The identification ofpolitically exposed persons( PEP, or “PEPs”) relies on screening clients and their Beneficial Owners at the outset of the business relationship and throughout its duration. The compliance team must be able to configure the scope, the name-matching threshold, and the handling of alerts on its own, while maintaining a record of each configuration for audit purposes.
When the matching threshold of a screening tool can only be modified by submitting a ticket to the vendor, the compliance team is forced to react to alerts rather than manage them. Effective detection of “ PEP ,” on the other hand, requires that business-specific settings be entrusted to the individuals responsible for the system and that every change be tracked.
| Setting or task | Who's driving it? | What the compliance team must be able to do on its own | Record to be retained for audit purposes |
| Scope of the screening: customers, Beneficial Owners, categories of PEP, and associates | Compliance Team | Enable a category, add a population to screen | Date of decision, reason, author |
| Name Matching Threshold (Fuzzy Logic) | Compliance Team | Adjust the tolerance for spelling and transliteration variations; test the setting on a sample before applying it | Old and new values, test results |
| Rules for filtering alerts: date of birth, country, job title | Compliance Team | Add a secondary criterion to filter out homonyms | Rule, Effective Date, Approval |
| Frequency of Portfolio Screening | Compliance Team, Based on Risk Classification | Schedule a new screening and trigger it on demand | History of Screenings and Identified Discrepancies |
| Alarm Processing Circuit | Compliance Team | Define approval levels and reasons for closure | Decision, rationale, and author for each alert |
| Data Sources and List Updates | Tool publisher and data provider | View the source and update date associated with each alert | Update Log |
| Integration with the information system, access permissions, access security | CIO, with the software publisher | Manage user profiles once integration is complete | Authorization Matrix |
What should an PEP detection tool detect?
PEP ’s screening process covers the client, their Beneficial Owners , and their associates, both at the outset of the business relationship and throughout its duration. The tool queries databases of politically exposed persons and compares the last names, first names, dates of birth, and nationalities of the individuals being screened with the profiles listed in the database.
Client, beneficial owner, associates: the scope of the screening
The Monetary and Financial Code requires that the customer and his or her Beneficial Owners. The ACPR’s guidelines on politically exposed persons specify that close family members and professional associates fall within the scope. The tool must cover each of these categories and allow you to adjust its settings based on your risk analysis.
When establishing a business relationship and throughout the business relationship
A customer may be identified as a “ PEP ” after the business relationship has begun. Screening therefore continues throughout the entire business relationship. You determine the frequency of screening based on your risk classification and must be able to schedule these screenings or initiate them on demand.
Who pays for what in a screening of PEP ?
Business rules fall under the purview of the compliance team. Integration into the information system and access permissions remain the responsibility of the IT department, while data sources are the responsibility of the software vendor. This division of responsibilities allows those in charge of the system to manage it without having to open a support ticket for every adjustment.
What settings should the compliance team be able to configure without requiring development work?
The compliance team must understand the factors that determine the scope, accuracy, and processing of the screening results.
Scope and screened categories
You must be able to configure the categories of PEP to be monitored, without excluding those covered by regulations. Spouses, children, and parents of these individuals, as well as their known business partners, can be added through the same interface. Each change to the scope must be dated and assigned.
Matching Threshold and Homonyms
The matching threshold determines the tool’s tolerance for variations in spelling, transliteration, and the order of first names. A threshold that is too strict may miss actual matches, while a threshold that is too broad will generate alerts for homonyms. You should be able to test a new threshold on a sample before applying it.
Alarm Processing Circuit
An " PEP " alert goes through one or more levels of approval. You must be able to define these levels, assign roles, and specify acceptable reasons for closing the alert. Each decision regarding an alert must include the decision-maker, the justification, and the date.
How can I change a setting without reducing detection sensitivity?
Every change to the settings follows a specific procedure:
- test on a sample before application;
- validation by a second person;
- recording changes in a log;
- periodic review of current settings.
The tool must date each modification and allow the system's state to be reconstructed as of a given date.
What evidence should be submitted to the supervisory authority?
The supervisory authority is awaiting your procedure for detecting PEP, the configuration log, the history of screenings performed, and the reasoned decisions regarding alerts. Once the PEP has been confirmed, you must implement the additional due diligence measures provided for by the Monetary and Financial Code. These measures are described in your enhanced KYC procedure.
What questions should you ask a publisher during the demo?
Ask:
- who can change a reconciliation threshold and in how many steps;
- who can view the revision history;
- What are the sources of the data on the PEP and how often it is updated;
- in which language the support team responds;
- where the data is hosted.
Verify that the interface allows you to test a setting before applying it to the entire portfolio. Compare these results to the ten criteria for selecting a screening solution.
How does AP Scan meet this need?
AP Scan, AP Solutions IO’s screening solution, allows the compliance team to configure the scope, reconciliation threshold, and alert reduction rules through a no-code interface. Each change is dated and assigned. The new portfolio screening is scheduled based on your risk classification.
The data comes from institutional and commercial sources that are regularly updated. The platform is hosted in France, and support is provided in French. The audit trail allows you to reconstruct and document every decision for auditing purposes. Make a list of the settings that your team cannot currently change on its own, and during the demo, verify that the new tool puts control over them in the hands of the people responsible for the system.
Frequently asked questions
What is the difference between " PEP " screening and "sanctions" screening?
Sanctions screening identifies individuals and entities subject to an asset freeze; a confirmed match requires the funds to be frozen. PEP screening identifies a public office at risk and triggers additional due diligence measures. Both checks can be performed within the same tool, using separate rules. Here’s why PEP are a key component of the fight against money laundering.
Is it necessary to screen the entire portfolio again after establishing a business relationship?
Yes. A customer may become a “ PEP ” after the business relationship has begun. Screening therefore continues throughout the business relationship, at a frequency determined by your risk classification. Verify that the tool allows the compliance team to schedule these screenings, trigger them on demand, and maintain a history of them.
What should you do when a " PEP " alert involves someone with the same name?
Compare the secondary data. If the data rules out a match, close the alert with a written explanation and document the decision. If doubt persists, request additional information from the customer. A tool that applies these criteria before generating the alert reduces the number of cases that require manual review. Fine-tuned settings help reduce false positives in the screening process.
Does code-free configuration eliminate the need to involve the IT department?
No: The IT department retains responsibility for integration into the information system, access permissions, and access security. Code-free configuration applies to business rules. The compliance team modifies these rules via the interface, without any development work. Each change must be dated, assigned, and available for review during an audit.
Does AP Scan also detect the relatives of a " PEP "?
Yes. AP Scan covers PEP, their immediate family and close professional associates, as well as sanctions and asset freeze measures. Configuration is code-free, and every decision remains traceable thanks to a reconstructible audit trail. The categories and associated obligations are detailed in the guide on politically exposed person.
