Understanding Regulation 33A and How It Affects You
If you operate in the trust or company service sector, you’ve probably heard about Politically Exposed Persons (PEPs) and Sanctions Checks – but what do they really mean in practice?
In this blog, we break down the essentials of Regulation 33A of the UK Money Laundering Regulations 2017, what it means for your business, and how to stay compliant while protecting your reputation and reducing risk.
What Is Regulation 33A?
Regulation 33A requires TCSPs and other regulated businesses to identify and manage PEPs and sanctioned individuals or entities. These clients carry a higher risk of involvement in money laundering, bribery, terrorist financing, or corruption – and regulators want to know you’re taking this seriously.
You must conduct:
- Initial screening during customer due diligence (CDD)
- Enhanced due diligence (EDD) when risks are identified
- Ongoing monitoring for high-risk clients
- Detailed record-keeping to demonstrate compliance
Key Definitions
Politically Exposed Person (PEP): Someone in a prominent public position (or their family or close associates). Think politicians, judges, military officers, or executives of state-owned enterprises.
Sanctioned Individual/Entity: Someone listed by the UK government, UN, or EU due to involvement in human rights abuses, terrorism, or financial crime.
💡 Flex Tip: Even if someone isn’t a PEP directly, their associates may still pose a risk. Always look at the bigger picture.
View improved navigation of GOV.UK sanctions content.
What You MUST Do Under Regulation 33A
1. Screening for PEPs and Sanctions
You must screen every client (and their beneficial owners) before onboarding:
- UK & international sanctions lists (Search GOV.UK)
- PEP databases
- High-risk jurisdiction alerts
💡 Flex Tip: Use technology that supports fuzzy matching to catch near-miss names. Always verify identity with date of birth, nationality, and supporting documents.
2. Enhanced Due Diligence (EDD) if There’s a Match
If someone is flagged as a PEP or appears on a sanctions list:
- Gather more information (e.g. source of wealth, business nature)
- Obtain copies of official documents (e.g. passport, utility bill)
- Escalate to senior management before continuing
💡 Flex Tip: Build a clear EDD checklist for your team to follow – it saves time and ensures consistency.
3. Ongoing Monitoring
Clients identified as PEPs or sanctions risks must be monitored:
- Review transactions regularly
- Update risk profiles at least once a year
- Log all red flags or inconsistencies
4. Documentation and Record-Keeping
You need to keep records of:
- The individual or company checked
- Screening tools used
- Date, result, and outcome
- Justification for onboarding (or declining)
- Steps taken during EDD and monitoring
💡 Flex Tip: Keep a Rejection Log. Showing that you refused high-risk clients can be just as powerful as managing onboarded ones.
Special Considerations for TCSPs
Because TCSPs often serve international clients, they are more likely to encounter PEPs. Services like offices, nominee directorships, and company formations are particularly vulnerable.
Questions to Ask at Onboarding:
- Are you or any UBO a PEP or connected to one?
- Have you or your business ever been subject to sanctions?
Be direct. Being upfront reduces confusion and protects your business.
Consider a Blanket PEP Rejection Policy
Some TCSPs choose to automatically decline working with known PEPs or sanctioned individuals. While not legally required, it significantly reduces risk.
Benefits:
- Easier compliance management
- Lower risk exposure
- Stronger reputation protection
How to Stay on Top of Sanctions & PEP Updates
A. Sign Up for HMRC and Sanctions Alerts
💡 Flex Tip: Visit GOV.UK and register for updates on sanctions notices and designated persons lists. You can also subscribe to updates from:
- Office of Financial Sanctions Implementation (OFSI)
- World-Check, Refinitiv, or Dow Jones risk platforms
B. Screen Clients Regularly
- Run checks monthly or more often for high-risk clients
- Use software that integrates alerts or perform manual reviews
- Match names and identifiers with updated lists
C. Verify and Take Action
- Confirm any match with additional identifiers
- Escalate true matches to your compliance officer or director
- Reassess the relationship and decide whether to proceed
Final Thoughts: Staying Compliant, Staying Safe
Managing PEPs and sanctions is more than a tick-box exercise. It’s about safeguarding your business from:
- Reputational harm
- Financial penalties
- Criminal association
💡 Flex Tip: Train your team using real-world case studies and “mock match” scenarios – the best learning is practical.
Need a Hand?
If you’re unsure how to structure your policies, screen clients properly, or implement a rejection policy, Flex AML can help. We offer:
- Tailored training
- Policy templates
- Compliance health checks
- On-demand guidance when you need it most
Book a free 30-minute consultation and let’s chat about keeping your compliance strong, simple, and commercially smart.
📍Stay compliant, stay confident – the Flex AML way.
Flex AML 