Politically Exposed Persons (PEPs): How Countries Define Them

Politically exposed persons are officials who have a prominent public function, such as a political office or senior appointment. The financial community places a higher risk on PEPs because they may be at a greater risk of exposure to corruption or bribery and money laundering by virtue of their position and their influence. The terms politically exposed person and senior foreign political figure are often used interchangeably, particularly in international forums. But there is no official global definition of a politically exposed person. The term PEP is typically used to refer to customers in the financial services industry, while “foreign official” refers to the risks of third-party relationships in all industries. They are not necessarily the same thing.

Regulators have been busy refining their PEP frameworks. Since 2024, the United Kingdom has finalized new PEP guidance, the European Union has adopted a single AML rulebook that will apply directly across all member states, and Australia has extended AML/CTF obligations, including PEP screening, to a new set of gatekeeper professions. This guide breaks down how FATF, Canada, the United Kingdom, the European Union, the United Nations, Singapore, Australia, and the United States each define and regulate PEPs today.

Key Highlights

• FATF’s 2013 Guidance on Recommendations 12 and 22 remains the closest thing to a global PEP standard, requiring enhanced due diligence for foreign, domestic, and international-organization PEPs.
• The UK’s Financial Conduct Authority replaced its 2017 PEP guidance with FG25/3 in July 2025, formalizing a presumption that domestic PEPs carry lower risk than foreign PEPs.
• The EU’s new AML Regulation (EU) 2024/1624 creates a single, directly applicable PEP rulebook across all member states starting July 10, 2027, backed by the new Anti-Money Laundering Authority (AMLA).
• Australia’s AUSTRAC Tranche 2 reforms, effective July 1, 2026, extend PEP and sanctions screening obligations to lawyers, accountants, real estate professionals, and other gatekeeper sectors for the first time.
• The United States continues to require enhanced due diligence for senior foreign political figures under Section 312 of the USA PATRIOT Act, with no federal requirement to treat domestic officials as PEPs.
• A risk-based, jurisdiction-aware PEP program, rather than a single global checklist, remains the most defensible approach for compliance teams.

FATF’s Definition of a Politically Exposed Person

The closest thing to an international definition comes from the updated 2013 Financial Action Task Force on Money Laundering (FATF) standard. The FATF is an independent inter-governmental body that develops and promotes policies to protect the global financial system against money laundering, terrorist financing and the financing of proliferation of weapons of mass destruction. They wrote that PEPs are “an individual who is or has been entrusted with a prominent public function. Due to their position and influence, it is recognized that many PEPs are in positions that potentially can be abused for the purpose of committing money laundering (ML) offenses and related predicate offenses, including corruption and bribery, as well as conducting activity related to terrorist financing (TF). This has been confirmed by analysis and case studies.” The FATF first issued mandatory requirements covering foreign PEPs, their family members and close associates in June 2003. However, they have since expanded the mandatory requirements to domestic PEPs and PEPs of international organizations, in line with Article 52 of the United Nations Convention Against Corruption (UNCAC).

Despite being more than a decade old, FATF has not superseded this guidance, and it remains the reference point that national regulators, including the UK, EU, and Australia, continue to build their own PEP frameworks around.

Foreign PEPs vs. Domestic PEPs

Article 52 of the UNCAC defines PEPs as “individuals who are, or have been, entrusted with prominent public functions and their family members and close associates”, and includes both domestic and foreign PEPs. The FATF’s latest definition of politically exposed persons (PEP), revised from 2003, is as follows:

• Foreign PEPs: individuals who are or have been entrusted with prominent public functions by a foreign country, for example, heads of state or heads of government, senior politicians, senior government, judicial or military officials, senior executives of state-owned corporations, and important political party officials.
• Domestic PEPs: individuals who are or have been entrusted domestically with prominent public functions, for example, Heads of State or of government, senior politicians, senior government, judicial or military officials, senior executives of state-owned corporations, and important political party officials.
• Persons who are or have been entrusted with a prominent function by a state-owned enterprise. This can include members of senior management.

For more information, view our blog on the fundamental information compliance professionals should know about politically exposed persons.

PEP Regulatory Frameworks by Country at a Glance

The table below summarizes how each jurisdiction covered in this guide currently approaches PEP identification and due diligence.

Canada: FINTRAC’s PEP Definition and Requirements

Canada goes into a bit more depth when defining a PEP. A politically exposed person (PEP) or the head of an international organization (HIO) is a person entrusted with a prominent position that typically comes with the opportunity to influence decisions and the ability to control resources. The influence and control of a PEP or HIO has put them in a position to impact policy decisions, institutions and rules of procedure in the allocation of resources and finances, which can make them vulnerable to corruption.

