At LOCA Private, we build resilient risk management solutions to help our clients confidently navigate dynamic business environments and meet tomorrow's challenges today.
Support with your compliance requirements
We provide industry-leading ongoing consultancy services support adapted to the ever-evolving regulatory environment. We routinely solve client specific compliance issues, offer reputation project support, assist with the effect and impact of Worldwide regulation on systems, policies and compliance KYC procedures.
A Risk-Based Approach to Sanctions and Watchlist Screening, including politically-exposed persons (PEP) lists
Sanction and watch lists are critical tools for any risk or sanctions screening program.
Organizations should also look at the risks associated with changing regulatory rules and expectations of regulators. When looking at customer risk, financial institutions capture and record data about the customer throughout their relationship in order to create an accurate view of the risks associated with that customer. During onboarding, data for an accurate customer risk score includes:
- Customer characteristics (name, address, date of birth, profession etc.)
- Anticipated utilization and activity of account
- Corporate entities characteristics (industry, annual revenue, number of employees, geographies, etc.)
- Presence on any sanctions or watch lists including politically – exposed persons (PEP) lists
Politically Exposed Persons Lists
Onboarding PEPs
The account opening or onboarding process is the most effective time to obtain the required information needed to open and maintain an account for a PEP. Examples of enhanced CDD measures that could be applied for PEPs include:
- Have appropriate risk-management systems and data lists to determine whether the customer or the beneficial owner is a politically exposed person1
- Obtaining additional information on the intended nature of the business relationship2
- Obtaining additional information on the source of funds or source of wealth of the customer3
- Obtaining information on the reasons for intended or performed transactions4
- Obtaining additional information on the receiving party (e.g. occupation, volume of assets, information available through public databases, internet, etc.)5
- Obtaining the approval of senior management to commence or continue the business relationship6
- Conducting enhanced monitoring of the business relationship, by increasing the number and timing of controls applied, and selecting patterns of transactions that need further examination7
- The requirements for all types of PEP should also apply to family members or close associates of such PEPs8
Have appropriate risk-management systems and data lists to determine whether the customer or the beneficial owner is a politically exposed person
Obtaining additional information on the intended nature of the business relationship
Obtaining additional information on the source of funds or source of wealth of the customer
Obtaining information on the reasons for intended or performed transactions
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3
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Obtaining additional information on the receiving party (e.g. occupation, volume of assets, information available through public databases, internet, etc.)
Obtaining the approval of senior management to commence or continue the business relationship
Conducting enhanced monitoring of the business relationship, by increasing the number and timing of controls applied, and selecting patterns of transactions that need further examination
The requirements for all types of PEP should also apply to family members or close associates of such PEPs
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According to the Federal Financial Institutions Examination Council (FFIEC), Bank Secrecy Act, a politically exposed person (PEP) is classified as:
- A current or former:
- Senior official of a major foreign political party
- Senior executive of a foreign-government-owned commercial enterprise
- A corporation, business, or other entity that has been formed by, or for the benefit of, any such individual.
- An immediate family member (including spouses, parents, siblings, children, and a spouse’s parents and siblings) of any such individual.
- A person who is widely and publicly known to be a close associate of such an individual.
According to the Federal Financial Institutions Examination Council (FFIEC), Bank Secrecy Act, a politically exposed person (PEP) is classified as:
- A current or former:
- Senior official of a major foreign political party
- Senior executive of a foreign-government-owned commercial enterprise
- A corporation, business, or other entity that has been formed by, or for the benefit of, any such individual.
- An immediate family member (including spouses, parents, siblings, children, and a spouse’s parents and siblings) of any such individual.
- A person who is widely and publicly known to be a close associate of such an individual.
