Politically Exposed Person (PEP)
What Politically Exposed Person means, who qualifies as a PEP, and why PEP status triggers enhanced due diligence.
2 min read
A Politically Exposed Person (PEP) is an individual who holds or has held a prominent public function. PEPs present higher risk for potential involvement in bribery and corruption due to their positions of influence.
Who Qualifies as a PEP
Domestic and Foreign PEPs
- Heads of state and government
- Senior politicians and party officials
- Senior judicial officials (Supreme Court, constitutional court)
- Senior military officials
- Executives of state-owned enterprises
- Senior central bank officials
PEP Family and Associates
FATF guidance extends PEP status to:
- Family members: Spouse, parents, children, siblings
- Close associates: Known business partners, joint beneficial owners
PEP and KYB
For KYB, PEP screening covers beneficial owners, directors, and authorized signers. If any are PEPs, the relationship typically requires:
| Requirement | Reason |
|---|---|
| Enhanced Due Diligence | Higher corruption risk |
| Senior management approval | Elevated decision authority |
| Source of funds verification | Ensure legitimate origin |
| Closer ongoing monitoring | Detect suspicious activity |
PEP Status Doesn’t Mean Rejection
PEP status doesn’t preclude a relationship—it requires heightened scrutiny. Many PEPs are legitimate customers. The goal is proportionate risk management, not blanket exclusion.
Related: EDD | Watchlist Screening | Risk-Based Approach