coverage of PEPs from all regions, including those often overlooked by legacy vendors.

Our comprehensive approach covers risk classification from levels 1- 4,  including real-time updates and local PEP identification, ensuring thorough risk management and compliance.

Our PEP screening solution features include:

Broader Jurisdiction Coverage

AML Watcher has a unique feature with its PEP screening is to cover data from less recognized, controversial, occupied regions, or small islands.

Our in-house data team also extracts, analyzes, and maintains all PEP information from regions like Kyrgyzstan, Abkhazia,  Gibraltar, Taiwan, and many more.

This will ensure that no high-risk individuals from these regions are overlooked, or no profile is wrongly sanctioned thus providing a detailed risk assessment for organizations.

Real-Time Data Updates

AML Watcher updates its PEP database every fifteen minutes, incorporating the latest information from all regions.

These timely updates reduce the risk of undetected changes in PEP status, enhancing compliance and security.

Tailoring Classification Levels

Based on their position, influence, and other risk criteria, institutions can assign PEPs with different risk levels.

This adaptability lowers false positives and guarantees that screening procedures meet the particular requirements of the organization.

Customizable Screening Parameters

With AML Watcher, institutions may customize their screening criteria to match their unique risk profiles and regulatory landscapes.

Institutions may choose their definitions from a range of regional and international standards definitions, such as the legislation of the EU and the UK, the FATF, or particular national recommendations.

Local PEP Detection

AML Watcher successfully covers PEP level 4 & associated risks and screens not only national but also local PEPs, including regional officials and local politicians.

Detailed screening with granular data captures all relevant political figures, ensuring thorough due diligence.

Contact us to talk more about your compliance needs.