Politically Exposed Persons (PEPs)
PEP screening identifies customers who are politically exposed persons or connected to PEPs through family or business relationships, requiring enhanced due diligence to mitigate corruption and money laundering risks. This use case addresses navigating varying PEP definitions across jurisdictions, identifying indirect connections through relationship traversal, tracking dynamic political positions over time, reducing false positives through contextual analysis, and maintaining continuous monitoring as political positions change.
The Challenge¶
Financial institutions face complex challenges in PEP screening:
- Definition complexity — PEP definitions vary by jurisdiction and regulatory framework (FATF, FinCEN, EU directives)
- Dynamic status — Political positions change through elections, appointments, and resignations
- Indirect connections — Family members and close associates of PEPs pose similar risks
- False positive management — Name matching alone creates excessive false positives requiring manual review
- Data quality — PEP databases have varying quality, coverage, and update frequency
- Cross-border complexity — Understanding foreign political structures and positions
- Risk assessment — Determining appropriate risk levels and due diligence measures for different types of PEPs
- Continuous monitoring — PEP status changes require ongoing monitoring and re-assessment
Traditional screening approaches rely on periodic batch checks that miss real-time changes and indirect connections.
Why EKG is Required¶
Enterprise Knowledge Graphs provide sophisticated PEP screening capabilities:
- Relationship traversal — Automatically identify connections through family, business, or social relationships
- Multi-hop analysis — Find indirect PEP connections that may not be caught by direct screening
- Temporal tracking — Maintain historical PEP positions and understand risk decay over time
- Contextual risk scoring — Weight PEP connections based on relationship strength, recency, and jurisdiction
- Continuous monitoring — Real-time updates as political positions change or new connections are discovered
- Enhanced entity resolution — Disambiguate individuals with similar names using relationship context
- Integration with other risk factors — Combine PEP status with transaction patterns and other red flags
- Compliance documentation — Maintain complete audit trail of PEP screening and risk decisions
Business Value¶
- Regulatory compliance — Meet AML/KYC requirements for PEP screening and enhanced due diligence
- Risk mitigation — Avoid corruption, bribery, and money laundering risks associated with PEPs
- Reputational protection — Prevent association with sanctioned or compromised political figures
- Efficiency gains — Reduce false positives and manual review effort through contextual analysis
- Proactive monitoring — Identify emerging PEP risks before they become compliance violations
- Audit trail — Maintain complete record of PEP screening and decisions for regulatory review
Related Topics¶
See also Political Connections for analysis of political relationship networks.