FINTRAC - Positive Domestic PEP/HIO Results - What To Do?
Overview
This procedure outlines the mandatory steps to be taken when a client self-discloses as a Domestic Politically Exposed Person (PEP) or Head of an International Organization (HIO), or when there is suspicion that a client qualifies as such.
1. Notification Upon discovery or suspicion of PEP/HIO status, you must immediately notify the Compliance Officer or your designated manager.
2. Enhanced Due Diligence (EDD) To mitigate residual risk.
- Domestic PEP: You must complete all 3 of the EDD measures listed below.
- A domestic PEP is NOT an automatic High Risk Rating in your Risk Assessment. But could be depending on the results of your Risk Mitigation Measure results.
Approved Risk Mitigation Measures:
- Source of Funds and Wealth (Mandatory): Trace and evidence the source of funds and wealth (See Definitions section below)
- Open Public Searches: Search the client and any related PEPs on OpenSanctions.org
- Identity Verification using two approved methods: Verify identity using two approved methods (e.g., Credit Bureau Method, Met-In-Person, Dual Process, or Biometric Technology).
3. Documentation and Review - Please complete this ASAP and before submitting the client to a lender.
- Submit the completed client signed PEP/HIO Declaration Form to the Compliance Officer for review.
- Submit the results of above listed Approved Risk Mitigation Measures to the Compliance Officer for review.
Definitions
Source of Funds: Refers to the origin of the particular funds used in the transaction. Down Payment and Income being the most highly considered. (e.g., salary, sale of an asset, inheritance, Gift or other identifiable transaction-specific funding). Documentation must be obtained and assessed for each application to ensure the legitimacy of monies used.
Source of Wealth: Refers to the origin of the individual’s total financial standing or net worth (e.g., career earnings,
accumulated investments, ownership interests, family wealth).
