Politically Exposed Person (PEP), explained
What is a Politically Exposed Person (PEP)?
Politically exposed persons (PEPs) are individuals who have been entrusted with a prominent public function. They are typically politicians, government officials, or business leaders. Due to their high-profile positions, PEPs may be susceptible to corruption.
As a result, businesses and financial institutions must take extra care when dealing with them. For example, when selling a property, it is important to verify the source of the buyer’s funds. This is to ensure that the money is not being used to launder illicit proceeds.
In addition, businesses should keep accurate records of their transactions with PEPs and monitor for any suspicious activity. By taking these precautions, businesses can help to prevent corruption and safeguard both themselves and the public interest.
How do property professionals identify PEPs?
As a property professional, you may come across individuals who are considered to be politically exposed persons. But what exactly does it mean? And how can you identify one?
Generally speaking, a PEP is an individual who has been entrusted with a prominent public function. This could include politicians, senior government officials, diplomats, and military officers. In some cases, they may also be wealthy individuals with close ties to those in power. When it comes to identification, there are a few key indicators to look out for.
First and foremost, you should check to see if the individual is listed on any sanctions lists. You can also run a search of public records to see if the person has ever held a public office or been involved in political activity.
Finally, it’s always worth doing a bit of research on the person’s background and connections. If you take these steps, you should be able to identify most PEPs.
What kind of information is collected on a Politically Exposed Person purchasing a property?
In the context of buying property, PEPs may be required to provide additional information and documentation in order to satisfy anti-money laundering (AML) obligations. This is because PEPs may be at a higher risk of being involved in corruption or other financial crimes.
When buying property, PEPs will typically be asked to provide proof of identity, proof of address and evidence of their source of funds. In some cases, PEPs may also be required to undergo enhanced due diligence. This may involve providing additional information about their financial history and business interests. By understanding the AML requirements for PEPs, you can help to ensure that your property purchase goes smoothly.
How do you decide whether to do business with a Politically Exposed Person or not?
When you’re applying for a home loan, the bank will usually do a background check to make sure you’re not a politically exposed person. This is because PEPs are considered to be at higher risk of corruption and money laundering. If you are a PEP, don’t worry – there are still plenty of lenders who will be happy to do business with you. However, you may need to provide additional documentation, such as proof of income and asset declarations.
Estate agents and conveyancers can also use Politically Exposed Person screening to help them decide whether to do business with someone. For example, they may be more likely to ask for a larger deposit or request additional ID documents. In some cases, they may even refuse to do business with the person altogether.
Ultimately, it’s up to each individual agent or conveyancer to decide whether they want to work with a PEP. They’ll often take into account factors such as the country of origin, the level of corruption risk and the amount of money involved in the transaction.
Are there any benefits to doing business with a PEP?
Property professionals may be interested in doing business with politically exposed persons (PEPs) for a number of reasons. PEPs are typically high-net-worth individuals who have access to important decision-makers and can provide valuable insights into the political landscape. In addition, PEPs often have a need for high-quality property assets and are willing to pay premium prices for them.
As a result, property professionals who are able to build relationships with PEPs can potentially secure lucrative deals. However, it is important to note that PEPs also come with heightened compliance risks.
Property professionals must take care to conduct due diligence on potential PEP clients and to implement adequate anti-money laundering procedures. Failing to do so could lead to serious financial and reputational consequences.
Politically exposed persons are important to know about for a few reasons. Firstly, they may be in a position to influence government decisions that could impact your business. Secondly, their wealth or political connections can make them attractive clients for property professionals. Finally, PEPs present a higher risk of money laundering and terrorist financing, so it’s important for property professionals to take measures to mitigate this risk.
At Veya, we offer HMRC-grade AML checks for property professionals which include PEP and sanction screening. We believe that by taking a proactive approach to identifying and vetting PEPs, property professionals can protect themselves and their businesses from financial crime. If you’re interested in learning more about our AML checks or other services, please get in touch. We’d be happy to help!