PEP (Politically Exposed Persons) Check System Development

Development of PEP (Politically Exposed Persons) Verification System

PEP verification is a requirement of FATF R12 and most AML legislations. Politically significant individuals (state officials, government corporation heads, politicians, senior military commanders) are considered high-risk clients due to elevated corruption risk. This does not mean blocking them, but requires Enhanced Due Diligence.

What is PEP

Domestic PEP: senior government official in the country where the client operates.

Foreign PEP: official from another country — typically higher risk.

International organization PEP: leaders of major international organizations (UN, IMF, World Bank).

RCA (Relatives and Close Associates): spouses, children, parents of PEP, business partners.

PEP Data Sources

Commercial providers:

• ComplyAdvantage: 10M+ records, REST API, RCA coverage
• Refinitiv World-Check: largest database, used by banks
• Dow Jones Risk & Compliance: enterprise grade
• Acuris Risk Intelligence

Note: there is no single official government PEP registry. Providers gather data from open sources (government websites, Wikileaks, journalists).

ComplyAdvantage API Integration

class PEPScreeningService {
  async screenPerson(params: {
    firstName: string;
    lastName: string;
    dateOfBirth?: string;
    nationality?: string;
  }): Promise<PEPScreenResult> {
    
    const response = await this.complyAdvantage.search({
      search_term: `${params.firstName} ${params.lastName}`,
      fuzziness: 0.7,
      filters: {
        types: ["pep", "pep-class-1", "pep-class-2", "pep-class-3", "pep-class-4"],
      },
    });
    
    const matches = response.content.data.hits;
    
    if (matches.length === 0) return { isPEP: false, isRCA: false };
    
    // Filter by DOB if provided
    const strongMatches = params.dateOfBirth
      ? matches.filter(m => this.dobMatches(m, params.dateOfBirth!))
      : matches;
    
    if (strongMatches.length === 0) {
      return { isPEP: false, possibleMatches: matches.slice(0, 3) };
    }
    
    const match = strongMatches[0];
    return {
      isPEP: match.doc.types.some(t => t.startsWith("pep")),
      isRCA: match.doc.types.includes("relative-close-associate"),
      pepClass: this.extractPEPClass(match.doc.types),
      positions: match.doc.fields?.filter(f => f.tag === "position") ?? [],
      country: match.doc.fields?.find(f => f.tag === "country_names")?.value,
      matchScore: match.score,
      entity: match.doc,
    };
  }
  
  private extractPEPClass(types: string[]): number {
    if (types.includes("pep-class-1")) return 1; // Head of state, government ministers
    if (types.includes("pep-class-2")) return 2; // Parliament members, senior judiciary
    if (types.includes("pep-class-3")) return 3; // Senior military, state-owned enterprise heads
    if (types.includes("pep-class-4")) return 4; // Local government, lower-risk positions
    return 0;
  }
}

PEP Result Processing Logic

async function handlePEPResult(userId: string, result: PEPScreenResult): Promise<void> {
  if (!result.isPEP && !result.isRCA) {
    await db.setUserRiskFactor(userId, "pep", false);
    return;
  }
  
  // PEP requires Enhanced Due Diligence
  await db.setUserRiskFactor(userId, "pep", true);
  await db.updateUserRiskLevel(userId, RiskLevel.HIGH);
  
  const eddRequired: EDDRequirement = {
    sourceOfFunds: true,
    sourceOfWealth: true,
    seniorManagementApproval: result.pepClass <= 2, // class 1-2 requires senior approval
    enhancedOngoingMonitoring: true,
    annualReview: true,
  };
  
  await requestEDD(userId, eddRequired);
  await notifyComplianceOfficer(userId, result);
}

Continuous PEP Monitoring

PEP status can appear for an existing customer (appointment to position):

// Weekly rescreening of all active customers
@Cron("0 2 * * 0") // every Sunday at 2:00
async weeklyPEPRescreening() {
  const activeCustomers = await db.getActiveCustomers();
  
  for (const customer of activeCustomers) {
    const result = await this.pepService.screenPerson(customer);
    const previousStatus = customer.pepStatus;
    
    if (result.isPEP && !previousStatus) {
      // New PEP — immediate notification
      await this.handleNewPEPDetection(customer.id, result);
    }
  }
}

PEP verification system with ComplyAdvantage integration, EDD workflow, and periodic rescreening — 2-3 weeks development.