Politically Exposed Persons (PEPs) are people who hold, or have held, important public positions, such as senior politicians, judges, military leaders, or executives of state-owned companies. Because these roles involve power and access to public money, PEPs are considered higher risk under Anti-Money Laundering (AML) rules. This does not mean PEPs are doing anything wrong; it simply means extra care is needed.

AML rules also extend to a PEP’s close family members and close associates. This is because money linked to corruption or bribery may sometimes be moved through people close to the PEP rather than through the PEP directly.

When an organization deals with a PEP, it must apply stronger checks than usual. This includes identifying the person as a PEP, carrying out extra due diligence, and understanding where their wealth and funds come from. Senior management approval is often required before starting or continuing a business relationship with a PEP.

Once the relationship is in place, transactions must be monitored more closely to spot anything unusual or suspicious. Even after a person leaves public office, they may still be treated as a PEP for a period of time, depending on the risk.

In short, AML requirements for PEPs focus on managing risk through increased oversight, while still allowing fair access to financial services.