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Politically Exposed Person (PEP) Meaning

A Politically Exposed Person (PEP) is an individual who holds a prominent public position, such as a head of state, senior politician, or military commander, or is a close family member of such a person. In the fintech and banking industry, PEPs are considered higher risk for potential involvement in corruption or money laundering because of their influence and access to public funds.Technically, when a PEP tries to open a crypto exchange account or a bank account, they are flagged by compliance software.

The firm must then perform Enhanced Due Diligence (EDD). This means the company must ask more intrusive questions about the person's source of wealth and funds.

The account must also be monitored more closely for any unusual transactions that might signal illicit activity.The PEP status is not a crime or a refusal of service; it is a regulatory requirement established by international task forces. If a fintech company fails to identify a PEP and that person later uses the platform to launder money, the company can face significant fines and criminal charges.

This is why identity verification in fintech is so rigorous; it’s about understanding the risk profile associated with a person’s public standing.In the decentralized world, PEP regulations are a major friction point. Many privacy-focused crypto users argue that their identity shouldn't matter as long as the transaction is valid.

However, as crypto-off-ramps become more regulated, the PEP flag is something that more government officials and their families are having to navigate. It is the price of integrating digital assets into the global financial system.

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Important Disclaimer:

Finery Markets BVI Limited (“Finery Markets”) provides software, technology infrastructure, and related Information and Communication Technology (ICT) services on a Software-as-a-Service (“SaaS”) basis. Finery Markets acts solely as a software vendor and does not operate a trading platform, does not intermediate, match, execute, clear, or settle transactions, and does not engage in any activities that would require regulatory authorisation under applicable laws.

Finery Markets’ software is non-custodial and is provided exclusively to licensed institutional entities that act as independent operators of their own environments. All counterparties are solely responsible for establishing and maintaining their own bilateral trading and settlement relationships. Finery Markets is not a party to any such arrangements and assumes no responsibility for the conduct, verification, or compliance obligations of any users of the software.

Nothing on this website shall be construed as a financial promotion, investment advice, or an offer to engage in regulated activities. Access to and use of the software is strictly limited to clients who have entered into a software licensing agreement with Finery Markets. Persons located in jurisdictions where such access is restricted should not rely on this website or any of its contents.

Additional notice to UK visitors: This website and associated communications are not intended to constitute a financial promotion under The Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended) and related guidance. Access to services provided by Finery Markets is limited to regulated entities, professional clients and eligible counterparties as set out by the Financial Conduct Authority. UK users are not permitted to use this website for the services of Finery Markets if they don't fall within these categories.