PEP

1. Definition #

A PEP is a person entrusted with a prominent public function, or a relevant family member or close associate, whose position may create corruption, bribery or influence-risk exposure.

2. Why It Matters #

PEP status is not automatically criminal and not automatically prohibited. It is a risk trigger requiring correct classification, EDD where needed and documented decision-making.

3. Common Triggers and Use Context #

• Screening identifies possible PEP.
• Customer declares PEP status.
• UBO, director, controller, signatory or close associate appears to be a PEP.
• Adverse media suggests political office or state-owned enterprise control.
• Customer has unexplained wealth linked to public office.

4. Source Basis #

• SRC-FATF-001: Recommendation 12.
• Implementation configuration may define domestic PEPs, declassification periods, family/associate scope and senior approval requirements differently.

5. PEP categories #

• Foreign PEP.
• Domestic PEP.
• International organisation PEP.
• Family member of PEP.
• Close associate of PEP.
• Former PEP, depending on implementation policy and residual risk.

6. How It Is Used in AML/KYC/KYB #

1. Confirm identity match and avoid namesake errors.
2. Identify PEP category.
3. Identify public role, geographic/organisational context, dates, authority and relevance.
4. Identify whether the PEP is customer, UBO, controller, signatory, family member or close associate.
5. Assess geographic exposure risk, sector risk and transaction risk.
6. Collect or assess source of wealth and source of funds where required.
7. Check adverse media and sanctions exposure.
8. Determine need for senior approval and enhanced ongoing monitoring.
9. Produce PEP memo.
10. Escalate to MLRO if high-risk or unexplained.

7. Evidence to collect #

• PEP screening result.
• Public official profile or official biography.
• Dates of office and current/former status.
• Relationship to customer/UBO/controller.
• Source of wealth/source of funds evidence.
• Adverse media search results.
• Senior approval record where required.

8. Red flags #

Medium#

• Former PEP with low-risk profile but limited information.
• Domestic PEP with low-value/simple product.
• PEP family member with plausible independent income.

High#

• Foreign PEP in high-corruption operating context.
• PEP has unexplained wealth or complex asset-holding structure.
• PEP uses nominee, relative or offshore entity.
• PEP has procurement, licensing, customs, defence, energy or state-enterprise influence.

Critical#

• PEP linked to sanctions, corruption, embezzlement, bribery or organised crime.
• Source of wealth contradicts public information.
• Customer hides PEP connection.
• Possible misuse of public funds.

9. Decision matrix #

10. Output Pattern #

# PEP Review Memo

Subject: [name]
Relationship to customer: [customer/UBO/director/signatory/family or close associate]
PEP category: [foreign/domestic/international organisation/family or close associate/former]
Role and geographic/organisational context: [details]
Dates/current status: [details]
Risk factors: [geography/sector/wealth/adverse media]
Source of wealth/funds: [assessment]
Senior approval required: [yes/no/local basis]
Recommendation: [false match/proceed/EDD/escalate/decline]
Source basis: SRC-FATF-001

Source of wealth, corruption and FIU case context#

Higher-risk PEP relationships may require a separate SoW/SoF assessment. Use Source of Wealth and Source of Funds for the evidence hierarchy, plausibility test and review note.

For higher-risk PEP relationships, use:

• SRC-WOLF-004 for Source of Wealth and Source of Funds evidence framing;
• SRC-EGMONT-BECA-001 for FIU case examples involving bribery, corruption and tax evasion;
• SRC-STAR-NOMINEES-001 for nominee and concealed-control questions.

These materials support questions and evidence design. They do not turn PEP status into an allegation or replace the applicable legal definition and approval rules.