The Future of Compliance in Africa – How the notion of ‘PEP’ in Africa differs from that in the West


Round Table Discussion on the Future of Compliance in Africa Part 2 of 4 – How the notion of ‘PEP’ in Africa differs from that in the West

The Future of Compliance in Africa was the theme of a roundtable discussion jointly convened by Ernest Honya, President of the Association of Certified Compliance Professionals in Africa (ACCPA), and Hugh Jones, President and CEO of Accuity. 19 people attended from organisations which included commercial banks, GIABA, central banks, FIUs and universities to discuss four key issues relating to the future of compliance in Africa:

  • Discussion 1: Jurisdiction – how major sanctions lists affect African banks
  • Discussion 2: PEPs – the importance of screening them, how to identify them and how the notion of PEP in Africa differs from that in the West
  • Discussion 3: African Compliance – how to satisfy local/regional needs while meeting international standards
  • Discussion 4: Trade Based Money Laundering – tackling this new phenomenon and screening dual-use goods

This is the second of four blogs on these content discussions that will appear here over the coming weeks. This one focuses on the first session on Politically Exposed Persons (PEPs) and below is an extract of the ACCPA’s write up of that discussion, together with the recommendations from the day.

A key observation on the topic of Politically Exposed Persons was the suggestion by participants at the round table that Africa should adopt a wider definition of PEPs than the West given the number of different organisations involved in political activity. The notion of Prominent Influential Persons (PIPs) was raised, with attendees stressing the importance of local influencers, such as religious leaders or chiefs of provinces. The term ‘PIP’ was recently identified by the Banking Association South Africa as a deviation from the internationally accepted terminology.

If you would like to discuss these issues with Accuity’s Africa team, you can contact Alfred Pobi, Key Account Manager or Carlos Trinanes, Sales Manager. You can also learn more about Accuity’s PEP database.

The following extract is reprinted from the ACCPA Compliance Journal, March/April 2016 with permission from ACCPA:

ACCPA Image

The second round of discussions focused on the importance of screening PEPs, particularly how to identify them and how the notion of PEPS in Africa differs from that in the West.

CEO Hugh Jones described the current challenge with PEPs by emphasising that there are currently a large number of PEPs globally, and in the absence of a standard PEP list, the potential to accurately classify and identify PEPs is further exacerbated. The CEO highlighted that Accuity has a PEP list and is continually working on expanding that list.

Ms. Anna Bossman, Director of Integrity and Anti-Corruption at the African Development Bank Group, advised that the key objectives should be to support transformation processes and sustainability. Ms. Bossman also drew attention to legislative disparities, explaining that in the absence of formal laws prohibiting people from having political relations, little can be done to distinguish business from politics. Ms. Bossman’s concluding remarks focused on the creation and implementation of a policy on integrity and due diligence.

Mrs. Subuola Abraham, Divisional Head, Group Compliance at Guaranty Trust Bank insisted that specific operational approaches should be employed in screening PEPs, such as risk rating within a PEP environment. This view was supported by Mr. Ulanga Martins, Compliance Officer of Banco Angolano De Investments, who added that due to the fact that PEPs use third parties to transact, a thorough screening of PEPs during the on-boarding process is needed to avoid unnecessary complications down the line.

Mr. Muhammad Mustapha Abdul Rahman, Head of Monitoring and Analysis at the Nigerian Financial Intelligence Unit suggested that an ‘influence’ based approach should also be explored. Within this context, the level of influence of a person over a community or institution is assessed. This, he argued, should include traditional and religious leaders.

Mr. Pattison Boleigha, Group Conduct and Compliance Officer for Access Bank, advised that certain procedural checks such as the flow of funds between PEPs and non-PEPs should be implemented, especially in light of the fact that PEPs are classified differently in each country/bank. He suggested that, for example, a PEP’s chauffeur or housemaid should be classified as a PEP when they conduct transactions on behalf of the PEP.

Participants agreed that a standard classification of what and who can be considered a PEP will help create international alignment and thus improve screening processes. In addition, Dr. Buno Nduka, Director of Programs and Projects at GIABA, proposed that Africa should adopt a wider definition of PEPs than the West considering the wide group of different leaders (traditional, religious etc.) that are involved in political activity. However, participants agreed that not all religious leaders are high risk.

Other key questions raised centred on whether or not there should be an obligation to inform a customer of his or her PEP status. The response to this was largely not to inform a customer of his or her PEP status. It was noted that there is currently much confusion as to what and who constitutes a PEP, and in addition, that each country uses different approaches in their PEP definition and processes.

In the concluding remarks, it was agreed upon unanimously that ultimately the onus is on each bank to implement and monitor proper and appropriate PEP screening processes. In addition, it was noted that there should be a set criteria for identifying PEPs internally.

Group photograph of participants

Group photograph of participants

Participants made a number of practical suggestions on how compliance in Africa can be improved on. The recommendations were not formally adopted and have no official status. Nevertheless, participants considered that the recommendations provided useful suggestions for follow-up and implementation of future compliance policies and strategies.

  1. Create, implement, and maintain a network of compliance experts on key pressing issues within an African context.
  2. Explore the possibilities for obtaining KYC information by collaborating with member state banks and sharing KYC processes.
  3. Encourage a culture of information sharing between banks across Africa and internationally.
  4. Support member states in their AML processes by sharing best practices.
  5. Compile more comprehensive and detailed information, regarding KYC,AML and CFT best practices.
  6. Hold in-service training for banking staff regarding KYC procedures.
  7. Encourage collaboration with non-governmental and governmental organisations and the banking sector.

Take a look back at last week’s blog:

The Future of Compliance in Africa – How major sanctions lists affect African banks

Keep an eye out for the next two blogs on African compliance on the Accuity Insights blog over the coming weeks.