Not every customer carries the same risk by virtue of who they are, and standard screening tools were not built with that in mind. A politically exposed person (PEP) is not inherently suspicious. The position they hold, though, can create elevated exposure to corruption, bribery and money laundering risks that require a different approach to compliance.
PEP screening is therefore a specialised component of risk management that extends beyond standard KYC processes. It requires purpose-built tools, ongoing vigilance and a clear methodology, applied across onboarding and the lifetime of the relationship. Across APAC, where state-linked enterprises are common and political and commercial networks frequently intersect, getting PEP screening right is what separates a defensible compliance programme from one that simply ticks a box.
What Is PEP Screening?
PEP screening is the process of identifying whether a customer, counterparty or beneficial owner qualifies as a politically exposed person, and applying enhanced due diligence where they do. The category covers current and former holders of prominent public functions: heads of state, senior government officials, judicial officers, military leaders, executives of state-owned enterprises and senior political party officials. It often extends to close associates and family members, as risk exposure can arise through relationships as well as official positions.
In APAC, where state-linked enterprises are common and political and commercial networks frequently intersect, PEP exposure is a recurring feature of due diligence, not an edge case.
What Is the Risk of PEP?
The elevated risk associated with PEPs is structural. Their positions grant access to public funds, regulatory influence or state assets that can be abused for personal gain, which is why PEPs carry higher exposure to money laundering, bribery and corruption.
Regulators do not assume guilt. They do, however, require the conditions to be actively managed. An institution that onboards or maintains a PEP relationship without enhanced due diligence and documented monitoring faces regulatory sanction regardless of whether financial crime actually occurred. The check itself is the obligation.
When Should PEP Screening Take Place?
PEP screening must happen at three points across the customer relationship:
- During onboarding: Regulated firms are required to screen before the relationship begins, not after.
- Continuously: PEP status is not static. Appointments happen post-onboarding, and former PEPs retain elevated risk for a defined cooling-off period after leaving office.
- On trigger events: Material changes in customer circumstances, new ownership information or fresh adverse media should prompt reassessment outside the scheduled cycle.
How often it should be done is risk-based, not calendar-based. High-risk relationships warrant continuous monitoring. Lower-risk ones can sit on a periodic review schedule with automated alerts in between.
How to Conduct a PEP Screening?
A defensible PEP screening process moves through six steps:
- Screen the full subject scope: Cover the primary customer, directors, UBOs and close associates, not just the named entity. PEP exposure often hides a layer below the surface.
- Use multi-jurisdictional databases with genuine APAC depth: Western-skewed PEP lists miss the exposure that matters most across Singapore, Malaysia, Vietnam, China and Thailand.
- Apply entity resolution for name variants and transliterations: Aliases, romanised forms and local-language spellings are where silent misses happen, more so than anywhere else in the workflow.
- Layer adverse media screening on top: Regional press routinely surfaces credible risk long before formal enforcement action.
- Document process and disposition: Regulators expect evidence of review and a recorded risk-based decision, supported by due diligence software and a clear audit trail, not just a search log.
- Build ongoing monitoring: Status changes, new appointments and ownership shifts should trigger timely reviews and alerts, rather than relying solely on periodic assessments.
Why Generic Screening Tools Fall Short for PEP Risk
Most PEP screening tools were built for direct name-matching against structured lists. That works for clean hits where the customer themselves appears in a database. It fails where the PEP operates through corporate layers, or where a family member holds a stake in a counterparty several entities removed.
The harder problem sits in APAC. Fragmented registry data across Singapore, Malaysia, Vietnam, China and Thailand can make beneficial ownership analysis and PEP risk identification significantly more challenging without cross-border relationship mapping capabilities. A name-match tool will return a clean result and still miss the exposure that matters.
How Handshakes Supports Comprehensive PEP Screening
Handshakes is built for the exposure that name-match tools miss. Handshakes APP serves as the central workbench, with UBO mapping that traces ownership chains across APAC corporate registries, helping organisations identify potential PEP exposure across multiple ownership layers rather than only the presented entity. The proprietary RED list adds regulatory, enforcement and disciplinary intelligence above standard PEP and sanctions databases, capturing the actions that often signal PEP risk before it surfaces elsewhere.
SEER processes adverse media at scale across regional and non-English sources, catching signals long before they reach global coverage. Ongoing monitoring and alert capabilities help teams stay informed of PEP status changes, enforcement actions, and ownership updates.
Handshakes is also a Monetary Authority of Singapore (MAS) designated screening provider for Singapore family offices, confirming the platform meets the standards that regulated firms require for their most sensitive relationships.
Strengthen PEP Screening from Onboarding to Ongoing Monitoring
PEP screening demands a meaningfully different rigour, not a variation on standard KYC run with the same tools. The firms most exposed are rarely those that skipped the check. They are the ones who ran it too narrowly, missed the indirect exposure and treated onboarding as the finish line.
Whether the work sits within customer onboarding, a corporate counterparty check or wider background screening in Singapore, Handshakes supports PEP screening workflows from initial verification through ongoing monitoring and review. Explore how Handshakes strengthens your PEP screening programme.
