# Politically exposed person (PEP)

**A politically exposed person (PEP) is a natural person who is or has been entrusted with a prominent public function — for example a head of state, minister, member of parliament, supreme-court judge, ambassador, or member of the board of a central bank or a state-owned enterprise.** Middle-ranking and junior officials are not PEPs.

*Also called:* PEP. Their family members and close associates are often abbreviated [RCA](/glossary/relatives-and-close-associates/).

## Why it matters for PSPs and EMIs

A PEP can be the customer or a beneficial owner of a business customer (a PEP who is only a director is not covered by the PEP measures as such, but is a risk factor to consider: EBA/GL/2021/02, Guideline 2). Holding a public function is not wrongdoing, but it brings a higher risk of corruption-related money laundering, so EU law requires specific additional measures when the customer or a beneficial owner is a PEP — and senior management must approve the relationship.

## What the law says

- **Definition.** AMLR Art. 2(1)(34): natural persons entrusted with prominent public functions in a Member State (including heads of state and government, ministers and deputy or assistant ministers; members of parliament; members of governing bodies of political parties with seats in national bodies or in regional or local bodies representing at least 50 000 inhabitants; members of supreme and constitutional courts; members of courts of auditors and central bank boards; ambassadors and high-ranking officers in the armed forces; board members of certain state- or regionally-controlled enterprises; heads of regional and local authorities with at least 50 000 inhabitants — Member States may set lower thresholds, Art. 2(3)), in international organisations, at Union level, and equivalent functions in third countries.
- **Not junior officials.** AMLR Art. 2(2).
- **Duty to determine.** AMLR Art. 20(1)(g): determine whether the customer, its beneficial owner and, where relevant, the person on whose behalf a transaction is carried out is a PEP, a family member or a person known to be a close associate.
- **Measures.** AMLR Art. 42(1): senior management approval to establish or continue the relationship; adequate measures to establish the source of wealth and source of funds; enhanced ongoing monitoring.
- **Official lists.** AMLR Art. 43: each Member State keeps a list of the exact functions that qualify; the Commission assembles a single list.
- **Former PEPs.** AMLR Art. 45: continue to take the continuing risk into account and apply measures for at least 12 months after the function ends, and longer while the risk remains.
- **Family and close associates.** AMLR Art. 46.
- **Until 10 July 2027.** Directive (EU) 2015/849, Art. 3(9) and Arts. 20 to 23, as transposed nationally. EU law applies these measures to domestic and foreign PEPs alike.
- **International standard.** FATF Recommendation 12 and the FATF Guidance on Politically Exposed Persons (Recommendations 12 and 22).

## How ProofVolt handles it

ProofVolt screens natural-person customers, and the directors and beneficial owners of business customers, for politically-exposed-person status. A match on a name alone stays a candidate until an agreeing date of birth or an officer's review confirms it. A confirmed PEP moves the case to enhanced due diligence: a source-of-wealth declaration is added to the documents the customer is asked for, and approval needs a second approver.

## Related

- [Relatives and close associates (RCA)](/glossary/relatives-and-close-associates/)
- [Source of wealth](/glossary/source-of-wealth/)
- [Enhanced due diligence (EDD)](/glossary/enhanced-due-diligence/)
- [Four-eyes principle](/glossary/four-eyes-principle/)

Canonical: https://proofvolt.eu/glossary/politically-exposed-person/