PEP screening in the UAE: who counts, what you must do, and how to do it

The definition covers natural persons entrusted, now or in the past, with prominent public functions in the UAE or any other country, including:

• heads of state or government, senior politicians and senior government officials;
• judicial and military officials;
• senior executives of state owned enterprises;
• senior political party officials; and
• people running international organisations or holding a prominent function in one, including directors, deputy directors and board members.

There is no time limit in the definition: a former minister is still within it.

The same definition expressly extends to:

• immediate family: spouses, children and their spouses, and parents; and
• known close associates: people who share beneficial ownership of a company or legal arrangement with a PEP, people with other close professional or social relationships with one, and anyone who solely owns a company set up for a PEP's benefit.

This is where most screening falls short. A company whose shareholder is the son in law of a foreign official is a PEP relationship, and you only see it if you screen beneficial owners rather than the company name alone. See UBO requirements in the UAE.

For foreign PEPs, Article 16 requires all of the following, on top of normal customer due diligence:

• a risk management system that determines whether a customer or beneficial owner is a PEP;
• senior management approval before starting, or continuing, the relationship;
• reasonable measures to establish the source of funds and the source of wealth; and
• enhanced ongoing monitoring of the relationship.

Source of funds and source of wealth are different questions. Source of funds is where the money in this transaction came from. Source of wealth is how the person came to have money at all, which is the question that matters in a corruption case.

For domestic PEPs, and for people holding a prominent function in an international organisation, you must take adequate measures to determine whether a customer or beneficial owner falls into these categories. The other three measures, senior management approval, source of funds and wealth, and enhanced monitoring, apply where the relationship is high risk. So the identification duty is constant; the heavier measures follow the risk assessment.

Two different obligations, often confused:

• Sanctions screening asks whether the person is designated. A match means freezing within 24 hours and a report through goAML. There is no risk based discretion.
• PEP screening asks whether the person is politically exposed. A match means extra due diligence and approval, not freezing and not a report.

A PEP hit is not a suspicious transaction report either. You file one only if something about the relationship gives reasonable grounds to suspect a crime. How sanctions screening works.

• Screen at onboarding, and again when ownership or control changes.
• Screen beneficial owners, directors and authorised signatories, not only the customer.
• Record the decision: who approved the relationship, when, and what evidence supported the source of wealth.
• Re-run screening when lists and profiles update, since a customer can become a PEP mid relationship.
• Set a review frequency for PEP relationships that is shorter than for ordinary customers.

RiskLens360 includes PEP screening and adverse media checks alongside sanctions and watchlist screening, with case management and an audit log of every approval and decision. Request a demo or see the software comparison.