In the world of anti-money laundering (AML) and counter-terrorist financing (CTF), we have a lot of acronyms. Here you find details about PEP, SIP and RCA.
PEPs: Politically Exposed Persons
According to the Financial Action Task Force or FATF, a PEP is an individual who has been entrusted with a prominent public function.PEPs come in all shapes, sizes, and forms and FATF has clearly defined them according to which entities entrust prominent functions to PEPs. This includes Foreign PEPs, Domestic PEPs, and International Organisation PEPs.
Examples of PEPs include but are not limited to heads of state, senior politicians, senior government, judicial or military officials, senior executives of state-owned corporations, and important political party officials.
Due to their positions of power, PEPs may be prone and are able to commit bribery and corruption. As such, organisations and reporting entities are required to take extra precautions such as enhanced due diligence measures when onboarding or transacting with PEPs.
SIPs: Special Interest Persons
A SIP is an individual who has been identified as being involved in activities that may pose a higher risk for money laundering or terrorist financing. This includes but is not limited to individuals involved in drug trafficking, arms dealing, human trafficking, smuggling, corruption, and fraud. In other words, SIPs are someone to keep a close eye on!
As with PEPs, organisations and reporting entities must also identify, observe, and flag SIPs if they pose any potential risks to trust abuse or money laundering.RCAs: Relatives and Close Associates
An RCA is an individual who is closely associated with a PEP or SIP. This includes but is not limited to immediate family members, for example, spouse, children, parents, close business associates, and yes, even romantic partners!
RCAs may pose a high risk for money laundering or terrorist financing because of their association with high-risk individuals, like PEPs and SIPs. As a result, organisations and reporting entities must be aware of these risks posed by RCAs and take the necessary steps to mitigate those risks so that they are complying with their AML/CTF obligations.
PEPs, SIPs, and RCAs present a greater risk for money laundering and terrorist financing. As such, it's important to always monitor your interactions with them very closely, as part of your AML/CTF regime.
POI: Profile of Interest
Profile of Interest is a category designed to capture legacy data of PEPs who served on relevant PEP positions more than 12 months ago, as well as legacy data of profiles which no longer fits the new Reputational Risk Exposure methodology.