It recently used the approach on a sample of law firms and real estate agencies, to evaluate the effectiveness of their PEP screening policies, procedures and controls.

The key issues uncovered included:

• no policy to conduct PEP screenings on customers and their beneficial owners;
• no policy to obtain senior management approval before continuing a business relationship with a PEP;
• no procedure outlining how a PEP screening would be conducted;
• no policy or procedure to keep records of the PEP screenings conducted;
• no New Zealand definition for PEP included in AML programmes; and
• no control to ensure that PEP checks had been completed.

The DIA also found that compliance rates for PEP checks were better where companies used third-party electronic customer due diligence providers.

You can find the DIA’s full article on Targeted Compliance Assessments – Politically Exposed Persons here.