There is no definitive answer as to how often you should re-screen existing clients against PEP lists. This is largely driven by two varying factors:
PEP Screening Technology
The technology in place has a large influence as to how screening for PEPs can be undertaken. Traditional screening technology requires entire customer databases to be extracted and loaded for screening on a periodic basis.
Given that these customer databases are in the millions of records, and that the PEP database are also in the millions, the tremendous strain it places on filtering systems is impractical for re-screening to be undertaken too frequently.
However, the screening technology from Firco Compliance Link‘s system enables ongoing monitoring in which the client’s database is placed into Compliance Link’s database, and any additions or changes will be automatically screened and flagged where necessary in real time. This renders the concept of re-screening existing clients obsolete, as the entire database is consistently being checked all the time.
Risk Assessment Rating of Clients
The result of the risk assessment may take into account multiple factors, such as the types of products the PEP client has subscribed to, the dollar value of the account, the jurisdiction in which the PEP resides, and whether there has been any negative or adverse news against the PEP.
Based on this combined information, a bank may decide that the PEP is high, medium, or low risk, and then choose to select thresholds for how often they need to be reviewed.
For example, a bank may say that high-risk customers should be reviewed on a quarterly basis, while a low-risk customer’s portfolio may be reviewed on an annual basis. This breakdown can serve as the foundation for how often existing clients are re-screened for PEPs and help manage limited resources.