What is a Politically Exposed Person (PEP)?

The term “PEP” (or Politically Exposed Person) was coined in the 1990s and essentially refers to anyone in a prominent position in public life, whether that be in the government, in law enforcement, or in publicly owned corporations.

It’s crucial to identify and pay special attention to PEPs during your AML checks, as they’re generally considered to be more susceptible to bribery and other financial crimes due to their high-profile roles, wealth, and influence. This means they present a greater money laundering risk to your firm; if you do decide to go into business with a PEP, you’ll need to carry out Enhanced Due Diligence, and they’ll require more ongoing monitoring than other potential clients or customers.

What is a PEP under UK regulations?

A politically exposed person, or PEP, is someone who holds a prominent public function, according to UK Money Laundering Regulations. The only people this doesn’t tend to include are middle-ranking or junior officials.

If someone is identified as being a PEP, this doesn’t automatically mean they’re involved in criminal activities or are involved in corruption; rather, their public position may leave them more open to bribery and corruption, with criminals trying to exploit their position of authority.

The job of businesses, therefore, is to identify the PEP status and then to assess that risk and decide on the appropriate level of enhanced due diligence to be put in place.

By automating sanctions and PEP screening, businesses can easily identify a politically exposed person during the onboarding process and then actively monitor for any changes that may take place during the relationship.

Examples of a Politically Exposed Person (PEP)

There’s no universally observed definition for PEPs, but most organisations use guidance set out by the Financial Action Task Force. The FATF defines PEPs as ‘individuals who are or have been entrusted domestically with prominent public functions.’ 

Some examples of positions which qualify as PEPs are as follows:

• Senior executives in government-owned businesses, like the BBC.
• Government officials.
• Leaders of political parties.
• Senior members of religious groups.
• High-ranking military officials.
• Consuls and ambassadors.
• Members of the House of Lords.
• Members of parliament.
• Close friends, immediate family members or non-familial associates of the above.

PEPs can be found across a wide range of roles and organisations, both current and former. For instance, those serving in legislative bodies, such as Members of Parliament or the House of Lords, are considered PEPs due to their legislative influence. Senior figures in executive bodies—from heads of state right down to assistant ministers—also fall under this category. Diplomatic roles, including ambassadors and chargés d’affaires, are always flagged as PEPs given their international reach and authority.

Within the judiciary, individuals working at the highest levels, such as supreme or constitutional court judges, are included due to the sensitive nature of their positions. Additionally, PEP status isn’t limited to those currently holding office; former senior executives or board members of state-owned enterprises may still be considered PEPs if they retain influence over public matters.

It’s also important to remember that the net extends beyond the individual themselves: immediate family members, close friends, and even associates who wield influence on behalf of a PEP can be classified as such. This broad scope ensures that potential risks tied to positions of power and influence are thoroughly addressed during your AML checks.

While some organisations might filter these roles into different categories to determine the level of risk, SmartSearch treats every match with equal importance. Our cutting-edge automated PEP screening software can even identify Politically Exposed Persons who are logged under nicknames, aliases, and abbreviations, so a thorough search is guaranteed.

Who counts as a PEP in the UK?

Understanding who would be considered a PEP can help with the identification process. Those who are considered to hold positions for prominent public functions, under UK guidance, include:

• Heads of government or heads of state
• Government ministers, deputy or assistant ministers
• Members of parliament or from similar legislative bodies
• Those with significant executive authority from members of national political party governing bodies
• Members of senior judicial bodies, such as Supreme Court judges
• Members of courts of auditors and central bank boards
• Ambassadors, deputy ambassadors and those who hold positions as high-ranking armed forces officers
• Members of the administrative, management or supervisory bodies of qualifying state-owned enterprises
• Directors, deputy directors and board members of international public organisations such as the United Nations or NATO.
  
  

Within the UK, if you hold a position as a local councilor, a middle-ranking official or as a civil servant below Permanent Secretary or Deputy Permanent Secretary level, you are not usually considered to hold PEP status.

Family members and known close associates

Once someone has been identified as requiring PEP-related enhanced due diligence, this will also extend to certain family members and any known close associates.

