What is a PEP? Politically Exposed Person Explained

A Politically Exposed Person (PEP) is an individual who holds or has held a prominent public position, such as a head of state, government minister, senior military official, senior judicial figure, or executive of a state-owned enterprise. Immediate family members and close associates of PEPs are also typically treated as PEPs for compliance purposes.

PEPs are considered higher risk for financial crime because their position gives them greater opportunity or motive to engage in bribery, corruption, or misuse of public funds. Regulated businesses are required to apply enhanced due diligence (EDD) when onboarding or transacting with PEPs.

PEP screening involves checking a customer's identity against PEP databases, which contain lists of known current and former politically exposed persons and their associates. This check is typically performed at onboarding and on an ongoing basis in case a customer's PEP status changes.