You can read the full definition in FINTRAC’s PEP and HIO guidance, which in November 2025 was updated alongside new money laundering indicators tied specifically to bribery and corruption, sharpening the red flags reporting entities should watch for in PEP relationships. For broader context on FINTRAC’s expectations, view our overview of FINTRAC reporting guidance and advisories.

United Kingdom: FCA’s Updated PEP Guidance (FG25/3)

The Financial Conduct Authority (FCA) requires firms to apply enhanced due diligence when dealing with those who are PEPs in the UK or in a state other than the UK, as well as family members or close associates of those PEPs, under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs).

In July 2025, the FCA replaced its 2017 guidance (FG17/6) with finalized guidance FG25/3, following a January 2024 amendment to the MLRs that established a presumption that domestic PEPs, along with their family members and close associates, present a lower risk than non-domestic PEPs unless other risk factors apply. The updated guidance also clarifies that firms should not automatically treat non-executive board members of UK civil service departments as PEPs, and confirms that junior or mid-ranking officials do not meet the definition. For more on structuring a program around these distinctions, see our overview of building an AML compliance program.

European Union: The New AML Regulation and PEPs

The European Union’s PEP requirements have historically developed through a series of anti-money laundering directives, most recently the Fifth Anti-Money Laundering Directive (AMLD5), which required member states to keep an up-to-date list of the exact functions that qualify as prominent public functions and to apply enhanced customer due diligence to PEPs on a risk-sensitive basis. Firms remained under their existing obligations to identify whether customers, or beneficial owners of customers, are PEPs, and to apply EDD measures accordingly.

That directive-based system is now being replaced. Regulation (EU) 2024/1624, the EU’s new Anti-Money Laundering Regulation (AMLR), creates a single rulebook that will apply directly across all 27 member states starting July 10, 2027, without the need for individual countries to transpose it into national law. The regulation requires obliged entities to apply enhanced due diligence to PEPs, their family members, and known close associates, and to continue treating a former PEP as higher risk for at least 12 months after they leave office. The new Anti-Money Laundering Authority (AMLA), based in Frankfurt and operational since July 1, 2025, will directly supervise the EU’s highest-risk institutions and is expected to issue further guidance on identifying PEPs and close associates ahead of the 2027 deadline.

United Nations: UNCAC’s Definition of a Public Official

The United Nations Convention Against Corruption (UNCAC) expanded the definition of PEPs with its declaration that a “Public official” shall mean:

• any person holding a legislative, executive, administrative or judicial office of a State Party, whether appointed or elected, whether permanent or temporary, whether paid or unpaid, irrespective of that person’s seniority;
• any other person who performs a public function, including for a public agency or public enterprise, or provides a public service, as defined in the domestic law of the State Party and as applied in the pertinent area of law of that State Party;
• any other person defined as a “public official” in the domestic law of a State Party (Article 2).

The UN points to the World Bank’s report on PEPs, Politically Exposed Persons: Preventive Measures for the Banking Sector, as a major policy paper to help entities strengthen preventative measures. This paper includes a number of practical tools to help guide banks, regulators, and other public authorities and includes:

• Main observations and trends in PEPs compliance and an analysis of the principal reasons for poor compliance and overall ineffectiveness of systems to detect and monitor PEPs.
• Implementation of PEPs measures by regulatory authorities and banks.
• The roles of the regulatory authority, which is responsible for providing guidance to banks and enforcing compliance, as well as the FIU, which has a role in the context of suspicious transaction reports (STRs) on PEPs.

Issues such as national cooperation, training and resources, must be addressed by all stakeholders. Banks may use a summary of good practices in the report to improve the quality and effectiveness of their PEPs measures, while regulatory authorities may use them to enhance their review and enforcement processes on PEPs. Regulatory authorities, financial intelligence units and other public authorities may use them to develop or improve guidance.

Singapore: ACRA’s PEP Definition

Singapore’s Accounting and Corporate Regulatory Authority (ACRA) defines PEPs as an individual who is or has been entrusted with any prominent public function in Singapore (domestic PEPs) or in a country or an outside territory (foreign PEPs). In this context, “prominent public function” includes the role held by a head of state, head of government, government minister, senior civil or public servant, senior judicial or military official, senior executive of a state-owned corporation, senior political party official, or a member of the legislature but excludes the role held by middle ranking or more junior officials. It also includes anyone who has been entrusted with any prominent public function by an international organization (PEPs of international organizations). A prominent public function includes the role held by a director, deputy director, member of the board and member of the senior management of an international organization, but excludes the role held by middle-ranking or more junior officials. A “close associate” of a politically exposed person means a natural person who is closely connected to a politically exposed person, either socially or professionally. This includes an immediate family member (spouse, child, adopted child, stepchild, sibling or parent) of a politically exposed person or a citizen of Singapore that the politically exposed person may have significant influence over due to the level of exposure to the PEP.

