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What is and how do I screen a PEP?

PEP stands for Politically Exposed Person. Due to their influential position, a higher risk of money laundering, for example, is assumed. Some of them have been accused of acts like bribes, tax evasion and terrorist financing. Now you are probably wondering: “What makes someone a PEP and how do I check?” We provide the answer on this page.

When is someone a PEP?

Someone is labelled a Politically Exposed Person if he or she holds a (high) political or official position. Or if he or she previously held a prominent political position. This applies to both foreign and domestic politically exposed persons.

Direct relatives or acquaintances are also among this group. Family members include spouses, children, parents and siblings, while close associates may be business partners, personal advisers or others with close ties to the PEP.

Some examples of Politically Exposed Persons (Article 2 of the AML Implementing Decree 2018) are:

  • Ambassadors, chargé d'affaires or senior officers of the armed forces
  • Heads of state, government leaders, ministers and deputy ministers and members of parliament of state secretaries
  • Member of the board of a political party
  • Directors of international organizations
  • Member of Supreme Court and Constitutional Court
  • Members of audit offices
  • Member of the Governing Council of Central Bank
  • Members of supervisory or management body or governing body of state-owned enterprises.


How do you proceed if you are (or suspect you are) dealing with a PEP?

Do you believe you are dealing with a PEP? You must conduct enhanced Customer Due Diligence (CDD). Because an extra duty of care is required for a PEP, the origin of the assets must, among other things, be verified.

It is often thought that extensive investigation, in the case of a long-term relationship, is no longer necessary. This is incorrect, as risks can also occur during the client relationship. Ask your client to issue a PEP statement based on a clear explanation and (updated) substantiation. In addition, ask your firm’s senior management for permission to maintain the relationship or transaction.

Continuous monitoring and periodic reviews are crucial. You should continually assess the PEPs and ensure that the information gathered is always up-to-date so that you can take timely action in response to any changes in risk profiles.


RegLab for screening a PEP

Do you also spend a lot of time on a Know Your Customer (KYC) and Customer Due Diligence policy to comply with AML requirements, including the PEP investigation? Despite the frustrations they may generate, the KYC principles are becoming increasingly important. RegLab helps firms to quickly, safely and easily comply with Know your Customer policy laws and regulations.

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