PEP, Sanctions and Adverse Media searches and monitoring

Overview

Xama is proud to offer the very best in PEP and Sanctions monitoring solutions. This article should provide you with all the information you need to understand how our solution works.

What is PEP and Sanctions monitoring

As part of AML compliance it is important to check whether individuals you are working with, or individuals connected to companies, are politically exposed or sanctioned. A monitoring solution helps you meet this requirement. When you add an individual to PEP and Sanctions monitoring, an initial search is carried out. Much like the PEP and Sanctions search that is completed as part of an AML check, you may be provided by a series of potential matches immediately.

However, these searches are monitored. It means that should there be any changes to existing matches or new potential matches that arise, the system will provide you with a notification and record of such an event. This ensures you are up to date with any changes that may happen across many data sources maintained across the world.

How frequently does monitoring take place?

Xama’s monitoring solution carries out a renewed search every day. That is 365 searches for each contact you monitor per year.

Configuring your monitoring solution

Unlike most other monitoring solutions available to professional firms, Xama allows you to configure, in detail, the filters used when searches are carried out.

Each firm is different and there is a balance to strike between possible matches you would like to be notified about and the resources you have available to manage all such matches. It is therefore possible to adjust a number of variables attached to searches which will impact the results being returned. 

It is important that you understand what these settings relate to when choosing to amend the default values:

Monitoring types

PEPs

You can choose to monitor the following categories of PEPs:

• PEP level 1 – The first PEP class contains all taxonomies with national-level PEPs such as: 
  • National legislatures
  • National cabinets
  • Central banks
  • Armed forces, police, fire service, and intelligence agencies
• PEP level 2 – The second PEP class includes:
  • Members of regional governments, parliaments, and judiciary.
  • Senior officials and functionaries of international and supranational organisations and diplomatic missions.
• PEP level 3 – The third PEP class related to:
  • National level state-owned enterprises.
  • Public sector institutions under regional level administration (eg regional agency, regional state-owned enterprises).
• PEP level 4 – And the fourth PEP class contains:
  • Mayors and members of local, county, city, and district assemblies.
  • Senior executives of local governmental bodies (agencies, state-owned businesses)
  • Judges of local courts.

Sanctions

Sanctions is monitored internationally across a vast number of data sources. For example, here are a list of UK based data sources monitored and the number of entries within these sources at the time of publication.

Warnings

Warnings are the monitoring of international data sources which may alert our users of adverse attributes. There are many of these sources, but below are listed a few to provide insight about the type of sources being monitored.

Fitness and probity

Also an international monitoring solution, an example of UK based data sources that are being monitored are listed.

Adverse Media

You can also choose to activate adverse media monitoring as part of your monitored searches within Xama. Adverse Media searches and monitoring will alert you of individuals with the same or similar names who have had any negative media coverage. Please be aware that if you search or monitor individuals for adverse media, you may receive a lot of results and monitoring alerts. This is especially true for individuals with common names.

Fuzziness

The fuzziness that is applied to name matching can be altered. By making the fuzziness more (closer to 100%) you will receive more potential matches and as you move fuzziness closer to 0% more potential matches will be filtered out.

Auto renewal

A monitored search will always be valid and active for 1 year. If you select to auto renew  the search the system will attempt to renew the search one year from the time it was started and every subsequent year thereafter.

When the search is renewed, a new monitor is not started from scratch. This is not required as a search is effectively carried out each day. A renewal simply means that this will continue and monitoring results will continue to be issued to you.

If you choose not to renew, the monitoring will seize after 1 year of the search being carried out.

Match by country

If you choose to filter by country code, the results will be impacted as follow:

• Match by country filtering only applies to PEP. Those found on a sanctions list will be returned regardless of a country filter.
• If the data kept within the data source lists a country of residence against the potential match, then if that country does not match the country of residence submitted as part of the search, the result will be excluded.
• If the country of residence is not available in the data source, the result will be returned. It means that you may still receive results of people who are not resident within the country specified, but that will be because it was not available as a value to exclude the result by.

Match by year of birth

• If the year of birth of the potential match found is known, then it will be excluded from search results based on the date of birth submitted as part of the search.
• If date of birth is not submitted as part of the search then the filter won’t be actively applied.
• If a match is found against a register, but on the register no date of birth is recorded, the result will be returned regardless of this filter being enabled.

Remove deceased

• With this option any individuals who exist within the data sources which have been recorded as deceased will be removed from returned results.

Managing hits returned as search results

Xama provides our customers with the very best solution to easily manage PEP and Sanction search results returned as part of monitored searches.

When you first run a search, you may be presented with multiple “Potential matches”. These we call “hits”.

At this point, you will be able to mark some or all potential matches as “False positives”. This will tell the system that you have been able to dismiss these hits as not being the same person as your customer. This means that any further events that relate to these individuals will not create monitoring events. This reduces the noise which can arise from monitoring solutions and helps you to only receive events that are relevant.

Should a new potential match be found, typically a new politically exposed person added to the relevant monitoring lists, you will be notified of such as hit. You will then be able to decide once again whether the hit should be marked as a false positive or kept active for receiving further updates.

Type of events received

There are three cases where you will receive updates:

• A new hit.
• A monitored hit who is no longer relevant (for example they are no longer exposed or on a sanctions list).
• A change to an existing hit. For example this might be a change in political position or exposure.

Why do PEP results from an AML check differ from results from a monitored search?

At Xama we use multiple third party providers. The provider which we use for AML checks is not the same provider we use for monitored searches.

As PEP and Sanctions data spans across a very wide range of data sources and different providers have slightly different definitions of who to exclude and exclude as matches this may be a frequent occurrence. 

Different providers also update sources at different times, so differences to results may be a result of timings.

Typically these differences will be most likely to happen at PEP’s at a lower level. PEP’s with significant influence are very likely to be listed on any PEP and Sanction checking service.

The main benefit of using a monitored solution, along with the AML check, is:

• To monitor any changes to existing PEPs and other relevant individuals.
• Be notified of any new possible matches of your client base to politically exposed individuals.
• To manage and record your notes and findings at a more granular level.