Special Interest Entities (SIE)
A Special Interest Entity (SIE) refers to a legal entity that has been accused of, convicted of, or is undergoing trial for serious criminal activities. These activities may include corruption, financial crimes (such as fraud, theft, money laundering, and tax evasion), trafficking, terrorism, or war crimes. Just as with sanctions or PEP checks, identifying SIEs is crucial in Customer Due Diligence (CDD) to mitigate potential risks associated with financial crimes. A legal entity may also be considered an SIE if its beneficial owners are found to be Special Interest Persons or SIPs.
High-risk businesses, entities of concern
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SIE
Examples
During the onboarding process at a financial institution, a corporate client undergoes standard Customer Due Diligence procedures. However, through adverse media screening, the institution discovers that the company has been previously investigated for involvement in money laundering. As a result, the company is classified as a Special Interest Entity (SIE) and thus a high risk. So, the institution applies Enhanced Due Diligence measures, such as verifying the source of the company's funds, more robust verification methods for the entity’s ownership structure, more attentive transaction monitoring, and more frequent account reviews. This is done both to better manage the risk this entity presents and to stay compliant with AML/CFT regulations.
FAQ
Why are Special Interest Entities considered high-risk?
Special Interest Entities (SIEs) are considered high-risk due to their involvement or suspected involvement in serious financial crimes. Identifying SIEs is therefore mandatory for properly implementing a risk-based approach and staying compliant with AML/CFT regulations.
What databases and watchlists include Special Interest Entities?
As with SIPs, there isn’t one exhaustive SIE list financial institutions can use. Instead, they rely on sanctions, PEP, and known criminal databases as well as adverse media screenings and internal data.
Which laws govern Special Interest Entities in the UK, US and EU?
As extensions of AML/CFT regulations, the handling of SIEs is handled by the relevant anti-money laundering frameworks; the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 in the UK, the Bank Secrecy Act (BSA) and the USA PATRIOT Act in the US, and the Anti-Money Laundering Directives (AMLD) in the EU.
