Morgan Stanley’s crypto policy shift – a game-changer for AML compliance
A game-changer for AML compliance. On October 15, Morgan Stanley will officially allow all its wealth management clients to invest …
Insight
In the world of compliance, few areas carry as much weight—and risk—as the screening of Politically Exposed Persons (PEPs). A recent case where a UK law firm was fined £172,934 by the Solicitors Regulation Authority (SRA) for failing to identify a client as a PEP during a property transaction has brought this into sharp focus.
This incident underscores a vital truth: PEP screening is not optional—it’s a regulatory necessity.
What is a Politically Exposed Person?
PEPs, by definition, are individuals who hold prominent public positions and are considered higher risk for potential involvement in bribery, corruption, or money laundering. The Money Laundering Regulations (MLRs) 2007 require enhanced due diligence when dealing with PEPs, including:
- Senior management approval before establishing a business relationship
- Measures to establish the source of wealth and funds
- Ongoing monitoring of the relationship
In this case, the firm failed to identify the client as a PEP until two months after the transaction had been completed. This delay led to inaccurate information being passed to another firm, compounding the compliance breach. The SRA noted that even though the misconduct wasn’t intentional, the failure to comply with the MLRs posed a significant risk of facilitating money laundering or terrorist financing.
What this means for regulated firms
This fine sends a clear message: compliance failures—even unintentional ones—can result in substantial penalties, as well as financial and reputational loss. It also highlights the importance of having robust systems and PEP risk assessments in place to identify these clients early in the onboarding process.
At Veriphy, we understand the challenges firms face in navigating complex and ever-evolving AML obligations. That’s why our PEP and sanctions screening tools are designed to deliver fast, accurate, and auditable results—helping firms stay compliant and avoid costly mistakes. PEP AML screening solutions offer peace of mind, enabling you to meet your obligations with confidence and protect your reputation.
Don’t let your firm be next
Whether you’re in legal, financial services, or property, the risks of overlooking a PEP are too great to ignore. With regulators tightening their grip and fines increasing, now is the time to ensure your AML processes are watertight.
Want to learn more? Our experts are on hand to help. Simply get in touch, or request a demo.
