Classification of a customer as a PEP or a Related Customer should take place during the CDD stage, prior to the commencement of the business relationship. Under Article 15 of the AML-CFT Decision, LFIs are required to have suitable risk management systems in place to determine whether a customer, or the beneficial owner of a customer, is a foreign PEP, or Related Customer and are required to take sufficient measures to identify whether a customer, or the beneficial owner of a customer, is a domestic PEP or an HIO, or Related Customer. In practice, however, it will generally be appropriate to conduct onboarding screening and ongoing screening on all customers. Even citizens of the UAE may qualify as foreign PEPs if they have been entrusted with prominent functions by foreign governments, for example, if they are dual citizens, or held office in a country that does not restrict prominent functions to citizens.

Screening may begin by including a question in onboarding forms or interviews that inquires whether the customer or any beneficial owner is a PEP or Related Customer. LFIs should not however rely solely on a customer’s assertion, but supplement this basic screening question with additional due diligence such as additional questions regarding the customer’s employment and job title, questions regarding the customer’s sources of funds and wealth, and conducting searches of public records (e.g. internet searches or searches of UAE databases) or proprietary databases. Should searches of public records or proprietary databases reveal adverse media on the potential PEP customer, the LFI should review the adverse media and determine whether it is within the LFI's risk appetite to onboard the potential PEP customer and/or subject the PEP to enhanced monitoring.

Where customers are public servants, LFIs should be sure to conduct these searches using not only the customer’s name but also the customer’s title, as some useful information (such as lists of high-level government positions) may be available by title only.

Some PEPs and Related Customers may be determined to conceal their status from financial institutions and the public at large in order to avoid enhanced scrutiny. In these cases, searches of public records or private databases may not reveal their status or the connection between the customer and a PEP. As always, LFIs should be alert to any aspects of a customer profile that are inconsistent or do not have a clear explanation. These ‘red flags’ may be connected to a variety of illicit or questionable activity, including concealed PEP status. Some potential indicators include:

Because a customer transforms from a non-PEP to a PEP immediately on being entrusted with a prominent public function, LFIs should use the ongoing monitoring process to determine whether a customer’s status has changed. Where a PEP customer, or a PEP who is connected to a Related Customer, has lost the prominent public function that qualified him or her for PEP status, ongoing monitoring can also determine whether it is appropriate to no longer classify the customer as a PEP or as a Related Customers, and to cease enhanced measures.