Family members requiring enhanced due diligence include:

· Spouses, civil partners and equivalent partners

· Children and their spouses, civil partners or equivalent partners

· Parents

For known close associates, this can include business associates, such as someone who co-owns or controls a business with or for a PEP.

Solely having a friendship or social connection with a PEP doesn’t automatically classify that person as a known close associate.

To find out more about why it’s important for screening to consider the relevant connections discussed above, read PEPs, RCAs and hidden risk for more information.

Challenges in Identifying PEPs

Pinning down exactly who qualifies as a PEP isn’t a one-and-done task—it’s a moving target. The list of individuals considered PEPs can shift rapidly as people step into new positions of influence, retire, or change jurisdictions. Even the guidelines, such as those issued by the FATF, are periodically updated and interpreted differently across countries.

Adding to the complexity, family structures and close associations can change just as quickly—imagine a new marriage, business partnership, or even a falling-out. Suddenly, the range of people who need to be screened expands or contracts. Organizations must stay vigilant, continually refreshing their data and procedures to ensure that no new risks slip under the radar.

Staying ahead requires both diligent monitoring and up-to-date technology. Outdated records or infrequent checks mean you could easily miss new PEPs, especially with the pace of political and regulatory change on the international stage.

Why the List of Potential PEPs is Always Evolving

The landscape of Politically Exposed Persons is never static. Individuals are frequently promoted, retire, or transfer to fresh positions—meaning new names are added while others drop off. Family ties and close associates can shift, too, as personal relationships change over time.

On top of this, the Financial Action Task Force (FATF) routinely updates its guidance, and different countries may tweak their own regulations accordingly. As governments evolve, organisations restructure, and global events unfold, who qualifies as a PEP can expand or contract. This constant evolution makes it essential to use robust, up-to-date screening tools to ensure every relevant risk factor is detected during your AML process.

How are PEP risk levels assessed?

Once PEP status has been identified, businesses then need to consider the level of risk they’re dealing with, as not every PEP presents the same level of risk. This is something that needs to be assessed on a case-by-case basis in order to apply the appropriate level of enhanced due diligence.

Factors that may indicate a lower level of risk

A PEP may be considered as low-risk if:

• They are a domestic UK PEP, and no additional risk factors have been identified
• Their role is subject to public disclosure requirements and independent oversight
• Their level of authority doesn’t extend to control of public funds, contracts or licences
• Their income, wealth and transactions all seem to be consistent with the information available
• They are connected to a jurisdiction that has stable institutions, low levels of corruption and effective AML controls in place.
  
  

UK domestic PEPs, their family members and known close associates will usually all have a low-risk starting point compared to those who are non-domestic PEPs, except in the cases where other enhanced risk factors have been identified.

Under these circumstances, enhanced due diligence will still be required, but its extent will reflect the lower level of risk.

Factors that may indicate a higher level of risk

Risk may be considered at a higher level when:

• The PEP has been found to be connected to a jurisdiction with high levels of corruption, political instability or weak AML controls
• They have a level of influence that can have a direct effect on public procurement, state contracts, government grants or valuable licences
• It has been found that their wealth or lifestyle is inconsistent with their known legitimate income
• The ownership structures they use are overly complex or opaque
• There has been an attempt to conceal their assets or business interests
• Credible allegations surrounding bribery, corruption, fraud or dishonesty have been discovered
• Their transactions have been found to involve unexplained third parties or high-risk jurisdictions
• Relevant adverse media or sanctions checks identify additional concerns.
  
  

To learn more about how these checks work together, you can find a full explanation of PEPs, sanctions and adverse media risks explained.

How do you deal with PEPs?

Identifying PEPs amongst your potential clients and customers is half the battle – it’s crucial that you’re able to spot PEPs when carrying out your AML checks, as they drastically increase the money laundering risk to your business.

Once you’ve identified a PEP, you’ll need to investigate further, building a solid profile around their public role, and establishing how they might make your company more vulnerable. These details will allow you to make an informed decision about whether or not to have dealings with them.

