High-risk customers, including politically exposed persons (2024)

FAQs

Why is PEP considered high-risk? ›

PEPs are at a higher risk for corruption, money laundering, terrorist financing, and bribery related to the nature of the influence they hold based on their position. The following are examples of politically exposed persons: Current or former government officials.

Higher Risk Customers are those who are engaged in certain professions or avail the banking products and services where money laundering possibilities are high. Moreover, Financial Institutions conduct enhanced due diligence (EDD) and ongoing monitoring for higher risk customers.

Stolen Credit Card Customers. Money Laundering Customers. Multi-Accounting Customers. Customers from High-Risk Countries.

High-risk customers are individuals or entities that, due to specific characteristics or circ*mstances, pose an elevated level of risk for businesses or financial institutions. These customers may be more likely to engage in activities associated with money laundering, financial crimes, or other illicit behavior.

In financial regulation, a politically exposed person (PEP) is one who has been entrusted with a prominent public function. A PEP generally presents a higher risk for potential involvement in bribery and corruption by virtue of their position and the influence they may hold.

Blog / Political Exposed Person Red Flag and Indicators

They are considered high-risk customers due to their potential involvement in financial crimes such as corruption and money laundering.

These people include pregnant women, their unborn and newborn babies, the elderly and people whose immune systems have been weakened by illness or drugs (for example: cancer patients, organ transplant recipients, and people on drugs like cortisone).

Typically, companies evaluate factors such as age, country of origin, and the nature of the business relationship to assess a customer's risk. This includes examining the customer's identity, location, the source of their funds, and how they intend to use those funds.

High-risk users are the top quartile of users in an organization who have had at least one instance of risky behavior, or event. These risky users are responsible for: 41% of all simulated phishing clicks. 30% of all real-world phishing clicks.

The 4 main categories of risk are financial risk, operational risk, compliance risk, and legal risk. Financial Risk: This category includes risks related to the financial performance of a business.

Which of the following is not considered a high risk customer in AML? ›

Entities that are exempted from the threshold transaction reporting by FIU if such entities are not considered as high risk. Government bodies, government owned companies, regulatory and supervisory bodies, semi government corporations, Banks and Financial Institutions licensed by central bank etc.

As indicated above, the five types of risk are operational, financial, strategic, compliance, and reputational. Let's take a closer look at each type: Operational. The possibility that things might go wrong as the organization goes about its business.

Individuals in leadership positions within international banks or financial oversight committees are classified as PEPs. Their roles involve overseeing financial transactions and dynamics between countries and multinational corporations, placing them in a high-risk category.

PEP can cause mild side effects, including nausea, upset stomach, fatigue and headaches. These symptoms often get better or go away after the first week of taking PEP. To prevent nausea, take PEP with a snack or before bed to make nausea less noticeable. To relieve nausea, try ginger candy or peppermint tea.

PEPs can be split into three main risk categories: low, medium, and high. The first step to determining an entity's risk evaluation criteria is to learn which category applies to them: Entities with minimal influence and exposure. Usually includes regional government officials, such as mayors.