Australia: AUSTRAC’s PEP Guidance and the Tranche 2 Reforms

Australia’s AUSTRAC defines a PEP as an individual who holds a prominent public position or role in a government body or international organization, either in Australia or overseas. Immediate family members and/or close associates of these individuals are also considered PEPs. PEPs often have power over government spending and budgets, procurement processes, development approvals and grants. Examples of PEPs include government ministers or equivalent politicians, senior government executives, high-ranking judges, high-ranking military officers, or board members or executives of an international organization. Because PEPs hold positions of power and influence they can be a target for corruption and bribery attempts, and ultimately for money laundering or terrorism financing activities. However, being a PEP does not automatically mean someone is involved in criminal activities. AUSTRAC points out that in Australia, a person is not considered a PEP once they leave their high-profile position, but they may still be high risk. Former PEPs can pose a money laundering or terrorism financing risk to a business, especially if they were high-risk PEPs. When a former PEP is considered a high-risk customer, AUSTRAC suggests implementing an enhanced customer due diligence program (ECDD). ECDD involves verifying or re-verifying a customer’s identification, collecting additional information, performing more detailed analysis, performing more monitoring of transactions and getting approval from senior management.

Australia’s AML/CTF framework is also expanding well beyond banks and casinos. Under the Tranche 2 reforms, which took effect July 1, 2026, AUSTRAC extended AML/CTF obligations, including PEP and sanctions screening, to lawyers, accountants, real estate professionals, trust and company service providers, and dealers in precious metals and stones for the first time. These gatekeeper professions must now enroll with AUSTRAC, build an AML/CTF program, and apply the same PEP identification and due diligence requirements that have long applied to banks and other Tranche 1 entities. For financial institutions, the change means a wider pool of professional counterparties involved in client transactions are now themselves subject to PEP screening obligations, which can affect how third-party risk is assessed during onboarding.

United States: Senior Foreign Political Figures Under the PATRIOT Act

Not all countries subscribe to the concept of domestic PEPs with respect to regulatory requirements or the application of due diligence. For example, US law, specifically Section 312 of the USA PATRIOT Act and its implementing regulations, provides for enhanced due diligence for senior foreign political figures only. They are defined as “a current or former senior official in the executive, legislative, administrative, military, or judicial branches of a foreign government… a senior official of a major foreign political party; and a senior executive of a foreign government-owned commercial enterprise.” The U.S. government’s FinCEN agency points out that FATF issued Recommendation 12, which requires countries to ensure that financial institutions implement measures to prevent the misuse of the financial system by PEPs and to detect such potential abuse. FATF recommends that family members and close associates of PEPs should be considered PEPs because of the potential for abuse of the relationship for the purpose of moving the proceeds of crime, facilitating placement and disguise of the proceeds, as well as for terrorist financing purposes. FinCEN’s regulations similarly include family members and known close associates within the definition of a senior foreign political figure. In the United States, Recommendation 12 is implemented through FinCEN rules and guidance and by supervisory expectations outlined in the Federal Financial Institutions Examination Council (FFIEC) BSA Examination Manual. With regard to foreign PEPs, it states that banks should exercise reasonable judgment in designing and implementing policies, procedures, and processes as part of their anti-money laundering (AML) program. This could include obtaining risk-based due diligence information on PEPs, such as countries of residence of the accountholder and beneficial owner and the level of corruption and money laundering risk associated with those countries, source of wealth and funds, and information on immediate family members and close associates.

US Regulators Coordinate on PEP Due Diligence Expectations

In August 2020, a number of US agencies, including FinCEN, issued a joint statement to clarify the Bank Secrecy Act (BSA) due diligence requirements for customers who may be considered PEPs, stating that these requirements should be commensurate with the risks posed by the PEP relationship. The statement points out that the term PEP is commonly used to refer to foreign individuals who are or have been entrusted with a prominent public function, as well as their immediate family members and close associates. “By virtue of this public position or relationship, these individuals may present a higher risk that their funds may be the proceeds of corruption or other illicit activity,” the joint statement concludes. “Addressing the money-laundering threat posed by the corruption of foreign officials continues to be a national security priority for the United States.” The statement recognizes that PEP relationships present varying levels of money-laundering risk, which depends on facts and circumstances specific to the customer relationship. For example, PEPs with a limited transaction volume, a low dollar deposit account with the bank, known legitimate sources of funds, or access only to products or services that are subject to specific terms and payment schedules could reasonably be characterized as having lower customer risk profiles. The statement clarifies that, while banks must adopt appropriate risk-based procedures for conducting customer due diligence (CDD), the CDD rule does not create a regulatory requirement, and there is no supervisory expectation for banks to have unique, additional due diligence steps for customers who are considered PEPs. You can read the full statement here.

