The mayor of a large town. The brother of a serving government minister. A supreme court judge who stepped down earlier this year.
Each of them could open an account or hire your firm next week. Under one set of rules, some of them are treated as politically exposed persons. Under another, they are not.
For the mayor and the brother, the answer is set to change, though nothing about their roles or families does. The judge’s answer turns on how long ago they stepped down, and each rulebook counts that time differently.
The label comes from the job, not from anything the person has done. A politically exposed person, or PEP, is someone who holds or has held a prominent public function. Politically exposed persons include heads of state, ministers, members of parliament, senior judges, ambassadors and board members of state-owned companies.
Middle-ranking and junior officials are not covered (FATF Glossary; Directive (EU) 2015/849, Article 3(9)). Beyond that, the rulebooks differ on the roles listed, the family members covered and the time limits.
A foreign PEP holds a senior public position in another country, while a domestic PEP holds one in your own country. International organization PEPs include directors, deputy directors and board members of organizations such as the United Nations (FATF Glossary).
The country that gave the person their public role determines whether they are a foreign or domestic PEP. Their nationality or where they live does not change this classification (FATF PEP guidance, paragraph 12).
Under FATF Recommendation 12, foreign PEPs require enhanced due diligence, while domestic and international organization PEPs require these additional checks when the business relationship presents a higher risk. EU anti-money laundering rules require these measures for business relationships with all three types of PEPs.
A PEP’s relatives get the same checks, but each rulebook draws the family line in a different place. In the EU, family includes a spouse or someone treated as a spouse, children and their spouses, and parents (Directive (EU) 2015/849, Article 3(10)).
From 10 July 2027, the EU AML Regulation adds siblings of people in the top roles (Regulation (EU) 2024/1624, Article 2(1)(35)(d)). Those are heads of state, heads of government, ministers and deputy or assistant ministers.
Close associates are known business partners of a PEP, such as joint beneficial owners of a company or trust. The sole beneficial owner of a company or trust known to be set up for a PEP’s benefit counts too (Directive (EU) 2015/849, Article 3(11)). That definition does not change under the EU AML Regulation (Article 2(1)(36)).
US federal anti-money laundering rules have no PEP definition. Only the private banking rule comes close, with the term senior foreign political figure. It covers senior officials of foreign governments and major foreign political parties, and senior executives of foreign government-owned companies.
Their immediate family, known close associates and any company formed by or for them count too (31 CFR 1010.605(p)). Immediate family means spouses, parents, siblings, children, and a spouse’s parents and siblings.
FinCEN and the federal banking agencies addressed PEPs in a 2020 statement. Under the US customer due diligence rule, they said, PEPs need no special steps. They also do not count US public officials as PEPs.
These rows follow each rulebook’s own lists, and national law can add roles. The mayor, the brother and the judge sit next to two cases where all three columns agree.
|
Example |
EU today |
EU from 10 July 2027 |
France today |
|---|---|---|---|
|
Mayor of a town with 50,000 or more residents |
Only if on the national list |
PEP |
Not on the French list |
|
Brother of a government minister |
Not a family member |
Family member |
Not a family member |
|
Joint beneficial owner of a company with a PEP |
Close associate |
Close associate |
Close associate |
|
Supreme court judge who left office eight months ago |
At least 12 months, longer if risk remains |
At least 12 months, longer if risk remains |
A PEP until one year after leaving |
|
Middle-ranking official in a ministry |
Not a PEP |
Not a PEP |
Not a PEP |
A PEP check asks one question about the client and each beneficial owner. Do they hold a prominent public role, or did they hold one in the past? It also covers a PEP’s relatives and close associates.
The PEP screening process draws on three sources: what the client tells you, what a database search finds and what your team already knows. You can run a sanctions check in the same step, but a sanctions match has very different consequences.
A single “Are you a PEP?” checkbox asks the client to apply a legal definition they may never have read. Many clients cannot tell whether they are a PEP (FATF PEP guidance, paragraph 77). Relying on their answer alone would shift the firm’s duty onto them.
Instead, the FATF wants firms to draw out the facts behind each part of the definition. Ask the client about:
A client may not know that a seat on the board of a state-owned company counts.
There is no single official list of politically exposed persons. Each EU country issues a list of the roles that count, with no names on it. The European Commission combines them into one public list (Directive (EU) 2015/849, Article 20a).
Screening databases fill the gap. Yet the FATF does not require them, and they are not enough on their own (FATF PEP guidance, paragraph 61). Clustdoc’s AML screening includes PEP checks.