Financial Conduct Authority's (FCA) guidance on dealing with Politically Exposed Persons is highlighted in FG 17/6. These guidelines provide definitions of such individuals while also advising on regulations on their treatment, including recommendations on how to avoid unnecessary due diligence monitoring. 

If you do decide to work with a PEP, they will require more intensive ongoing monitoring than a normal client or customer. As well as Enhanced Due Diligence, your ongoing monitoring process should involve measures like keeping a close eye on all future transactions, frequently reviewing their PEP status, and setting clear business boundaries.

UK regulatory requirements for PEPs

Regulation 35 of the Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017 is what governs the treatment of PEPs in the UK.

It’s the job of the regulated business to be able to maintain the appropriate procedures and to have access to the appropriate systems in order for them to determine whether a customer or beneficial owner is a PEP or the family member or known close associate of a PEP.

Once a PEP relationship has been identified, businesses need to then apply the proportionate enhanced due diligence. This will depend on the level of risk that has been identified, but it can include:

• Gaining the right level of approval
• Obtaining the customer’s source of wealth and where the relevant transaction funds have come from
• By completing more in-depth customer and beneficial ownership checks
• Conducting enhanced ongoing monitoring
• Keeping a record of the assessment, as well as the reasons behind any business decisions.
  
  

Current guidance for FCA-supervised businesses is FG25/3: The treatment of politically exposed persons, which was published in July 2025. The guidance reinforces the fact that organisations need to use an adequate risk-based approach when it comes to dealing with PEPs, as well as their family members and known close associates.

How long is a PEP considered a PEP?

‘Recommendation 12’ of FATF guidance states that ‘the handling of a client who is no longer entrusted with a prominent public function should be based on an assessment of risk and not on prescribed time limits.’

In other words, this is usually subject to interpretation. Anyone who has been a PEP in the past might still qualify as a PEP years after they leave the high-profile position they occupied if they’re still relatively well-known within their field. Once a past or present PEP has been identified, deciding how to proceed is at your discretion, but vigilant ongoing monitoring will enable you to manage the risks involved.

What should ongoing PEP monitoring include?

The nature of PEPs is that their risk profile can change at any stage throughout the business relationship due to their role or connections changing. This is why screening can’t simply be done once during onboarding, and ongoing monitoring is very much required.

Ongoing PEP monitoring can help firms to spot:

• One of their existing customers gaining PEP status
• A shift in the PEP's influence or seniority in their role or the influence they may have
• If a PEP leaves public office
• If there are new family members or known close associates
• Any changes in the control or ownership of a company the PEP is associated with
• Any new sanctions or watchlist information that’s been gathered
• If there has been any emerging adverse media
• Any transactions that have taken place and are inconsistent with the customer’s known profile
• If there have been any changes that have affected the customer’s sources of wealth or funds.
  
  

How much monitoring needs to take place will depend on the level of risk the relationship presents.

Even in the event of a PEP leaving their position, enhanced due diligence will still need to continue for at least another 12 months. This is in order to assess whether or not the person still represents a PEP-related risk, and this includes whether they’re deemed to have retained their significant influence.

The only circumstance when this isn’t the case is for the PEP’s family and known close associates. Monitoring and enhanced due diligence for these groups usually stops as soon as the PEP leaves office and is only continued if other risk factors deem it necessary.

For more information on identification, verification, risk assessment and ongoing monitoring, you can read how the PEP screening process works.

What is a PEFP?

The FATF guidance makes the specific distinction between PEPs in the UK and PEPs overseas, who must also be considered during your AML checks. A PEFP, or Politically Exposed Foreign Person, is defined by the FATF as any ‘individual who is or has been entrusted with prominent public functions by a foreign country.’

SmartSearch operates on a global scale, and our sophisticated screening software enables us to identify PEFPs just as easily as PEPs, so you can be sure we’ll never miss a beat.

How can SmartSearch help?

Our complete AML solution is a comprehensive platform that can easily identify PEPs and PEFPs, using unparalleled resources like the Dow Jones WatchList, which is updated daily.

