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How to Identify Politically Exposed Persons (PEPs): A comprehensive Guide for Insurance Professionals

25th September 2025

Identifying Politically Exposed Persons (PEPs): A comprehensive Guide for Insurance Professionals

How to Identify Politically Exposed Persons (PEPs): A comprehensive Guide for Insurance Professionals

Conducting Politically Exposed Persons Checks is an important process for firms that work in the insurance and financial services sectors, particularly with the pressure they face by regulators such as the FCA. PEPs screening is also crucial for reducing the risks linked to money laundering, corruption, and other forms of financial misconduct.

risks of not conducting checks on PEPs

Failing to conduct thorough PEP checks can lead to serious breaches of compliance laws, resulting in costly fines and serious reputational damage.

While sometimes it can seem like an impossible job to carry out proper PEP checks, technology has made it simpler and efficient – helping many firms let go of their legacy processes and focusing on automation and real-time monitoring.

This article will give you an introduction to PEPs in the context of insurance, leading up to the main types of PEPs, the importance of PEPs and sanctions screening, the steps for identifying PEPs and the role of RegTech in facilitating the whole process.

PEPs screening for insurers
PEPs in the Context of Insurance

Politically Exposed Persons are individuals who hold prominent public positions, such as government officials, judges, or senior executives in state-owned organisations.

 In the context of the insurance industry, PEPs present unique challenges and considerations for regulatory compliance. Insurers must be vigilant in identifying and managing relationships with PEPs due to their potential exposure to corruption and money laundering risks.

The insurance sector is often subject to stringent regulations aimed at preventing financial crimes. As a result, companies must implement robust due diligence processes when dealing with PEPs. This includes thorough background checks and ongoing monitoring of these individuals’ activities.

Moreover, sanctions imposed on certain countries or individuals can further complicate the situation for insurers engaging with PEPs. Companies need to stay informed about relevant sanctions lists and ensure that they do not inadvertently provide services to sanctioned businesses or individuals.

Types of politically exposed persons: Domestic and non domestic PEPs
Main Types of Politically Exposed Persons (PEPs) and Examples

In the UK and Euope, politically exposed persons (PEPs) are categorised into two main types: domestic PEPs and non-domestic PEPs. Understanding these categories is crucial for compliance with anti-money laundering regulations and for institutions that are required to conduct enhanced due diligence.

Domestic PEPs: 

Domestic PEPs are individuals who hold prominent public functions within the UK. This includes members of Parliament, judges, senior military officials, and high-ranking government officials. Additionally, family members and close associates of these individuals may also be classified as domestic PEPs due to their potential involvement in illicit activities or financial crimes.

Non-Domestic PEPs:

On the other hand, non-domestic PEPs refer to individuals who hold similar positions but in foreign countries. This category encompasses heads of state, senior politicians, and high-ranking officials from other nations. Financial institutions must exercise caution when dealing with non-domestic PEPs as they may pose unique risks associated with international corruption or bribery.

In the United States, the Financial Action Task Force includes three more categories worth noting:

International organisation PEPs: 

Individuals who hold a high-ranking position in international firms such as directors, senior managers and board members.

Family of PEPs

Which include husbands, wives, or civil partners. However, it’s crucial to ensure any other important or close family member are scrutinised, notably siblings or an offspring.

People who are close to PEPs: 

Such as friends or close colleagues. Sometimes it can be difficult to determine close friends, so it’s important to ensure firms are collecting the correct information.

Recognising and differentiating between these categories of PEPs enables insurance firms to navigate the complexities of risk management more effectively and ensure compliance with relevant regulations while maintaining high ethical standards in their operations.

The importance of PEPs and sanctions screening
The Importance of PEPs and Sanctions Screening

In the insurance sector, the importance of screening for PEPs cannot be overstated. Insurers must implement robust PEP screening processes to mitigate risks associated with these high-profile clients.

Sanctions screening is equally critical; it ensures that insurers do not engage with individuals or entities that are on government watchlists due to their involvement in illegal activities, terrorism, or other forms of financial misconduct.

Failure to conduct thorough sanctions screenings can lead to severe legal repercussions and reputational damage for insurance companies.

By integrating effective PEPs and sanctions screening into their compliance frameworks, insurance firms can protect themselves from potential risks while promoting a culture of transparency and integrity within the industry.

This proactive approach not only safeguards the company’s interests but also contributes to broader efforts against financial crime globally.

Politically Exposed Persons signs checklist
Signs Someone May Be A High-Risk PEP

There are many different patterns, job positions, country of residence or political stances that might indicate that an individual could be a politically exposed person. Therefore, it’s essential to categorise accordingly and consider all the signs below when determining PEPs and conducting effective due diligence checks to avoid doing business with high-risk individuals illegally.

