PEP Screening

Politically Exposed Persons (PEPs) require enhanced due diligence under anti-money laundering regulations. TrustGate screens against comprehensive PEP databases to identify individuals who hold or have held prominent public positions.

What is a PEP?

A Politically Exposed Person (PEP) is someone who holds or has held a prominent public function. Due to their position, PEPs may be more susceptible to corruption or money laundering, requiring enhanced scrutiny during the customer onboarding process.

Why Screen for PEPs?

• Regulatory requirement: FATF recommendations, EU AML directives, and most national regulations require PEP identification
• Higher risk profile: PEPs have greater access to public funds and decision-making power
• Reputational risk: Onboarding corrupt officials damages business reputation
• Criminal liability: Failure to identify PEPs can result in regulatory penalties

PEP Tiers

TrustGate classifies PEPs into four tiers based on their level of influence and risk:

Tier 1 - Highest Risk

Position	Examples
Heads of state/government	Presidents, Prime Ministers, Monarchs
Senior politicians	Cabinet ministers, party leaders
Supreme court justices	Chief justices, constitutional court judges
Central bank governors	Fed chairs, ECB presidents
High-ranking military	Generals, admirals, chiefs of staff
Executives of state-owned enterprises	Major SOE CEOs, chairpersons

Tier 2 - High Risk

Position	Examples
Members of parliament	Senators, MPs, congresspeople
Regional governors	State governors, provincial leaders
Ambassadors	Current and former diplomats
Senior military officers	Colonels, admirals, brigadiers
Regulatory body heads	SEC chairs, FCA directors
Senior judges	Appeals court, federal judges

Tier 3 - Medium Risk

Position	Examples
Mayors of major cities	Capital cities, major metros
Local politicians	City council, municipal leaders
Mid-level judges	District court judges
Political party officials	Treasurers, secretaries
Senior civil servants	Department directors

Tier 4 - Associated Persons

Relationship	Description
Close family members	Spouse, parents, children, siblings
Close associates	Business partners, close advisors
Beneficial owners	Of companies owned/controlled by PEP
Known co-conspirators	In corruption cases

PEP Screening Process

How It Works

1. Applicant name submitted for screening
           ↓
2. Name searched against PEP databases
           ↓
3. Fuzzy matching identifies potential matches
           ↓
4. Each match returned with:
   - Position held
   - Country/jurisdiction
   - PEP tier classification
   - Match confidence score
           ↓
5. Hits reviewed and resolved by compliance team

Running a PEP Screen

curl -X POST https://api.bytrustgate.com/v1/screening/check \
  -H "Authorization: Bearer YOUR_API_KEY" \
  -H "Content-Type: application/json" \
  -d '{
    "applicant_id": "550e8400-e29b-41d4-a716-446655440000",
    "check_types": ["pep"]
  }'

PEP Hit Response

{
  "id": "check_123456",
  "status": "hit",
  "hit_count": 1,
  "hits": [
    {
      "id": "hit_789012",
      "hit_type": "pep",
      "matched_name": "John Michael Smith",
      "confidence": 87.5,
      "pep_tier": 2,
      "pep_position": "Member of Parliament",
      "pep_country": "GBR",
      "pep_start_date": "2015-05-01",
      "pep_end_date": null,
      "is_current": true,
      "categories": ["national_politician"],
      "matched_fields": ["name", "date_of_birth"],
      "list_source": "pep_database",
      "resolution_status": "pending"
    }
  ]
}

PEP Data Fields

Standard Fields

Field	Description	Example
pep_tier	Risk tier (1-4)	2
pep_position	Title/role	"Senator"
pep_country	Jurisdiction	"USA"
pep_start_date	When position started	"2020-01-15"
pep_end_date	When position ended (null if current)	null
is_current	Currently holds position	true
political_party	Party affiliation	"Democratic Party"
categories	PEP categories	["national_politician"]

