#pep screening

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The email list of PEPs helps organizations to identify and manage the potential risks associated with doing business with these individuals,

[idenfy]

Throughout the years, governments and institutions try to reduce corruption, fraud, and other illegal and immoral activities globally. It would be tough to find a country with little to no regulations on financial institutions. Anti Money Laundering (AML), Know Your Customer (KYC), and Know Your Business (KYB) guidelines are expanding each year in an attempt to fight various acts of money laundering, fraud, and terrorist financing.

Although this “war” is far from over, and the money laundering schemes have become more devious than ever, there’s knowledge to be found amidst the fog of war. It makes sense that some people are more likely to commit fraud or be involved with corrupt entities than others.

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How KYC is An Important Component of FinCEN

In 2001, FinCEN implemented KYC, or know your customer regulations, as part of the Patriot Act. These requirements are intended to be counter-terroist efforts as well as a way to prevent other financial crimes such as money laundering and fraud. Learn more about KYC, what it means for businesses and who FinCEN actually are below.

What is FinCEN?

FinCEN, also known as the Financial Crimes Enforcement Network, is a regulatory body which is part of the US Department of the Treasury. Their primary mission is to collect data and analyze it to prevent financial crimes, especially crimes such as money laundering and terrorism funding. The know your customer compliance regulations are a part of this mission.

What are the Main Facets of Know Your Customer Compliance?

If you’re unfamiliar with know your customer compliance, here are a few of the main components:

Customer Identification

This requires financial services to collect enough information to properly identify their new potential customer. This means that individuals will need to provide several different forms of identifying information in order to start an account. Things like photo ID and their social security number are common. Businesses must also provide identifying documents.

Customer Due Diligence

Identifying customers properly is important, but further due diligence is required to determine the trustworthiness or risk of an individual or business. Due diligence involved looking at who and individual or business deals with financially, or who they’ve dealt with previously. For instance, if an individual holds public office, or a business regularly works with less than reputable organizations, they would be considered higher risk.

Ongoing Monitoring

Finally, once identification and due diligence is completed, a financial service must continue to monitor the financial dealings of their customers to ensure no illicit activity is going on. A mixture of risk-assessment software and manual employee investigation will be required to do this effectively.

Know your customer compliance is essential for banks and financial institutions to follow, so it’s important they stay up to date with the latest KYC software and procedures to ensure that they mitigate risk as much as possible.

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