Politically exposed person (PEP)

PEP screening is the process of checking customers or business partners against PEP lists during anti-money laundering (AML) onboarding and monitoring. Financial institutions must apply enhanced due diligence (EDD) when dealing with PEPs, including source-of-funds verification and ongoing transaction monitoring.

In employment or vendor onboarding, PEP status is checked to assess reputational and regulatory risk. A PEP designation doesn't mean someone is criminal, but it raises the need for closer scrutiny. Background checks often include international sanctions databases, adverse media, and watchlists.

PEP status is determined by evaluating public roles (current and past), their proximity to power, and the country’s PEP classification framework. Some jurisdictions maintain public registries, while most institutions rely on third-party data providers like World-Check or Dow Jones to identify PEPs. Relatives and close associates (RCAs) of PEPs are also included under many regulations.