The FFIEC’s BSA/AML Examination Manual continues to reference this joint statement as the operative interagency position on PEP due diligence for bank examiners, so it remains a live compliance expectation rather than a historical one.

FinCEN Red Flags for Corrupt PEPs and Their Facilitators

The red flags noted below may help financial institutions identify suspected schemes that corrupt foreign PEPs and their facilitators may use. In applying the red flags, financial institutions are advised that no single transactional red flag necessarily indicates suspicious activity. Financial institutions should consider additional indicators and the surrounding facts and circumstances, such as a customer’s historical financial activity and whether the customer exhibits multiple red flags, before determining that a transaction is suspicious. Financial institutions should also perform additional inquiries and investigations where appropriate. Here are some common red flags:

• Use of third parties when it is not a normal business practice
• Use of third parties when it appears to shield the identity of a PEP
• Use of family members or close associates as legal owners
• Use of corporate vehicles to obscure ownership, involved industries or countries
• Declarations of information from PEPs that are inconsistent with other information, such as publicly available declarations and published official salaries
• The PEP or facilitator seeks to make use of the services of a financial institution or a non-financial business or profession that would not normally cater to foreign or high-value clients

These red flags reflect FinCEN’s published guidance for identifying suspected money laundering schemes involving corrupt PEPs and the facilitators who assist them.

PEP Screening Best Practices for Compliance Teams

When screening PEPs, there are some best practices to consider:

• Take a risk-based approach: Once a client has been identified as a foreign or domestic PEP, a pre-established risk-scoring model can help determine the appropriate level of enhanced due diligence.
• Gather information from various sources: It is necessary to pull information from various sources to help with this determination. These sources include but are not limited to up-to-date customer due diligence information, internet and media searches, commercial and in-house databases, and additional sources of information like government-issued PEP lists, asset disclosure systems, customer self-declaration statements, and general information that may be shared by competent authorities.
• Conduct enhanced due diligence: FATF recommends obtaining senior management approval, taking reasonable measures to establish the source of wealth or funds, and completing enhanced ongoing monitoring of the business relationship.

When looking to determine whether someone is a PEP, here are some tips:

• Where possible, use native character searching. Searching for names in their native language greatly reduces false positives by limiting transliteration issues. How you handle a local PEP may differ from how you handle a national PEP, since their risk rating will be different.
• Use geography to help determine risk. Not all countries pose the same risk. Lower-risk countries present the opportunity to reduce the amount of time spent reviewing close associates and relatives.
• Reduce the number of hits you receive by using date of birth and age to refine your search.
• Build a PEP risk-scoring model that works for your organization using a defined set of risk factors. For each risk category, weigh the risk factors and then build a defensible risk-scoring process.
• For low-risk PEPs, consider screening and monitoring for sanctions only. For medium-risk PEPs, screen and monitor for sanctions and regulatory actions only. For high-risk PEPs, screen and monitor against an entire database.

For a deeper walkthrough of building this process, see our dedicated guide to PEP screening, or watch our on-demand webinar on PEP and sanction list screening.

Alessa offers the ability to identify whether someone is a PEP by using internal and external lists (like those provided by risk intelligence data providers) to screen individuals. Screening can be done in native characters, and compliance professionals can build their own risk models depending on the risk appetite of the organization.

Building a Defensible, Risk-Based PEP Program

PEP rules are not static. In the span of about two years, the UK rewrote its PEP guidance, the EU replaced its directive-based framework with a single directly applicable regulation, and Australia extended PEP screening obligations to entirely new industries. A program built around a single, fixed checklist will fall behind. Compliance teams need a risk-based approach that can absorb jurisdiction-specific changes, foreign versus domestic distinctions, and evolving family member and close associate definitions without a full rebuild each time a regulator updates its guidance.

All these features allow compliance professionals to quickly and correctly identify whether an individual is a PEP and to take a risk-based approach to the relationship. Contact us today or sign up for a demo below to learn more about how Alessa can help with your PEP screening.