PEP Categories

Category	Description
head_of_state	Presidents, prime ministers, monarchs
head_of_government	Prime ministers (where different from HoS)
national_politician	MPs, senators, congresspeople
regional_politician	Governors, regional assembly members
local_politician	Mayors, city council members
judicial	Judges, prosecutors
military	High-ranking military officers
diplomat	Ambassadors, consuls
central_banker	Central bank officials
state_enterprise	SOE executives
international_org	UN, EU, IMF officials
pep_family	Family members of PEPs
pep_associate	Close associates of PEPs

Handling PEP Hits

Risk Assessment

When a PEP is identified:

1. Verify the match - Is this actually the same person?
2. Assess the tier - Higher tiers = higher risk
3. Check if current - Current PEPs require more scrutiny
4. Evaluate the relationship - Direct PEP vs. associated person
5. Consider the jurisdiction - High-corruption countries = higher risk
6. Review source of funds - Can income be legitimately explained?

Enhanced Due Diligence (EDD)

For confirmed PEPs, apply EDD measures:

Measure	Description
Senior approval	Board/senior management sign-off
Source of wealth	Document how wealth was acquired
Source of funds	Verify origin of specific transactions
Ongoing monitoring	More frequent re-screening
Transaction monitoring	Lower thresholds for alerts
Relationship review	Regular review of relationship

Documenting PEP Decisions

# Example: Record PEP approval decision
response = requests.patch(
    f"{BASE_URL}/screening/hits/{hit_id}",
    headers={"Authorization": f"Bearer {API_KEY}"},
    json={
        "resolution": "confirmed_true",
        "notes": """
        Confirmed PEP - Member of Parliament (Tier 2)
        - EDD performed: source of wealth verified
        - Approved by senior compliance officer
        - Subject to quarterly review
        - Transaction monitoring threshold: $5,000
        """,
    },
)

PEP Screening Best Practices

Screening Frequency

Customer Type	Initial	Ongoing
Retail customers	At onboarding	Annual
High-net-worth	At onboarding	Quarterly
Corporate	At onboarding + UBOs	Annual
Correspondents	At onboarding	Real-time

Name Matching Considerations

PEP names often have variations:

• Transliterations (Arabic, Chinese, Russian names)
• Honorifics and titles
• Multiple given names
• Patronymics/matronymics

TrustGate handles these with fuzzy matching. Review hits with >75% confidence.

Former PEPs

Former PEPs (those who no longer hold position) still require attention:

• Cool-off period: FATF recommends 12-month minimum
• Risk assessment: Consider how long since leaving office
• Ongoing influence: Some retain influence after leaving
• Retained access: May still have insider connections

Country-Specific Requirements

European Union (AMLD)

• Must screen for domestic and foreign PEPs
• Family members and close associates included
• Enhanced measures for high-risk third countries

United States (FinCEN)

• Foreign PEPs explicitly covered
• Domestic PEPs increasingly scrutinized
• Beneficial ownership requirements

United Kingdom (MLR)

• All PEPs require EDD
• Simplified due diligence never permitted for PEPs
• Must document senior management approval

API Reference

Screen for PEPs Only

curl -X POST https://api.bytrustgate.com/v1/screening/check \
  -H "Authorization: Bearer YOUR_API_KEY" \
  -H "Content-Type: application/json" \
  -d '{
    "applicant_id": "550e8400-e29b-41d4-a716-446655440000",
    "check_types": ["pep"]
  }'

Filter PEP Hits by Tier

curl -X GET "https://api.bytrustgate.com/v1/screening/hits?hit_type=pep&pep_tier=1" \
  -H "Authorization: Bearer YOUR_API_KEY"

Get PEP Statistics

curl -X GET https://api.bytrustgate.com/v1/screening/stats \
  -H "Authorization: Bearer YOUR_API_KEY"

Response includes PEP-specific metrics:

{
  "pep_hits_30d": 15,
  "pep_true_positives_30d": 3,
  "pep_by_tier": {
    "tier_1": 1,
    "tier_2": 2,
    "tier_3": 5,
    "tier_4": 7
  }
}

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Next Steps

• Sanctions Screening - Sanctions list screening
• Adverse Media - Negative news monitoring
• Hit Resolution - Resolving screening matches
• Screening Lists - Data sources reference