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How does the notion ‘Once a PEP, Always a PEP’ apply in AML watchlist screening?

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Introduction

The 2022 revelations of corruption charges against prominent European Parliament member Eva Kaili, implicated in a cash-for-influence scandal with Qatar, underscore the critical need for a comprehensive examination of Politically Exposed Persons and the imperative to enhance regulatory scrutiny.

In the realm of global finance, the term “Politically Exposed Persons” (PEPs) holds substantial weight. PEPs encompass individuals who presently hold or have previously held significant public positions, along with their close associates and family members. Financial institutions closely scrutinize this group due to their elevated risk for corruption and involvement in money laundering. The concern arises from the potential for PEPs to exploit their positions, engaging in corrupt practices such as bribery and misappropriation of funds, and then utilizing financial systems, both domestically and internationally, to legitimize these ill- gotten gains.

Notwithstanding the fact that not all PEPs engage in corrupt activities, the inherent risk of misuse of power remains a persistent concern irrespective of their country of origin, nature of business activities, or seniority of role. The endemic scale of grand corruption and its detrimental impacts on institutions, government revenues, and social welfare underscore the imperative for effective measures to mitigate these risks.



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