Carry out all your AML checks in one place, from initial checks to sanctions screening and ongoing monitoring – AML compliance has never been easier. Our automated system allows you to ensure that no stone goes unturned, so you’ll always get all the information available about your potential client or customer.

Contact us now to speak to an AML and compliance expert to discover more.

Automate sanctions and PEP screening

As identified, political positions and connections can all change during a customer relationship, so relying on manual searches can make it difficult to be consistent.

This is where automation can be a huge help. As part of every AML check, SmartSearch completes PEP and sanctions screening every night and will alert users of any changes.

SmartSearch’s sanctions and PEP screening solution helps businesses when:

• Performing screening for any customers and beneficial owners during onboarding
• Identifying PEPs, their relatives and known close associates
• Helping to search for all aliases, abbreviations or any alternative spellings
• Investigating any potential matches
• Taking into account any information regarding sanctions and adverse media in conjunction with PEP status
• Monitoring all current customers to identify any changes
• Collating information and maintaining it for audit-ready checks.

FAQs

What is a PEP?

According to the Financial Action Task Force, a PEP is an individual who is (or has been) ‘entrusted domestically with prominent public functions.’ Simply put, anyone in a high-profile position within the public sector can qualify as a PEP. Some politically exposed person examples include members of parliament, high-ranking military officials, and senior executives in government-owned organisations, like the BBC or NHS.

What does politically exposed mean?

In the context of AML, to be politically exposed is to be in a prominent public position, generally resulting in significant wealth or influence. When a person is politically exposed, they present a greater risk of involvement with bribery, corruption, and other forms of financial crime, so they require monitoring more closely. This is what PEP screenings are for.

Why are PEPs high risk?

Anyone who qualifies as a PEP is automatically a high-risk customer. This is because PEPs – by the very nature of their positions – are exposed to more opportunities to be involved in different forms of corruption, like accepting bribes, tax evasion, fraud, or money laundering. This is why PEP lists are so important, as they enable you to identify and monitor politically exposed persons before going into business with them.

Are all PEPs automatically high risk?

No, this is not the case. Although PEP status does mean there’s a risk factor, businesses will still need to assess the level of risk presented on a case-by-case basis.

N.B. Domestic UK PEPs usually have a lower-risk status when compared to non-domestic PEPs. This is the case unless there are any other risk factors identified. Enhanced due diligence will still be required; however, the level of risk must be calculated and found to be proportionate to the assessed risk.

Does being a PEP mean someone has committed a crime?

No. Being a PEP is not an automatic sign of any wrongdoing, but PEPs receive additional scrutiny due to their position and the chance that they may have significant influence over public resources. This chance means they are more open to and at risk of bribery, corruption, or exploitation by criminals.

Are family members automatically PEPs?

Yes. Certain family members (spouses or partners, children and their partners, and parents) will be subject to PEP-related enhanced due diligence requirements; however, this doesn’t mean they have to hold a prominent position themselves.

What is a known close associate of a PEP?

Usually this is someone who shares beneficial ownership with a PEP. They may own a business together, have a joint financial arrangement, or maintain a close business relationship.

Whilst friendships or social connections may need to be monitored, this alone doesn’t mean they’ll be classed as a known close associate.

How often should PEP screening be carried out?

The frequency can vary, but PEP screening should be carried out during onboarding and then throughout the customer relationship.

How often these need to be completed will depend on the customer’s assessed risk. This is where automated ongoing monitoring can come in very useful, as it can conduct checks and spot any changes that have taken place between scheduled customer reviews.

Is PEP screening the same as sanctions screening?

No, these two screening checks are looking for different risk factors. PEP screening helps to find those who hold, or once held, a public position of some prominence and influence, whereas sanctions screening spots those who are subject to legal restrictions. A person can be a PEP without being sanctioned, sanctioned without being a PEP, or both.

What happens when a PEP leaves office?

Following a PEP leaving their position, enhanced due diligence should continue for 12 more months, at least.

After this timeframe, the business will need to consider if it feels the former PEP is still a risk, and if so, what level of risk they are deemed to be, and if that qualifies them for continuing with the enhanced due diligence.