Understanding Politically Exposed Persons (PEPs)
One of the most common concepts in anti-money laundering and counter-terrorist financing (AML/CFT) compliance is that of the Politically Exposed Person (PEP). While the term is often associated with politicians, its scope is much broader and forms an important part of the risk-based approach applied by regulated businesses.
A PEP is an individual who holds, or has held, a prominent public function. Due to the nature of these roles and the influence that may accompany them, such individuals can be exposed to higher risks of bribery, corruption or abuse of power. For this reason, AML regulations require enhanced scrutiny of business relationships involving PEPs.
Importantly, being classified as a PEP does not imply wrongdoing or suspicious activity. Rather, it is a risk factor that requires businesses to apply additional due diligence measures to better understand and manage potential risks.
For subject persons, identifying PEPs, as well as their family members and known close associates, is an important part of customer due diligence. Where a PEP relationship is identified, obliged entities are required to apply enhanced due diligence measures and enhanced ongoing monitoring in accordance with their AML obligations.
As individuals may become, or cease to be, PEPs over time, regular screening and ongoing monitoring remain key elements of an effective AML compliance framework.
Understanding who qualifies as a PEP and the obligations that arise is essential for businesses seeking to maintain a robust and risk-based approach to AML/CFT compliance.
Further Reading
FIAU Implementing Procedures Part I (2026):
https://fiaumalta.org/app/uploads/2026/06/Implementing-Procedures-Part-1-2026-1.pdf
European Commission – Prominent Public Functions (PEPs):
https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=OJ:C_202300724
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