AMLA, the EU’s anti-money laundering authority, sent the European Commission final draft standards on customer due diligence in a report dated 30 September 2026. The Commission has not adopted them yet.
The draft PEP screening requirements ask firms to recheck existing clients as often as their risk calls for (draft Article 17). They also call for a check without delay when new information bears on PEP status or the list of roles changes.
PEP due diligence adds three measures to the normal checks (FATF Recommendation 12; Directive (EU) 2015/849, Article 20). They are checks on where the client’s wealth and funds come from, closer monitoring, and senior management approval.
For a PEP, you look past the money in this account to the client’s whole wealth. Firms should take reasonable measures to establish both the source of wealth and the source of funds (FATF Recommendation 12).
After approval, the relationship gets enhanced ongoing monitoring (Directive (EU) 2015/849, Article 20(b)(iii)). In practice, payments are checked against what the client said about their money, and the file is reviewed more often. PEP status is one of the factors a customer risk assessment rates.
All three measures carry over to the EU AML Regulation, which applies from 10 July 2027 (Article 42). From that date, senior management must also approve one-off transactions with a PEP.
Who counts as senior management depends on the size of the firm. The decision should go above the usual approval level, to a senior manager (FATF PEP guidance, paragraph 23). That is someone with the knowledge and authority to accept the risk, not always a board member (Directive (EU) 2015/849, Article 3(12)).
A monitoring committee can review PEP relationships, normally with the head of AML, compliance officers and customer service staff. Larger firms may centralize that review (FATF PEP guidance, paragraph 83).
Whoever approves should know the firm’s controls in depth and understand the client’s risk (paragraph 82). Approval is also needed to keep an existing client who becomes a PEP (FATF Recommendation 12; Directive (EU) 2015/849, Article 20).
Leaving office does not end the checks right away. The FATF sets no fixed period: a former PEP should be handled according to risk (FATF PEP guidance, paragraph 44). US private banking rules also cover former senior foreign political figures, with no time limit (31 CFR 1010.605(p)).
EU and UK rules set a floor of 12 months after the person leaves office (Directive (EU) 2015/849, Article 22; Money Laundering Regulations 2017, regulation 35(9)). In the EU, risk-sensitive measures then stop only once the PEP risk has passed. In France, a person stays a PEP until one year after leaving the role (Code monétaire et financier, Article R561-18).
Family members and close associates are where the rulebooks split. From 10 July 2027, the EU AML Regulation applies the 12-month minimum to them too (Articles 45 and 46). In the UK, the measures for them can stop when the PEP leaves office (regulation 35(11)).
The PEP rules are preventive. They do not say a PEP has done anything wrong. Refusing a client only because they are a PEP is contrary to the letter and spirit of FATF Recommendation 12 (FATF PEP guidance, paragraph 2).
The EU AML Regulation agrees, and covers family members and close associates too (recital 98). In France, PEP status does not in itself cast general suspicion on the client’s transactions (ACPR, July 2024). Instead, the focus should be on whether your controls fit that client’s risk (FATF PEP guidance, paragraph 18).
Book a demo call and map one PEP client’s family and close associates with us. Our team will then show the form questions and the approval route for that file in Clustdoc.
In banking, a PEP is a client or beneficial owner who holds or has held a prominent public role. Where the rules require it, banks add extra checks. US federal rules define no PEPs, only senior foreign political figures in private banking.
The FATF names three types: foreign, domestic and international organization PEPs. The country that gave the role decides the type, not the person's nationality or home. Your own country's ministers are domestic PEPs, and another country's ministers are foreign PEPs.
Not under FATF or EU rules, but they get the same checks. From 10 July 2027, the EU family list also covers siblings of people in the top roles, such as ministers. In the US, the private banking rule already counts siblings, and a spouse's parents and siblings.
Ask about current and past public roles of the client, close family and business partners. Screen the names against a PEP database, and use what your team already knows. Neither a self-declaration nor a database is enough on its own.
Under FATF and EU rules, not simply because the client is a PEP. The FATF guidance and the EU AML Regulation call that contrary to the letter and spirit of the rules. A bank can still refuse if its controls cannot handle the risk.
Still stitching emails, files, and approvals together?
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Claire writes about customer onboarding, digital processes, and the day-to-day challenges faced by operations teams. At Clustdoc, she focuses on practical insights: how organizations collect information, guide customers through complex steps, and improve service delivery with automation.
