Poland is set to become one of the most exciting FinTech hubs in Europe. Already it hosts rapidly expanding FinTech companies such as PayU and Blue Media who offer an alternative to traditional financial products in the payments and banking spaces. But as the Polish FinTech market expands the ever changing world of AML regulations can create a complex environment in which to operate in and for the Polish FSA (KNF) to regulate in.
FinTech firms will have to navigate the changes coming in with the 4th Money Laundering Directive at the end of this month. One area that will change significantly is in the regulation of Politically Exposed Persons (PEPs) – which for the first time will include both foreign and domestic PEPs. Regulatory influencers such as the Wolfsberg Group have also issued new guidance for businesses on how best to apply a Risk Based Approach (RBA) to PEP compliance.
Their new recommendations are as follows:
What this means for Polish PEPs?
In Poland companies are already advised to pursue a RBA to PEPs in the Anti-Money Laundering Act of 2000. Additionally the Ministry of Finance is well underway with implementing 4MLD which will go far in addressing the deficiencies related to PEP compliance which were highlighted by the 2013 MONEYVAL Fourth Risk Assessment Visit report.
Financially regulated companies operating in Poland should be prepared for the changes coming in with 4MLD on the 26th June 2017. As part of this it may be of particular interest to companies that the Wolfsberg Group Guidance doesn’t recommend conducting Enhanced Due Diligence on all PEPs – which is currently a requirement under Polish law. The Wolfsberg group argues that the level of due diligence at onboarding and throughout a client relationship should be proportionate to the risk level of the client. They even go as far as to say that in low risk scenarios, only a low level of due diligence needs to be carried out. For companies with limited compliance resources this recommendation could be an indication for future changes to regulation depending on the direction the Polish FSA (KNF) choses to take.
How can ComplyAdvantage help?
Many companies default to performing a blanket approach to PEP screening due to technology and data limitations which produces a lot of noise and manual work. At ComplyAdvantage we do things differently, helping companies cut through the noise to properly understand and pinpoint the real risks. We allow you to easily customize your screening approach to PEPs, so you can properly implement a RBA. Our solution allows compliance teams to quickly and easily classify PEPs into clear risk categories and apply a relevant screening protocol assigned to that risk level. We achieve this by using a simple four tier system of risk classes.
By applying our sophisticated fuzzy matching capability (fuzziness can be prescribed to PEP class) we can scan our global AI-driven adverse media database to determine risks arising from negative news coverage. Our systems also allows teams to easily tailor alerts which can proactively notify analysts of news they want to see – such as when new negative news stories relating to specific crime types are published or when the risk exposure of that entity changes – for example when they are added or removed from a sanctions list. When companies have a proper RBA in place they can confidently and safely “whitelist” entities they know don’t pose a risk to their business. The ability to whitelist combined with our smart matching means that companies can reduce their false positive rate by up to 84%.
Finally, we combine this information with a graph database of entities which maps relatives and close associates giving analysts the full picture of an entity’s risk profile. When an analyst has all the facts it becomes easy to apply a RBA to client segments, streamlining customer experience and reducing the burden of compliance.
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