StartKYC assesses Politically Exposed Persons (PEPs) using a structured framework based on international guidelines (e.g., FATF, UNCAC, EU AML Directives) and national legislation. The methodology categorizes PEPs into Global Minimum Coverage and National Requirement Coverage, ensuring compliance across jurisdictions.
1. Key PEP Definitions and Framework
- International References:
- StartKYC adopts authoritative PEP definitions from:
- FATF (Financial Action Task Force)
- UNCAC (United Nations Convention Against Corruption)
- EU AML Directives (4th and 5th AMLDs)
- Wolfsberg Group
- UK FCA Regulations
PEPs are broadly defined as individuals who:
- Hold prominent public functions (e.g., heads of state, senior politicians).
- Include family members and close associates due to their potential risk of being used to hide illicit funds.
- StartKYC adopts authoritative PEP definitions from:
- Global Minimum Coverage:
These roles are universally classified as PEPs in all jurisdictions and include:- Heads of State/Government and deputies.
- Senior government officials (ministers, deputy ministers).
- Heads of the Armed Forces.
- Members of National and Regional Parliaments.
- Top-level judicial officials (e.g., Supreme Court judges).
- Central bank executives and auditors.
- Senior diplomats (ambassadors, high commissioners).
- Directors of state-owned enterprises (SOEs).
- National Requirement Coverage:
In some countries, additional roles are designated as PEPs, including:- Regional and Local Government Officials: Governors, mayors, municipal leaders.
- Judicial roles at district and regional levels.
- Middle- and Low-Ranking Diplomats.
- PEP by Association:
StartKYC also identifies relatives and close associates (RCAs) of PEPs, such as:- Direct family members (parents, spouse, children, siblings).
- Extended family members (where defined by national law).
- Close associates: Friends, business partners, and individuals holding assets for PEPs.
2. Risk-Based Approach and Prioritization
- Tiered Classification:
StartKYC segments PEPs into Tier 1 (highest risk, senior roles), Tier 2 (mid-level), and Tier 3 (lower-ranking officials) to prioritize screening:- Tier 1: National-level officials (e.g., government, legislature).
- Tier 2: Regional-level officials, senior diplomats, SOE directors.
- Tier 3: Local government officials, middle-ranking diplomats.
- Temporal Scope:
- Current PEPs: Serving officials.
- Former PEPs: Within 12 months (or longer if defined by national law).
- Profile of Interest: Former PEPs beyond 12 months, retained for up to 10 years if additional risks arise (e.g., sanctions, law enforcement issues).
- Risk Criteria:
StartKYC prioritizes PEP coverage based on jurisdiction risk (e.g., corruption perception) and client demand. High-risk jurisdictions receive more frequent updates.
3. Operational Process
- Content Sourcing:
StartKYC uses official government websites, national AML/CFT laws, PEP lists, and media reports to identify PEPs. - Continuous Updates:
- Proactive updates for elections, appointments, and reshuffles.
- Periodic reviews to ensure up-to-date information.
- Retention Policy:
PEP data is retained for up to 10 years unless associated with active risk factors (e.g., sanctions).
In Case of Ambiguity or Incorrect Data Input
- If incorrect country data is input, StartKYC’s methodology relies on clear role definitions tied to global minimum standards and national laws. This ensures officials serving in relevant roles are captured consistently, minimizing inaccuracies.
This comprehensive approach ensures StartKYC’s PEP data is reliable, up-to-date, and adheres to global AML compliance requirements.