Senior Influential Person (SIP)

🔹 Definition

A Senior Influential Person (SIP) refers to an individual who, while not holding an official political position, wields significant influence in sectors such as government, finance, military, or state-affiliated enterprises. SIPs are often flagged in AML screening databases like World-Check or Dow Jones Risk & Compliance due to their proximity to power, potential exposure to corruption, or association with politically sensitive environments.

Although SIPs are not officially classified as Politically Exposed Persons (PEPs), many institutions treat them with comparable scrutiny depending on their risk appetite and regulatory environment.

🔹 Key Characteristics

• Not an official PEP, but closely connected to high-risk environments
• May be:
  • Former senior military or government officials
  • Royal family members
  • Strategic advisors or leaders of state-owned enterprises (SOEs)
  • Key figures in critical sectors like defense, oil & gas, or infrastructure
• Often maintain close relationships with current PEPs or influential government stakeholders

🔹 Compliance Implications

Risk-Based Approach:

• SIPs are not automatically subject to Enhanced Due Diligence (EDD) under most regulations (e.g., FATF, EU AMLD), but may trigger additional scrutiny
• Institutions may apply EDD voluntarily if the individual:
  • Is involved in high-value transactions
  • Operates in high-risk jurisdictions
  • Is linked to a PEP or government contract

Monitoring Requirements:

• Institutions should maintain:
  • Watchlist screening for SIP-related entities or associates
  • Ongoing transaction monitoring for unusual activity or red flags
  • Internal policies on treating SIPs as high-risk clients based on influence and exposure

🔹 SIP vs. PEP: What’s the Difference?