Politically exposed persons (PEPs) are individuals who have been entrusted with prominent public functions, such as government officials, politicians, or high-ranking members of the military. PEPs may also include their family members and close associates. The term "PEP" is often used in the context of anti-money laundering (AML) and financial crime prevention efforts as PEPs may be at higher risk of corruption and may abuse their position for personal gain.

Revelations of grand corruption, such as the plundering of state assets and embezzlement of public funds, have led to increased scrutiny of business relationships with PEPs.

Financial institutions are expected to take extra precautions when dealing with PEPs as there is a higher risk that they may use their position to engage in illicit activities, such as accepting bribes, misusing state resources, and using financial systems to launder the proceeds of their crimes.
PEP 0


To mitigate the risk of money laundering and financial crime, financial institutions are required to conduct enhanced due diligence on PEPs and their related parties, and to report suspicious activity to the appropriate authorities. Financial institutions may also be required to implement additional controls and procedures to ensure compliance with AML and financial crime prevention regulations.

PEPs represent a higher risk of money laundering and financial crime due to their potential abuse of position and influence, and financial institutions are expected to take extra precautions when dealing with them to prevent illicit activities and protect the integrity of the financial system.

To ensure that financial institutions are fully compliant with AML rules, it is essential to know who or what a politically exposed person (PEP) may be, so as to conduct enhanced due diligence checks.

Providing a definitive list of who could be classified as a PEP is a tough challenge as international definitions vary and the Financial Action Task Force (FATF) frequently issues updated recommendations.
PEP 1

According to FATF’s International Standards on Combating Money Laundering and the Financing of Terrorism and Proliferation (2012), there are three categories of PEPs:
  • 1

    Foreign PEPs: Individuals who are or have been entrusted with prominent public functions by a foreign country and with a certain influence which makes him/her more susceptible of being involved in bribery or corruption.

  • 2

    Domestic PEPs: Individuals who are or have been entrusted domestically with prominent public functions and with a certain influence which makes him/her more susceptible of being involved in bribery or corruption.

  • 3

    International Organization PEPs: Persons who have been entrusted with a prominent function by an international organization, and refers to members of senior management or individuals who have been entrusted with equivalent functions, i.e. directors, deputy directors and members of the board or equivalent functions.



Which position should be considered a PEP?

The following positions should always be considered as PEP:

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Are you looking for improve your screening of PEPs? One of our specialized experts will be delighted to provide responses to your inquiries related to the execution of requisite vigilance protocols concerning politically exposed persons (PEPs), as well as any other queries regarding AML and compliance.
Damian Vildosola Truche - Pideeco Network Partner
Damian Vildosola Truche Senior Consultant
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