Politically Exposed Persons Screening

Every funder engaged in international philanthropy faces heightened risks when grantee leadership includes Politically Exposed Persons (PEPs). These are senior officials, political leaders, state enterprise executives, and their close associates whose public influence creates opportunities for corruption, diversion of funds, and reputational harm. Screening does not by itself establish compliance with any legal or regulatory obligation, and Paragon does not provide legal, tax or financial advice.

Why it matters

Regulatory and Reputational Risks of Political Exposure

Funders face legal and regulatory exposure where grant funds reach politically connected individuals, under frameworks such as the U.S. Foreign Corrupt Practices Act (FCPA), the UK Bribery Act and EU anti-money laundering directives, alongside the prudence expected of grantmakers in every jurisdiction. Beyond any penalty, a single association with corruption can undermine decades of charitable work, erode donor trust, and halt program delivery. The Financial Action Task Force (FATF) and the OECD call for PEPs to be identified and monitored precisely because of this heightened risk.

Approach

Paragon’s Screening Approach

Unlike automated screening tools, which generate large numbers of false positives, Paragon’s PEP screening is designed for cross-border philanthropy. Paragon’s vetting team reviews every potential match for accuracy, significance and jurisdictional context, and communicates with grantees in a structured, professional way, so findings are clarified without damaging the relationship.

Screening is global. Political influence rarely stops at national borders, so Paragon screens across all jurisdictions for domestic, foreign and international-organization PEPs and their close associates, with particular attention to the countries where the organization is incorporated, governed, funded or active.

Alongside PEP status, the review surfaces Special Interest categories, such as corruption, financial crime, organized crime, terrorism and trafficking. These can apply to anyone connected to the grantee, not only PEPs, and give funders early warning of risks beyond political exposure. Sanctions, watchlist and adverse media screening are not part of PEP screening and are covered by separate Paragon services.

Who it serves

Who Benefits from PEP Screening

PEP screening matters wherever civil society, government and business leadership overlap, as they do in many countries, including long-established democracies. A grantee’s founder may be a former minister, a board member may hold elected office, or a program may depend on a partnership with a ministry. None of this is unusual, and none of it is disqualifying on its own. What it calls for is awareness: knowing whether a connection exists, whether it bears on decision-making or the flow of funds, and how it should be monitored. The Charity Commission for England and Wales, for example, lists involvement with politically exposed persons among its risk indicators for charities’ partners. Private and family foundations, donor-advised fund sponsors, community and corporate funders, and organizations that regrant all face this question, as do the banks that carry their payments.

When to use

When to Use PEP Screening

Lower-risk jurisdictions: even where governance is strong, to meet funder expectations and demonstrate prudent stewardship.
Higher-risk regions: where corruption and political influence are prevalent, as an essential safeguard.
Repeat and multi-year grants: to keep the record current as leadership and political circumstances change.
Equivalency Determination (ED) and Expenditure Responsibility (ER) grants: to document the integrity of the grantee’s leadership as part of the ED or ER record.

Process

How PEP Screening Works

PEP screening covers the people who govern, run and control an organization, because they decide how its funds are used and represent it to funders, partners and governments. Paragon’s vetting team screens the same individuals it screens in Anti-Terrorist Financing Screening (ATFS), as disclosed on the Organization Information Form: board members, founders, persons with operational authority, and beneficial owners and controlling individuals. Each name is checked against records of current and former public officials, which also identify their relatives and close associates.

Who is screened

Governing bodyBoard members

Persons with operational authority

The organization

Founders

Beneficial owners and controlling individuals

Screening steps

Collect
The names of the individuals listed above are collected from the grantee through the Organization Information Form.
Screen
All names are screened against CSI WatchDog Elite and Dow Jones RiskCenter, with multi-language searches and transliteration checks.
Clarify
Where a match remains uncertain, the vetting team resolves it with the grantee, with translation support where needed.
Report
The vetting team compiles the report for the grant file.

Deliverable: PEP Screening Report

Each PEP screening concludes with a comprehensive report for the grant file, following procedures benchmarked against recognized international due diligence frameworks.

Contents

What the PEP Screening Report contains

01Executive Summary

Clear PEP/non-PEP determinations for every individual screened.

02Evidence Documentation

Match details, sources, and the vetting team’s assessments.

03Special Interest Alerts

Corruption, financial crime, or other integrity risks for any positive PEP matches or Relatives and Close Associates (RCAs).

04Supporting Materials

The questionnaire responses used to identify the individuals screened, and correspondence with the grantee.

All reports undergo quality control before release and give funders and their counsel the information needed to make informed decisions.

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