Financial institutions should look at the definition of a PEP for each jurisdiction, as these may slightly vary, which adds to the level of complexity when screening for this class of individuals. For some jurisdictions, a PEP is an individual who meets any of the following criteria:
- Heads of State and their deputies
- Heads and Deputies of Regional Government
- Heads of Government Agencies and Cabinet Ministers
- Regional / Provincial Government Ministers
- Members of National Parliament
- Members of Provincial Legislature
- Senior Civil Servants
- Senior members of the army and/or influential officials, functionaries, and military leaders and people with similar functions international or supernatural organizations
- Senior members of the police services
- Senior members of the secret services
- Senior members of the judiciary
- Senior and/or influential representatives of religious organizations
- Political leaders
- Labor group officials
- Influential functionaries in the private sector and public services administration
- Key leaders of state-owned enterprises
- Private companies, trusts, foundations, or other juristic persons owned or co-owned by PEPs directly or indirectly
- Any business and/or joint venture that has been formed by, or for the benefit of a senior political figure
- Close Family who are defined as individuals who are related to the PEP either directly (consanguinity)
- or through marriage or similar (civil) forms of partnership including:
- Children and siblings
- arents and grandparents
- Uncles and aunts
- Nephews and nieces
- Relatives by marriage
- Heads of State and their deputies
- Heads and Deputies of Regional Government
- Heads of Government Agencies and Cabinet Ministers
- Regional / Provincial Government Ministers
- Members of National Parliament
- Members of Provincial Legislature
- Senior Civil Servants
- Senior members of the army and/or influential officials, functionaries, and military leaders and
- people with similar functions international or supernatural organizations
- Senior members of the police services
- Senior members of the secret services
- Senior members of the judiciary
- Senior and/or influential representatives of religious organizations
- Political leaders
- Labor group officials
- Influential functionaries in the private sector and public services administration
- Key leaders of state-owned enterprises
- Private companies, trusts, foundations, or other juristic persons owned or co-owned by PEPs
- directly or indirectly
- Any business and/or joint venture that has been formed by, or for the benefit of a senior political figure
- Close Family who are defined as individuals who are related to the PEP either directly (consanguinity) or through marriage or similar (civil) forms of partnership including:
- Children and siblings
- Parents and grandparents
- Uncles and aunts
- Nephews and nieces
- Relatives by marriage
We regularly advise on
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Consultations on sectoral sanctions
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Identification of sanctioned persons, including in cases of indirect participation, taking into account the «50 percent rule»
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Preparation of sanctions policies for various industries
4
Checking contracts and agreements in terms of sanctions regulation
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Preparation of sanctions and force majeure clauses
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Preparation of legal opinions of legal opinions on sanctions regulation
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Preparation of documents for compliance procedures
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Source of funds or source of wealth of the customer
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Audit and verification of the client profile in the international database World-Check
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Legal support for the process of making adjustments to the international database World-Check: work to exclude PEP statuses, communication with PEP, Offshore, Reputation, Sanctions
11
Creation of social media profile for passing Media-Check Negative Screening
Consultations on sectoral sanctions
1
Identification of sanctioned persons, including in cases of indirect participation, taking into account the «50 percent rule»
2
Preparation of sanctions policies for various industries
3
Checking contracts and agreements in terms of sanctions regulation
4
Preparation of sanctions and force majeure clauses
5
Preparation of legal opinions of legal opinions on sanctions regulation
6
Preparation of documents for compliance procedures
7
Source of funds or source of wealth of the customer
8
Audit and verification of the client profile in the international database World-Check
9
Legal support for the process of making adjustments to the international database World-Check: work to exclude PEP statuses, communication with PEP, Offshore, Reputation, Sanctions
10
Creation of social media profile for passing Media-Check Negative Screening
11
Our team
Our team of subject matter experts help to minimise the regulatory burden, offering practical, usable advice and solutions that work for our clients and the Regulator.
It’s through the breadth and depth of their collective expertise and experience that we provide an outstanding service and ensure that compliance makes a positive contribution to a firm’s day-to-day running of their business.
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