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Politically Exposed Person

Posted on October 30, 2008 by Doug Cornelius
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Politically Exposed Person “PEP” is a person who may be or recently acted in the political arena of a country or has held a position in the recent past. These individuals must be tracked by financial institutions as they pose potential risk.

PEP-specific compliance legislation underlines the link between corrupt politicians, money laundering and the financing of terrorism. More than 100 countries have changed their laws related to financial services regulation, with the fight against political corruption playing a foundational role.

The Financial Action Task Force (FATF) definition of a Politically Exposed Person:

  • current or former senior official in the executive, legislative, administrative, military, or judicial branch of a foreign government (elected or not)
  • a senior official of a major foreign political party
  • a senior executive of a foreign government owned commercial enterprise, being a corporation, business or other entity formed by or for the benefit of any such individual
  • an immediate family member of such individual; meaning spouse, parents, siblings, children, and spouse’s parents or siblings
  • any individual publicly known (or actually known by the relevant financial institution) to be a close personal or professional associate.

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