workflow-kyc-pep-screening

# KYC — PEP Screening ## What this skill covers Identification and classification of Politically Exposed Persons (PEPs) among the natural persons associated with a customer. Covers FATF PEP categories 1-4, the domestic vs foreign PEP distinction, time-horizon treatment for former PEPs, mandatory EDD trigger, and source-of-wealth evidence requirements for confirmed PEPs. ## Core principle PEP status is an absolute EDD trigger. A confirmed PEP triggers Enhanced Due Diligence regardless of the individual's risk score, the customer's risk score, or any other mitigating factor. ## FATF PEP categories | Category | Role examples | |----------|--------------| | 1 | Heads of state, heads of government, ministers, deputy/assistant ministers, senior ruling-party officials | | 2 | Members of parliament or equivalent legislative body; supreme court / constitutional court / other high-level judiciary judges | | 3 | Senior military officials (general officer equivalent); central bank governors and deputy governors; senior diplomats (ambassador, high commissioner); members of governing boards of international organisations | | 4 | Family members of PEPs in categories 1-3: spouse/partner, children and their spouses, parents; close associates of PEPs in categories 1-3: individuals with joint beneficial ownership of entities, close personal or business associates | ## Domestic vs foreign PEP The FATF distinction is relative to the jurisdiction of the financial institution performing the screening: - **Foreign PEP**: the person holds (or held) a PEP role in a country other than the institution's jurisdiction. FATF treats foreign PEPs as higher inherent risk — they are subject to automatic EDD. - **Domestic PEP**: the person holds (or held) a PEP role in the same jurisdiction as the institution. Risk-based approach applies; many institutions treat domestic PEPs as CDD-minimum with risk-based uplift, though EDD is required where risk factors combine. ## Time horizon Former PEPs remain in scope for **at least 12 months** after leaving office. Longer retention applies when: - The jurisdiction warrants elevated concern (high corruption risk, weak rule of law). - The individual's risk profile otherwise warrants it (connected sanctioned entities, adverse media). - The institution's risk appetite policy specifies a longer period (common: 24-36 months for Category 1). ## Workflow ### Step 1 — Compile the natural-person list From `workflow-kyc-beneficial-ownership` and the customer questionnaire, list every natural person to be screened: - All UBOs (≥25% ownership or control test). - All directors and board members. - All authorised signatories. - All key management personnel disclosed in onboarding documents. ### Step 2 — PEP database check Screen each person against PEP databases. As no single universal PEP database exists, use the institution's standard vendor (World-Check, Refinitiv, Dow Jones Risk & Compliance, or equivalent) supplemented by: - Government gazette lookups for senior roles. - Parliament/legislature registers. - Central bank and senior public official registries. ### Step 3 — Classify each confirmed PEP For each person where PEP status is confirmed: - Assign category (1, 2, 3, or 4). - Determine domestic vs foreign relative to the institution's jurisdiction. - Record: role held, country of office, start/end date, date-since-office calculation. - Determine if the person is a current PEP or former PEP; apply the 12-month minimum time horizon. ### Step 4 — EDD trigger Any confirmed PEP (current or former within the time horizon): - Triggers EDD tier regardless of KYC risk score. - Requires source-of-wealth evidence at two-source corroboration standard. - Requires MLRO approval before onboarding completion. Category 4 (family members and close associates): screen for PEP connection and apply risk-based judgement. Where a Category 4 person has direct access to PEP assets or influence, treat as EDD trigger. ### Step 5 — Source-of-wealth standard for confirmed PEPs Confirmed PEPs require source-of-wealth documentation at a minimum two-source-cross-check standard: - Source 1: declared lifetime wealth narrative (employment history, business ownership, inheritance). - Source 2: at least two independent corroborating documents (tax returns, audited financials, sale-of-business records, inheritance documents, prior banking references). Declared-only SoW is non-compliant for PEPs. ### Step 6 — Produce the PEP screening table Document every screened natural person, including those confirmed as non-PEP. ## Output format ``` PEP SCREENING TABLE -------------------- Screening date: [DD-Mon-YYYY] | Person | Role at customer | PEP status | Category | Domestic/Foreign | Role held | Country | In-office | Date-since-office | EDD trigger | SoW standard | |--------|-----------------|------------|----------|-----------------|-----------|---------|-----------|------------------|-------------|--------------| | Alice Smith | UBO (33%) | No PEP | — | — | — | — | — | — | No | CDD | | Bob Jones | UBO (27%) | Yes — Current | 2 | Foreign (UAE → UK institution) | Member of Parliament | UAE | 2022-present | N/A | YES | EDD — 2-source SoW | | Carol White | Control (GP) | Yes — Former | 1 | Foreign (US → UK institution) | Deputy Minister | US | 2018-2022 | 4 years | YES (>12m) | EDD — 2-source SoW | OVERALL PEP DETERMINATION: PEPs identified — EDD mandatory for Bob Jones, Carol White ``` ## Quality gates - Every natural person listed in the screening scope is checked — no skipped individuals. - Confirmed PEPs have category, domestic/foreign classification, in-office dates, and date-since-office documented. - Former PEPs within the 12-month window are treated as active PEPs. - Every PEP triggers EDD — no exceptions based on risk score or other factors. - Category 4 persons are documented and given a risk-based determination. - Non-PEP determinations are documented (not omitted) — "no PEP found" must appear in the record. ## Related skills - `workflow-kyc-customer-intake` — calls this skill in Step 5 of the master onboarding pipeline - `workflow-kyc-beneficial-ownership` — provides the natural-person list to be screened - `workflow-kyc-source-of-funds` — PEP confirmed → EDD standard applies to SoF and SoW ## Routing **Primary agent:** `cfa-esg-regulatory-analyst`