Wire Reject based on 100% PEP Hit LIst - Questions

Posted By: WestKerryGirl

Wire Reject based on 100% PEP Hit LIst - Questions - 02/19/16 06:25 PM

100% Match on the PEP list with no way to determine false positive DOB not available. Prior wires to the beneficiary's account shows only parents of this NRA sent previous funds via wire they are going to school here. Called the OFAC hotline and they said it was a business decision to accept or reject. Based on the high risk of PEP's we are rejecting the wire.
Questions:

1. Since its the PEP list the name hit on, not OFAC, do we need to make a report within 10 days?
2. We should send a written letter to beneficiary of the wire rejection- what should the letter say?
3. Are we prohibited from mentioning the conductor's name is a PEP?
4. Is this a SAR event as we cannot match any relationship to the beneficiary and the possible PEP?
Posted By: edAudit

Re: Wire Reject based on 100% PEP Hit LIst - Questions - 02/19/16 06:34 PM

It is not illegal for a PEP to engage in banking
Posted By: Elwood P. Dowd

Re: Wire Reject based on 100% PEP Hit LIst - Questions - 02/19/16 06:39 PM

Only an echo: U.S. banks are not prohibited from conducting transactions on behalf of known PEPs. I attended one conference where all of the employees of one major bank sported buttons that said: "PEPs are customers too!"

Consult the BSA-AML Examination Manual for guidance on the proper care and feeding of PEPs.
Posted By: WestKerryGirl

Re: Wire Reject based on 100% PEP Hit LIst - Questions - 02/19/16 06:44 PM

The Examination Manual says this: Banks should take all reasonable steps to ensure that they do not knowingly or unwittingly assist in hiding or moving the proceeds of corruption by senior foreign political figures, their families, and their associates. Because the risks presented by PEPs will vary by customer, product/service, country, and industry, identifying, monitoring, and designing controls for these accounts and transactions should be risk-based.

If this PEP is dumping his politically obtained money to say pay for this students tuition, then I think I have a problem.
Posted By: Elwood P. Dowd

Re: Wire Reject based on 100% PEP Hit LIst - Questions - 02/19/16 06:51 PM

Quote:
If this PEP is dumping his politically obtained money to say pay for this students tuition, then I think I have a problem.


Yes. And if he isn't, you don't.

Being a PEP is analogous to being a non U.S. person; i.e. it's about status. Banks do not reject transactions or file SARs just because someone is a PEP.
Posted By: edAudit

Re: Wire Reject based on 100% PEP Hit LIst - Questions - 02/19/16 07:05 PM

If I am a customer who is a landlord I think I may be a little annoyed if the bank rejects a valid transaction from the senator of (insert country) for one of his children's rent while a student.
Posted By: WestKerryGirl

Re: Wire Reject based on 100% PEP Hit LIst - Questions - 02/19/16 07:08 PM

I thank you for all your answers- We will have re-think our position based on your feedback.