A Politically Exposed Person (PEP) is an individual who holds, or has held in the past, a prominent public function. This includes heads of state, government ministers, members of parliament, senior judges, senior military officials, directors of state-owned enterprises, and senior officials of international organisations. The concern is not that PEPs are assumed to be corrupt, but that their position of power and influence creates a heightened risk that they could be the target of bribery or misuse public funds — making them a higher risk from an AML perspective.
EU law requires that PEPs — as well as their immediate family members and known close associates — be subject to Enhanced Due Diligence. This means verifying their source of wealth and funds, obtaining senior management approval for establishing or continuing the relationship, and conducting enhanced ongoing monitoring. A person generally remains classified as a PEP for at least 12 months after leaving their prominent public role, and obliged entities must apply judgement as to whether the risk has truly diminished after that period.
