What is an AML check?
An AML (Anti-money Laundering) check is a screen against a register of publicly known individuals with public functions, their associates and close family.
It is important to note that, inevitably, many PEP matches are false positives. This is due to the absence of information such as the date of birth relating to actual PEPs.
What to do when you see PEPs on a report:
To be compliant you will need to discount that the PEPs (Political Exposed Person) identified are not related to the person you are completing a transaction with. Your duty is to know your customer through speaking and meeting with them to understand who they are. You will want to know as much about them so that you can confidently discount that they are a PEP.
Criteria you can discount on:
Full Name - The full name of the PEP does not match the person, for example, has a different middle name or the middle name is not there.
DOB (if available) - The date of birth is different.
Country - The person is not from or lived in the country the PEP is found in.
Occupation - The occupation of the PEP is different to the occupation of the person.
Family relations - Sometime PEPs flag up as being related to someone, if they aren't related then you can discount on this basis.
If you can't discount or know they are a PEP:
In the event of a client cannot be discounted against all the PEPs listed, we recommend you do an enhanced due diligence (EDD) which simply means the collection of additional data on an individual in order to mitigate risk.
For example:
Establishing source of funds and wealth
Enhanced monitoring of transactions
Carrying out additional searches on the individual (such as an adverse media check)
Establishing the intended purpose and nature of the business relationship
A client who is at high risk needs to be monitored on a regular basis. Many financial organisations have monitoring systems in place for clients who are at high risk. The process involves screening individuals against the PEP register.
What is a Sanction?
A sanction is a preventative measure often implemented by governments and international bodies to change behaviour, prohibit illicit activity and curb undesirable actions by certain high-risk persons or groups.
What to do when Sanction has been flagged?
If a Sanction has been flagged on your Checkboard report, you must report instantly to your nominated Money Laundering Reporting Officer regarding the suspicious activity and make suspicious activity reports to the National Crime Agency. The nominated officer can delegate responsibilities but must do so clearly and in writing.
What is a MLRO Officer?
The UK’s Money Laundering Regulations 2007 highlights that all businesses within the regulated financial services sector are required to appoint a Money Laundering Reporting Officer (MLRO).
The MLRO - sometimes referred to as a 'nominated officer' - provides oversight for their firm's anti-money laundering (AML) systems and acts as a focal point for related inquiries. Not only is having a Money Laundering Reporting Officer a legal requirement, but it can also help with:
Have a “nominated officer” for employees to report suspicious activity too.
Documenting your anti-money laundering policies and procedures.