PEP list screening is a very useful process that helps businesses and financial institutions eliminate risks linked to crimes like money laundering and corruption. But as nothing comes without challenges, politically exposed persons screening has its own challenges.
Expect this blog to cover the 8 most common challenges that businesses and FIs face when screening PEPs and find the most effective solutions to those problems.
But before we start talking about the challenges and their solutions, it is also important to understand the basics of PEP screening and why it is important. When people have high exposure to politics or other PEPs, they have a higher chance of being part of illegal activities and committing crimes. The screening of these people makes it easy for organizations to recognize and alleviate the risks coming with them.
- Lack of Awareness
The first and foremost problem that occurs is that businesses do not have enough knowledge about PEP screening and its importance. Because of this they do not take the risks linked to PEPs seriously and this leads to ineffective measures to eliminate risks.
Solution: Businesses should always try to bring things into the knowledge of the stakeholders so that they are all on the same page. When it comes to PEP Screening they can do so by telling them how important it is for the present as well as for the future.
- Complex Regulatory Landscape
Another huge challenge is that the regulatory needs always keep changing. This makes it difficult for businesses to go through regulations all the time and keep updating their policies, especially if they are working globally.
Solution: With regulations and needs changing, it is important to have PEP screening solutions that can easily change with time for the better.
- Limited Resources
Performing PEP checks requires resources like investments and experts which are at many times not available to all organizations.
Solution: Organizations can make use of automated PEP screening solutions that can smooth out their processes and comply with regulations without requiring many resources.
- Data Quality Issues
To make sure that the effectiveness of screening PEPs does not lessen, it is extremely important to collect high quality information. When there is an issue of data quality and data collected is inaccurate, obsolete or incomplete, it becomes difficult for businesses to perform PEP checks.
Solution: Businesses must focus on getting high quality data and invest in data sources and verification processes so that the accuracy of PEP screening results is not affected.
- Integration with Existing Systems
PEP screening solutions can be integrated with your existing systems but this process is very time-consuming. Also, issues like compatibility, data migration, and technical problems also occur and they affect the efficiency of the PEP screening process.
Solution: Look out for solutions that can be easily integrated and implemented in your organization.
- Balancing Efficiency and Accuracy
Getting the perfect balance between efficiency and accuracy is a huge problem in PEP screening. When organizations only focus on performing in-depth screening so they can recognize risks, they at many times forget that they are causing delays and inefficiencies in operations.
Solution: Using a risk-based approach when performing pep risk assessment is a great choice that businesses can make. This is because with the help of this approach, they can divert their focus on more riskier clients first.
- Managing False Positives
When people are wrongly identified as politically exposed persons, false positives arise and take a lot of time for the compliance groups in the organization. Because of this it is very important to manage false positives so that the effectiveness of pep screening is not reduced.
Solution: Organizations must use review mechanisms and analytics to make their algorithms for screening better and this can also help in reducing false positives.
- Ensuring Stakeholder Buy-in
Getting buy-in from stakeholders, including senior administration and board individuals, is very important to put in place PEP screening successfully in an organization. What stops this is the lack of knowledge and people’s resistance to change processes that have been going on for a long time.
Solution: Businesses must explain the reasoning behind PEP screening. They should explain how risks are affecting the operations and how they can benefit from screening clients.
Are You Ready To Make Use Of The Solutions?
PEP list screening can really help organizations work on their anti-money laundering (AML) and (CFT) Counter-terrorism financing efforts as it helps in the identification of politically exposed persons and eliminating the risks they carry. Compliance and safety can become easy for your organization with the help of PEP screening.
So, put in place the right strategies and solutions so you do not face any more challenges in implementing PEP screening. Need more help? Contact us at AML Watcher and discover our pep screening services.
