by Jenny Reid
In South Africa, PEP (Politically Exposed Person) and sanctions tests are typically used by financial institutions and certain designated non-financial businesses and professions to comply with anti-money laundering and counter-terrorist financing regulations.
PEPs are people who, due to prominent positions or roles, could be susceptible to corruption or bribery. Sanctions are measures used to restrict financial transactions or trade with targeted individuals, entities, or countries.
PEP and sanctions tests need to be conducted on those in positions of financial risk to pre-empt the likelihood of your company falling prey to financial crime or restrictions from external organisations. When dealing with finances, the importance of hiring employees who are low risk for financial crime, is of the utmost importance.
Here's a breakdown of who could use PEP and sanctions tests:
Designated Non-Financial Businesses and Professions (DNFBPs) refer to a category of entities or professions that are not primarily financial institutions but are susceptible to being used for money laundering and terrorist financing activities.
DNFBPs are often considered high-risk due to the nature of their business activities and the potential for handling large sums of money or facilitating transactions that could be exploited for illicit purposes.
Here are some examples of DNFBPs:
1. Attorneys and Legal Professionals:
2. Accountants and Auditors:
3. Real Estate Agents and Brokers:
4. Trust and Company Service Providers (TCSPs):
5. Dealers in Precious Metals and Stones:
6. Other High-Risk Professions:
PEP (Politically Exposed Person) and sanctions tests for employee screening are essential components of anti-money laundering and counter-terrorist financing regulations.
Here's how these tests are typically conducted:
1. Politically Exposed Persons (PEPs) Screening:
PEP screening involves checking whether a job applicant is considered a politically exposed person.
The screening process compares the individual's name, date of birth, and other identifying information against PEP lists to determine if they are a PEP or have close associations with PEPs. If a match is found, further due diligence and risk assessment may be necessary.
2. Sanctions Screening:
Sanctions screening is the process of checking whether an individual is subject to economic, or trade sanctions imposed by governments, international organisations, or regulatory bodies.
Employee screening for sanctions involves checking against sanctions lists or watchlists maintained by regulatory authorities, such as the Office of Foreign Assets Control (OFAC) in the United States or the United Nations Security Council sanctions lists.
The screening process verifies if the individual's name, aliases, passport number, national identification number, or other identifying information appears on sanctions lists. Matches indicate potential sanctions risks that require further investigation and assessment.
3. Ongoing Monitoring and Updates:
Employee screening for PEP and sanctions status is not a one-time process but requires ongoing monitoring and updates. Changes in PEP status or sanctions lists may occur, necessitating regular screenings and updates to ensure compliance and mitigate risks effectively.
Avoid the risk of financial crime in your organisation by adding PEP and sanctions screening to your employee screening process. iFacts can assist. Hire with confidence, hire with iFacts.
Jenny Reid is a Human Risk Expert and Professional Speaker, and the owner of iFacts based in South Africa, a specialist employee screening and vetting service. She is constantly assessing new and innovative ways to remove the people risk in any organisation. Since 2009 when she took over iFacts completely, she has seen the company double in size and hopes to continue this growth. iFacts specializes in employee Screening, risk assessments, employee wellness, investigations, and truth verification. Jenny is a past President of the Security Association of South Africa. Contact Jenni via email jenny@ifacts.co.za
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