The short answer
AUSTRAC’s guidance describes the outcome and does not name a tool. Before providing a designated service, a business establishes on reasonable grounds whether the customer and certain connected people are politically exposed persons (PEPs) or are designated for targeted financial sanctions.
For PEPs, AUSTRAC says the process depends on the size, nature and complexity of the business, and its examples range from asking the person to using a specialist database. For sanctions, it says a business can use the Department of Foreign Affairs and Trade (DFAT) Consolidated List. Manual and automated methods both appear among AUSTRAC’s examples. Which suits a business may depend on how many customers it screens and their risk.
Sources: AUSTRAC: How to establish if an individual is a PEP; AUSTRAC: Overview of targeted financial sanctions obligations in the Act.
- Manual check
Search the current DFAT Consolidated List, ask the PEP question and check public sources. Try spelling variations and aliases.
- Automated service
A database or tool matches names for you and can repeat checks. Confirm what it searches and review each possible match.
- Same for both
Reasonable grounds for the conclusion and checks during the relationship. For PEP checks, AUSTRAC says to keep a record of how you reached the conclusion.
Two ways to reach the same outcome
AUSTRAC guidance does not name a tool. The fit may depend on customer numbers and risk.
Separate evidence questions. An answer to one does not settle the others.
What a manual check involves
For sanctions, the source is public. DFAT publishes the Consolidated List as a spreadsheet, which it says includes all individuals, entities and vessels subject to Australian sanctions, with names, aliases, dates and places of birth, citizenships and addresses. The list also covers travel bans and other measures, so one column shows whether targeted financial sanctions apply to an entry. DFAT updates it regularly and runs a mailing list for changes. AUSTRAC says to check the most recently published list.
Name matching is where a manual check takes care. AUSTRAC notes that names can be spelled in different ways, particularly non-English names translated into English, and that you may need to check alternative spellings and use fuzzy searching. The list marks each name as a primary name, an alias or original script, and grades aliases as strong or weak.
For PEPs, AUSTRAC points to two government lists that can help identify domestic PEPs. Its examples of manual steps are asking the person whether they, a family member or a close associate is a PEP, and checking their background on the internet, including government lists.
Sources: Department of Foreign Affairs and Trade: What is the Consolidated List; How do I access the Consolidated List; Mailing list; Does the Consolidated List include individuals or entities listed under other countries’ laws; Department of Foreign Affairs and Trade: Table of information columns; AUSTRAC: How to establish if a person is designated for targeted financial sanctions; AUSTRAC: How to establish if an individual is a PEP.
What an automated service adds
A screening service typically runs names against sanctions and PEP data for you, and may offer fuzzy matching and repeat checks. AUSTRAC says a business may use a specialist PEP database or third-party reports, for example if it often needs more thorough checks or is very likely to have PEP customers.
The results still need someone’s judgement. AUSTRAC says that if you use a third-party provider to screen for PEPs, check whether it searches for the positions and offices in the Act’s PEP definitions. A possible match still needs a person to decide whether it is the same individual.
One limit of the Consolidated List applies however it is searched. It covers only Australian sanctions laws, including United Nations Security Council listings. DFAT says it does not include people or entities listed under other Australian laws or under other countries’ sanctions laws.
Sources: AUSTRAC: How to establish if an individual is a PEP; Department of Foreign Affairs and Trade: What is the Consolidated List; How do I access the Consolidated List; Mailing list; Does the Consolidated List include individuals or entities listed under other countries’ laws; Department of Foreign Affairs and Trade: Table of information columns.
Checks after onboarding
Screening is not only an onboarding step. AUSTRAC says a business checks whether relevant people become designated for sanctions during the business relationship, and takes reasonable steps to monitor whether they become PEPs. Its examples include asking questions when KYC information is reverified and periodically running open-source or database checks.
The number of clients matters for this step. Re-checking a handful of ongoing clients against list updates by hand may be workable. Re-checking hundreds may not be. AUSTRAC also suggests considering more thorough sanctions checks where risk is higher, such as international customers or complex structures with foreign beneficial owners.
Sources: AUSTRAC: Overview of targeted financial sanctions obligations in the Act; AUSTRAC: Identifying if a customer becomes a PEP; AUSTRAC: How to establish if a person is designated for targeted financial sanctions.
Keep a record either way
AUSTRAC says a business keeps records that show how it established whether a person is a PEP. For an open-source check, it suggests keeping extracts of relevant pages, the names and phrases searched, and why you concluded the person is or is not a PEP.
A manual process may need a simple form to capture this each time. A screening service may produce a report. Check that it shows what was searched and when.
Source: AUSTRAC: Record keeping.
Invented example: six new clients a month
A fictional conveyancing practice takes on about six new clients a month, nearly all local individuals. The owner downloads the current Consolidated List, searches each client’s name and known spelling variations, asks each client the PEP question on the intake form, and saves a dated note of the searches.
If the practice later takes on overseas buyers or company clients with foreign owners, the owner might reconsider whether the manual method still gives reasonable grounds. These are suggested steps for the example. They do not show that the practice meets its obligations.
Source: AUSTRAC: How to establish if a person is designated for targeted financial sanctions.