Question 1

What is a PEP?

Accepted Answer

A Politically Exposed Person is an individual entrusted with a prominent public function. The category exists because such individuals present a higher money-laundering and corruption risk and therefore warrant enhanced due diligence. The definition originates with FATF Recommendations 12 and 22.

Question 2

What are the FATF categories of PEP?

Accepted Answer

FATF distinguishes three categories:

Question 3

Who counts as a PEP's family member or close associate (RCA)?

Accepted Answer

Family members typically include parents, spouse / partner, children and their spouses, and siblings. Close associates are individuals known to have joint beneficial ownership of legal entities or arrangements with the PEP, or any other close business relationship, or sole beneficial ownership of...

Question 4

Is a PEP designation permanent?

Accepted Answer

No. Most regimes treat PEP status as time-bound after the person ceases to hold the function — typically 12 to 24 months — but require an ongoing risk-based assessment beyond that period. The EU 6th AMLD does not set a fixed end date and requires continued assessment proportionate to the residual...

Question 5

Are there PEPs in the United States?

Accepted Answer

The US does not maintain a government-issued PEP list and does not use the term "PEP" in its statutes. Instead, FinCEN's CDD Rule and the Bank Secrecy Act use the term "senior foreign political figure" with a substantively similar definition for correspondent banking and private banking accounts...

Question 6

Is being a PEP itself suspicious?

Accepted Answer

No. PEP status is a risk indicator, not an adverse finding. Most PEPs are not corrupt. EDD obligations exist to ensure source of wealth and source of funds are understood and that the relationship is monitored more closely. Refusing service solely because a customer is a PEP is de-risking and is...

Question 7

What is the difference between a PEP screen and a sanctions screen?

Accepted Answer

A sanctions screen is a binary legal compliance check — match means stop. A PEP screen is a risk-management input — match means apply EDD. The data sources differ: sanctions lists come from named regulators; PEP data is compiled by commercial providers (Dow Jones, LSEG/Refinitiv, ComplyAdvantage,...

Politically Exposed Persons (PEPs)