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

Nasir Sultan and Norazida Mohamed

Journal of Money Laundering Control, 2022, vol. 26, issue 3, 488-508

Abstract: 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.

Keywords: Politically exposed persons; Customer due diligence; Enhanced due diligence; Identification and verification; Role of regulator (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jmlcpp:jmlc-06-2022-0073

DOI: 10.1108/JMLC-06-2022-0073

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