Challenges faced by financial institutes before onboarding politically exposed persons in undocumented Eastern economies: a case study of Pakistan

• Published in: Journal of Money Laundering Control
• Main Author: Sultan N.; Mohamed N.
• Format: Article
• Language: English
• Published: Emerald Publishing 2023
• Online Access: https://www.scopus.com/inward/record.uri?eid=2-s2.0-85134156019&doi=10.1108%2fJMLC-06-2022-0073&partnerID=40&md5=9dec64b5ade58f8b1d76fb3a13359f8a

Purpose: This study aims to evaluate and investigate the existing process of establishing a banking relationship with politically exposed persons. Design/methodology/approach: This study used qualitative techniques of semi-structured interviews with senior compliance officers of financial institutes in Pakistan. Findings: This study found that the existing mechanism of identification and verification of politically exposed persons (PEPs) is ineffective. Financial institutes face challenges like the quality of name screening data sets, cost of identification and verification, role and control of the regulator, the influence of politically exposed persons, the opaqueness of laws and international connections of the politically exposed persons. Further, financial Institutes are burdened by regulators to perform robust PEP customer due diligence but do not guide and provide the right tools. Originality/value: This paper aims to find challenges faced by financial institutes before onboarding the PEPs. Further, very limited studies on this topic have been conducted in Pakistani context. © 2022, Emerald Publishing Limited.