The Anti-Money Laundering Act clearly states that every new and existing client must undergo sufficient verification. Among the most critical tasks are PEP screening (check of politically exposed persons) and checks against international sanction lists. What exactly does this mean for your business?
Table of contents
What is a PEP and Why the Law Singles Them Out
The acronym PEP (Politically Exposed Person) refers to a natural person who holds or has held a prominent public function. This includes ministers, members of parliament, judges, or senior military officials, including their close family members. The Czech AML Act requires so-called enhanced due diligence for these clients, as the nature of their function implies a higher potential for corruption.
Sanction Lists — Which to Check and How Often
As an obliged entity (whether you are a real estate agent, an accounting firm, or a lawyer), you must not establish a business relationship with a person or entity on a sanction list. You are obliged to check clients against the sanction lists of the Czech Republic, the EU, and often the UN and national sanction lists. Furthermore, this check must not be a one-time event at the beginning of the relationship, but must be continuous.
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How PEP Screening Works in Practice (Manual vs. Automated)
Manual checking, by browsing web search engines or public news, is tedious, error-prone, and usually insufficient for later demonstration to the Financial Analytical Office. The modern standard is therefore full automation. Software tools compare the identified person with thousands of current records in databases in seconds and create a reliable audit trail.
What Happens if You Skip PEP Screening
Ignoring PEP screening or haphazardly checking sanctions is a common compliance failure that the FAU quickly detects. A violation of these AML principles (client control) carries multi-million fines for legal entities, which can be devastating for smaller businesses.
How AML PROOF Handles PEP and Sanctions Checks for You
To save time and minimize human error, our screening solution offers complete automation of the entire process. Once the client enters their details into the system, the AML PROOF platform automatically performs a deep analysis against global PEP indices and extensive families of sanction lists.