Politically Exposed Persons (PEPs) hold prominent public positions or roles that could be exploited for financial gain or corruption. This category also includes their relatives and close associates (RCAs) who may be at risk of being involved in illicit activities due to their connection with the PEP.
Due to their influence and access to resources, PEPs are considered high-risk. According to the Financial Action Task Force (FATF), they are more susceptible to bribery, corruption, and money laundering. Identifying and monitoring PEPs and their RCAs is crucial for maintaining financial integrity and preventing financial crimes.
Benefits of monitoring PEPs and RCAs
- Risk mitigation: Helps in identifying and mitigating the risks associated with financial crimes.
- Regulatory compliance: Ensures adherence to anti-money laundering (AML) and counter-terrorist financing (CTF) regulations.
- Reputational protection: Safeguards financial institutions from potential scandals and legal repercussions.
ComplyAdvantage PEPs & RCAs intelligence
ComplyAdvantage offers comprehensive intelligence on PEPs and their RCAs, enabling businesses to manage financial crime risks effectively. Independent verification of our data confirmed that we have best-in-class PEP data coverage.
Lightning-fast PEP updates
ComplyAdvantage is the fastest in the industry when it comes to updating PEP data. For example, in July 2024, there were two major elections. We updated our PEP data within hours of the election results being announced.
- UK election: The election results came between July 5 and 6. ComplyAdvantage updated the PEP data simultaneously, and it was all available to you in real-time.
- French election: Election results were announced on July 8, and the PEP data was updated the same day for you to access.
How ComplyAdvantage defines and classifies a PEP
One of the key challenges PEP data providers face is the lack of a universal definition of a PEP. The ComplyAdvantage taxonomy results from the analysis of more than 40 anti-money laundering (AML) regulations worldwide. This includes:
- National regulations.
- By-laws.
- International guidance from:
- The FATF.
- Wolfsberg Group.
- The European Union.
- The World Bank.
It aligns with the FATF recommendations as it links PEP status and risk to a particular public function's level of influence.
In contrast with the FATF approach, ComplyAdvantage’s database does not use a domestic versus foreign label. This is because, for example, a domestic PEP in Russia will be a foreign PEP in India. Instead, ComplyAdvantage’s International Affairs Research Analysts (IARA) team labels each entity relative to the jurisdiction from which their PEP status derives. This ensures the data is presented objectively and neutrally.
ComplyAdvantage categorizes PEPs into four classes according to the scope of their influence:
- National
- International
- Regional
- Local
Each PEP class contains several taxonomies that are purposely granular, enabling analysts to select the relevant PEP categories for countries with varying levels of robust regulations.
PEP Class 1
The first PEP class contains all taxonomies with national-level PEPs, such as:
- National legislatures.
- National cabinets.
- Central banks.
- Armed forces, police, fire service, and intelligence agencies.
PEP Class 2
The second PEP class includes:
- Members of regional governments, parliaments, and judiciary.
- Senior officials and functionaries of international and supranational organizations and diplomatic missions.
PEP Class 3
The third PEP class related to:
- National-level state-owned enterprises.
- Public sector institutions under regional-level administration (e.g. regional agency, regional state-owned enterprises).
PEP Class 4
And the fourth PEP class contains:
- Mayors and members of local, county, city, and district assemblies.
- Senior executives of local governmental bodies (agencies, state-owned businesses).
- Judges of local courts.
Subdivided taxonomies
To allow for differences between governance structures, such as federal versus unitary, and for a finer distinction between various institutions, ComplyAdvantage subdivides its taxonomies into institution types, where necessary.
For example, the taxonomy of ‘national agencies’ distinguishes between an agency under the authority of a ministry, an independent agency, or a specialized agency, such as a public prosecution agency or a court of accounts.
In ComplyAdvantage’s database, institution types are visible in the search results and serve as an additional data point for the users in their risk-based approach (RBA) assessment.