Preventing politically exposed persons from exposing risks to your companies

Preventing politically exposed persons from exposing risks to your companies

Politically Exposed Person (PEP) is a term coined to describe an individual entrusted with a prominent public service. PEP includes State Administrators as referred to in the laws and regulations governing State Administrators as well as people who are registered as members of political parties.

These people influence the policies and operations of political parties, and it possibly exposes companies to legal and reputational risks, including fines and damage to the brand because of a huge possibility for fraudulent actions, such as corruption, money laundering, and bribery.

The importance of conducting PEP checks

Therefore, in order to encourage companies to remain transparent and accountable while at the same time mitigating the risks, it is highly suggested that a company monitors the ethics of political and business relations by conducting PEP checks.

While the involvement of politicians in a company’s business is not regulated by the law, Indonesia has Peraturan Otoritas Jasa Keuangan Nomor 12 /POJK.01/2017 which is a regulation made by OJK (Financial Services Agency) regarding Politically Exposed Person (PEP) in the financial services industry.

The checks can be done prior to recruitments of both selected candidates and existing employees, especially those who work for high-risk or AML-required companies such as banks.

Who should carry out the PEP checks?

As there is a potential for false positives in PEP checks, it is important to run other checks such as background checkscredit checks, and bankruptcy checks to cross-reference the results. PEP checks – when done incorrectly – can cost a lot of time, energy, and money when it’s conducted by an unreliable company.

Therefore, it is highly recommended that your companies work with professional screening services in carrying out the check. Integrity Asia has been trusted by our clients for more than seventeen years to provide professional PEP checks. Contact us for more information about PEP checks as well as other compliance services.

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