  • Unusual transactions: Engaging in irregular or suspicious financial activities raises concerns and could eventually be a red flag.
  • Position influence: The more powerful or senior the political role, the greater the exposure and risk.
  • Hidden ownership: Complex corporate structures, shell companies, or trusts used to obscure real owners are red flags.
  • Risky locations: Financial ties to corrupt countries, tax havens, or places with weak AML laws increase risk levels.
  • Financial irregularities: Signs of unclear fund sources or mismatched details in financial statements compared to public records.
  • Concealed Leadership Roles: Efforts to hide or downplay senior positions held within a company or organisation.
  • High-Profile family connections: Immediate family members or close associates are known to hold significant political positions.
  • Wealth Discrepancies: Displays wealth that appears inconsistent with their known income sources, raising questions about the origin of funds.
  • Frequent Changes in Employment: Has a history of rapidly changing jobs within the public sector or moving between various governmental roles.
  • Involvement in Controversial Activities: Linked to scandals, investigations, or allegations related to corruption, bribery, or other illicit activities.
Sources for finding PEP related data
Sources for extracting Politicaly Exposed Persons Data

There are different sources where insurers or any financial services institution can check for PEPs, but the main two can be categorised into publicly available databases and private (paid only) services or databases.

  • Publicly available databases constitute any free source an individual can gather information on suspected high-risk PEP such as government websites, Wikipedia, social media and other free databases. However, these free sources tend to be incomplete, false or misleading which could result in gaps and inaccuracies. 
  • Privately-owned databases or subscription-based services are software or paid accounts that many in the insurance industry go for to access a comprehensive list of PEPs. For instance, the REG platform has access to more than 330m business information, including sanctions lists and PEPs information which potentially saves individuals a lot of time by automating the process and providing real-time monitoring capabilities.
Steps for identifying politically exposed persons
Stages for Identifying Politically Exposed Persons (PEPs)

Stage 1 – Collect the Data:

This stage consists of collecting detailed data on the person you want to monitor, which includes their first name, last name, place and date of birth, nationality or citizenship, job position, salary, family members and more.

Stage 2 – Access Reputable Databases: 

The accuracy of a PEP check depends on the quality of the database used. Our software provides a well-maintained, global database that is regularly updated, ensuring businesses receive reliable and current information. Using outdated or incomplete databases can undermine the entire PEP screening process.

Stage 3 – Perform the PEP Checks

Using reliable data and a trusted database, begin by running an initial scan to identify possible matches. Carefully verify each result against precise identifiers such as name and date of birth, then assess the broader context, including positions held, affiliations, family connections, and geographical risk factors. Cross-reference findings with additional databases, confirm negative results where necessary, and document every step of the process. Finally, compile these insights into a well-structured risk profile that supports sound, transparent business decisions.

Stage 4 – Ongoing Monitoring and Updates

PEP checks are an ongoing process, as an individual’s status can change over time. Regular monitoring and updating of customer and partner records ensure businesses stay compliant and aware of evolving risks, demonstrating a proactive approach to risk management.

The role of RegTech in facilitating PEPs screening
The Role of RegTech in Screening PEPs

RegTech has emerged as a vital tool in this process, enabling insurers to automate compliance tasks efficiently while minimising human error.

By leveraging advanced RegTech solutions, insurance providers can enhance their compliance frameworks and navigate the complexities associated with PEPs more effectively, ultimately safeguarding their operations against regulatory risks.

With its advanced machine learning capabilities and access to a wide range of data, RegTech, particularly the REG Network, makes the PEP screening process seem like a breeze.

Below are four distinctive ways RegTech simplifies the PEPs screening process:

1. Access to sanctions lists: The REG Network benefits from a detailed database and has access to official sanctions lists which makes the PEP screening process faster and smarter. The ability for firms to access everything in one centralised platform eradicates data siloes and uncertainty – this in turn, speeds up the onboarding process and makes room for starting business relationships faster.

2. Ongoing Monitoring Capabilities: One of the key benefits of RegTech is its ability to provide ongoing monitoring of PEPs. This ensures that any changes in a person’s status or new information are identified rapidly, enabling firms to stay compliant with the FCA’s regulatory requirements.

3. Seamless API Integration and Reporting: RegTech software offers API integration, allowing insurance firms to incorporate screening processes into their existing systems seamlessly. It also facilitates efficient reporting of suspicious activity, ensuring compliance with regulatory obligations while streamlining internal processes.

4. Advanced Data Analysis: RegTech utilises sophisticated algorithms and data analysis techniques and can identify potential risks associated with PEPs more effectively than legacy processes, allowing for better risk assessment and speeding up the decision-making process.

PEP compliance is crucial
Final Thoughts Around PEP

PEP screening is a critical component in the insurance industry, ensuring compliance with regulatory standards and mitigating risks associated with financial crime.

Identifying PEPs helps insurers maintain integrity within their operations, as these individuals may present higher risks due to their prominent public positions and potential exposure to corruption.

Implementing robust PEP screening processes not only protects businesses from reputational damage and legal repercussions but also fosters trust among trading partners, clients and stakeholders.

Discover how the REG Network can help you stay on top of your compliance duties

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Article author:

Picture of Sandra Simôes, head of product at REG Technologies
Sandra Simões

Sandra Simōes is the Head of Product and CX. Focused on customers and market needs, Sandra designs solutions that accelerate journeys and enable companies to deliver outstanding services to their customers.

020 3946 2880

info@reg.uk.com

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