What are the PEP identification Requirements under AML in UAE?

Customers who are Politically Exposed Persons (PEPs) or relatives of PEPs pose a high risk to businesses from an Anti-Money Laundering and Combating the Financing of Terrorism (AML-CFT) perspective. The UAE AML-CT Law requires Financial Institutions (FIs), Designated Non-Financial Businesses and Professions (DNFBPs) and Virtual Assets Service Providers (VASPs) to check for PEPs while screening their potential customers.

PEPs are considered a higher risk due to their potential ability to influence government policies, determine the outcome of public funding or procurement decisions, or obtain access to public funds. The best AML consultants in Dubai can help you comply with the PEP requirements outlined in the AML-CFT regulations.

Let us dive in to learn more about the PEP screening requirements under AML in UAE:

Who is a Politically Exposed Person?

PEPs are natural persons (individuals) who occupy prominent public positions in the UAE or any other foreign country. Some of the top examples of a PEP include Heads of State or Governments, senior politicians, senior government officials, judicial or military officials, senior executive managers of state-owned corporations, and senior officials of political parties and persons who are or have previously been, entrusted with the management of an international organization or any prominent function within such an organization.

PEPs can also be

• Direct family members of the PEP (spouses, children, spouses of children, parents)
• People having close business associations with the PEP

Steps to Identify PEPs for Your Business

Identifying the PEPs is one of the critical requirements of the UAE AML compliance process. It is advisable to hire experienced AML consultants in Dubai to make the process easier. The below steps are required to identify PEPs:

1. Create a policy for PEPs
2. Carry out an onboarding assessment for PEPs
3. Conduct Enhanced Due Diligence (EDD) for PEPs

Risk Mitigation Measures for PEPs

PEPs are considered high-risk due to their power to influence government spending. This leads to money laundering as they would then want to convert illicit money into legitimate money.

DNFBPs, FIs and VASPs are required to implement appropriate risk management systems to determine whether a customer, Beneficial Owner, beneficiary, or controlling person is a PEP.

The UAE AML-CFT Decision lists some of the risk mitigation measures for PEPs:

1. Carry out Customer Due Diligence Procedures (CDD)
2. Take reasonable measures to establish the source of funds and the source of wealth
3. Implement (automated) screening systems which screen customer and transaction information for matches with known PEPs
4. Incorporate thorough background searches into CDD procedures
5. Obtain senior management approval before establishing a Business Relationship with a PEP
6. Carry out enhanced ongoing monitoring for PEPs and related customers

How to check if someone is a Politically Exposed Person?

In order to check if a person is a Politically Exposed Person (PEP), reporting entities can resort to AML screening software. It is a great tool for reporting entities to identify whether a person is a PEP. Such AML screening software can screen the customer against the sanctions list and the PEP list.

Manual checking of PEPs can be tough compared to automated checks as a global database for PEPs is not publicly available. Reporting entities can also include this question in the KYC form:  “Are you a Politically Exposed person?”. Entities may also obtain a PEP declaration form from the customer.

Hire the Best AML Consultants in Dubai, UAE

A robust AML framework and screening checks are required to identify the PEPs. However, this is a complex process that warrants the advice of the best AML advisers in Dubai such as Jitendra Chartered Accountants (JCA). JCA is one of the leading AML compliance advisory services providers in the UAE. We have served many businesses with AML compliance activities, including the risk assessment of PEPs.

If you need help with the AML framework concerning PEPs, our AML consultants in Dubai will assist you. We offer a full range of AML compliance services in Dubai, such as Annual AML Health Checks, assistance in AML software selection, AML policy, AML training, Penalty appeals and procedures documentation. Contact us for a full range of AML compliance services in the UAE.