Enhanced Due Diligence on Politically Exposed Persons

Banks are required to be conducting enhanced due diligence for the individual accounts related to politicians and politically associated individuals.

Enhanced Due Diligence is essential for on-boarding the politically exposed persons and organisations. Biznexxus compiles the data of the politicians and politically exposed persons, which is of great importance to the banking and finance sector to assess the risk associated with the business with these heightened risk entities.

Defining Politically Exposed Persons ?

According to the Reserve Bank of India, Politically Exposed Persons (PEPs) are individuals who are or have been entrusted with prominent public functions in a foreign country, e.g., Heads of States or Central Governments, senior politicians, senior government/judicial/military officers, senior executives of state-owned corporations, important political party officials etc.

Biznexxus which compiles the information about the politically exposed persons, classify the politically exposed persons and entities into various heads such as bureaucrats, politicians, relatives of politicians and business associates of the politicians.

However, this is a very crude definition of Politically Exposed Persons. There is no one fit all definition of the term Politically Exposed Person and every country needs to define the same to manage the risks associated with the Politically Exposed Persons. Indiaforensic, which offers the training and certification courses on forensic accounting and anti-money laundering defines the Politically Exposed Persons in the Indian context.  The image below is depiction of the India related politically exposed persons.

PEP Definition
India Specific PEP Definition

The infographic above considers the Indian political scenario and the taxonomies to define the term indepth. The definition covers Legislative bodies such as Loksabha, Rajyasabha, members of legislative bodies, security forces, relatives of the politicians. It also endeavours to defines the term Politically exposed directors.

Enhanced Due Diligence Reports

Bankers are required to perform the enhanced due diligence where there is an involvement of Politically exposed person. Growing demands on internal resources often cause delays in clearing clients or prospective business partners, damaging the relationship and, at times, missing what could have been valuable to assess the business opportunities.

Political Nexus

Biznexxus provide the Enhanced Due Diligence Report on the registered Indian companies. Our enhanced due diligence report consider different possibilities in which Politically Exposed Persons operate in the business world. Some of the possibilities which our report considers are

Political Competition

One of the significant considerations in Enhanced Due diligence report is to analyse the companies where more than one politicians from different parties are involved. The picture sketched by media about the cut-throat competition may not be true always. There are politicians which represent rival political parties but they do the business together. Sometimes the business is family business but the political parties are different.

Below dashboard reveals the statistics about the heightened risk individuals who are politically associated.

Party Politics

Another consideration in Enhanced Due Diligence report is to analyze the companies where more than one politicians from the same political party are involved. This type of report shows the ties that the politicians from the party enjoys with each other in the business.

Historical Associations

When the politicians have to exercise their political clout or power, they get associated with certain companies for a short period of time and once the benefit is passed on to the company or when the event is completed then they prefer to resign. Biznexxus reports consider these associations in the Enhanced Due Diligence Reports.

Contact us to find out more on the Enhanced Due Diligence Reports