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What is a Politically Exposed Person (PEP)?

The definition of a politically exposed person (PEP) is an individual with a high-profile political role, or one who has been entrusted with a prominent public function. They present a higher risk for involvement in money laundering and/or terrorist financing because of the position they hold. <br/><br/>

PEP status does not predict criminal behaviour but the additional risk exposure it brings means that the financial institutions must apply additional AML/CFT measures (<a href="/glossarycollection/enhanced-due-diligence" style="color:#48277C;" target="_blank" title="Enhanced Due Diligence"><u>EDD</u></a>) when establishing a business relationship. It also means that these institutions must conduct ongoing monitoring to ensure they don’t miss a change in a PEP’s risk profile.<br/><br/>

Providing a politically exposed person list is difficult as the criteria is broad and varies from country to country. The Financial Action Task Force (FATF) also issue frequent recommendations on PEPs, adding to the challenge of having a definitive list. <br/><br/>

However, most countries base their PEP definitions on the FATF guidance which categorise them as: <br/><br/>

- Government Officials; <br/>
- Political Party Officials; <br/>
- Senior Executives; <br/>
- Relatives and close associates.

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