If you run a financial organization today, you need to do your due diligence on every transaction that comes through. Sure, some transactions are larger than others. Therefore, you will want to monitor larger transactions more closely. Even though you want the catch if someone is trying to use your financial institution to launder money, you also want to protect your business partners, employees, and associates. Therefore, one of your steps when it comes to conducting due diligence is to identify politically exposed persons. Usually shortened to PEPs, these are individuals who are at risk of being taken advantage of. As a result, even though you are keeping an eye on their transactions, you are also protecting them. You want to see if they could be at risk of laundering money or being used for money laundering themselves.
There are several examples of politically exposed persons. Not all of them are necessarily politicians. Some of them may not even hold governmental positions. They may qualify for PEP status purely because they are connected to another individual who may be a powerful politician. In this case, we are looking at relatives and Close Associates, usually shortened to RCAs.
What does this mean and what are a few examples? Why is this so important?
What Is Meant by Relatives and Close Associates (RCAs)?
Relatives and Close Associates are often referred to as politically exposed persons by association. This is a specific category of individual who shares a friendship, family, or otherwise close connection to a specific PEP. This could include someone who is married to a specific politician, has a familiar relationship with someone, or is simply a close business associate, partner, or friend.
There are a lot of people who may qualify as relatives and close associates; however, some clothes examples include:
- Spouses, partners, and those who are involved in a civil union
- The parents of politically exposed persons
- Children of PEPs (once they are old enough to take control of their own finances)
- Brothers and sisters of PEPs
- Close relatives including cousins, uncle’s, aunts, nieces, and nephews
- Individuals who are close friends of politically exposed persons
- Legal advisors, lawyers, attorneys, and counsels of PEPs
- Any close business associates, partners, or superiors
Clearly, this is a lot of people to keep track of. It is also important to note that relatives and close associates could also be owners or beneficiaries of a specific entity, organization, charity, or other financial organization in which the PEP has an interest. In some cases, the PEP might even be the owner of that specific entity. These are also individuals who fall into the category of due diligence.
Why Is it Important To Monitor RCAs Through Screening and Monitoring?
If you run a large organization, you may feel like you already have enough to do when it comes to keeping track of large transactions that take place in your company. You probably already keep an eye on PEPs. On the other hand, this may not be enough. It is important to monitor relatives and close associates because these individuals could be at risk of being taken advantage of. They could also be roped into a financial crime at the behest of someone who is more powerful than they are. They may feel like they have to comply with their demands. Otherwise, they could be harmed in some way.
A lot of politicians already know that they are being watched. Politically exposed persons understand that financial organizations are already keeping a close eye on their transactions. Therefore, they may ask someone else to conduct these transactions for them. That is why it is so important to keep an eye on relatives and close associates. They are at risk of being drawn into financial crimes that are perpetrated by others. This could include business partners, friends, or family members.
How Should Screening Take Place for RCAs?
There’s a significant risk when it comes to screening relatives and close associates. Therefore, it is important to screen these individuals at the start of any new business relationship. Then, these individuals need to be monitored regularly, which means they should be screened periodically. Ongoing monitoring is critical at financial institutions. That way, if something changes regarding the rest, exposure, or status of the relationship between a PEP and RCA, the organization can respond appropriately.
It is always better to prevent a financial crime from taking place than to try to fix one that has already happened. As a result, all financial organizations need to invest in the right software program that will allow them to keep an eye on all relatives, close associates, and politically exposed persons. For this reason, work with trained professionals who can place you in the best position possible to be successful. That is where we can help you.
Work with Truth Technologies and All KYC/AML Needs, Including PEP and RCA Screening
If you are looking for the right software program that can help you screen politically exposed persons and relatives and close associates, we are here to help you. We have PEP profiles that have been built with a specific focus on relatives and close associates. This includes children, partners, spouses, and more. That way, you can keep a close eye on everyone with whom you are dealing. Then, if something changes, you will be alerted. Contact us today!