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Challenges of identifying and monitoring politically exposed persons (PEPs) in Latin America

Challenges of identifying and monitoring politically exposed persons (PEPs) in Latin America The purpose of this paper is to analyze politically exposed persons (PEPs) according to Financial Action Task Force (FATF) Recommendations and assess the identification process followed by financial institutions to create a harmonized regional model for PEPs identification in Latin America.Design/methodology/approachFATF Recommendation No.12 states that financial institutions should identify PEPs. To do so, the latter uses either an internal identification system or an external database. Within this framework, the purpose of the research work is to determine whether the procedure adopted by the regulated entities complies with the requirements of the regulations. Both analytical and interpretative methods have been used for this purpose.FindingsIn accordance with FATF Recommendation No.12, national and foreign PEPs, as well as officials of relevant international organizations, close relatives and closest associates must be identified. This wide range of people forms an hybrid type of PEPs. Because of the lack of a harmonized identification policy, it is likely that some people who meet these conditions may not be spotted.Originality/valuePEPs control success relies on accurate and prompt identification. Therefore, it is crucial to create an inter-state model of harmonized identification at a regional level in Latin America. It includes not only the participation of the obligated subjects but also the sector entities associated to the concerned economic activity. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Money Laundering Control Emerald Publishing

Challenges of identifying and monitoring politically exposed persons (PEPs) in Latin America

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Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
1368-5201
eISSN
1368-5201
DOI
10.1108/jmlc-05-2020-0061
Publisher site
See Article on Publisher Site

Abstract

The purpose of this paper is to analyze politically exposed persons (PEPs) according to Financial Action Task Force (FATF) Recommendations and assess the identification process followed by financial institutions to create a harmonized regional model for PEPs identification in Latin America.Design/methodology/approachFATF Recommendation No.12 states that financial institutions should identify PEPs. To do so, the latter uses either an internal identification system or an external database. Within this framework, the purpose of the research work is to determine whether the procedure adopted by the regulated entities complies with the requirements of the regulations. Both analytical and interpretative methods have been used for this purpose.FindingsIn accordance with FATF Recommendation No.12, national and foreign PEPs, as well as officials of relevant international organizations, close relatives and closest associates must be identified. This wide range of people forms an hybrid type of PEPs. Because of the lack of a harmonized identification policy, it is likely that some people who meet these conditions may not be spotted.Originality/valuePEPs control success relies on accurate and prompt identification. Therefore, it is crucial to create an inter-state model of harmonized identification at a regional level in Latin America. It includes not only the participation of the obligated subjects but also the sector entities associated to the concerned economic activity.

Journal

Journal of Money Laundering ControlEmerald Publishing

Published: Jul 31, 2021

Keywords: Politically exposed persons; Financial intelligence units; Identification; Monitoring; Risk; Latin America

References