Politically exposed person (PEP)
A politically exposed person (PEP) is someone who holds, or has held, a prominent public function, such as a head of state, minister, member of parliament, senior judge or board member of a state-owned enterprise. EU anti-money laundering rules require banks, EMIs and other obliged entities to identify PEPs, their family members and close associates, and to apply enhanced due diligence to them. PEP status marks higher risk, not wrongdoing.
Who counts as a PEP
The EU Anti-Money Laundering Directive (AMLD) lists the functions that make someone a PEP:- heads of state, heads of government, ministers and deputy or assistant ministers
- members of parliament or similar legislative bodies
- members of the governing bodies of political parties
- members of supreme courts, constitutional courts and other high-level courts whose decisions can't usually be appealed
- members of courts of auditors and of the boards of central banks
- ambassadors, chargés d'affaires and high-ranking officers in the armed forces
- members of the management or supervisory bodies of state-owned enterprises
- directors, deputy directors and board members of international organisations
Family members and close associates
The rules also cover people around the PEP, because they can be used to hold or move money on the PEP's behalf.| Group | Who it includes |
|---|---|
| Family members | Spouse or equivalent partner, children and their spouses or partners, parents |
| Close associates | Anyone who jointly owns a company or legal arrangement with a PEP, or has another close business relationship with one; anyone who is the sole owner of an entity set up for a PEP's benefit |
What happens when a client is a PEP
The provider must apply enhanced due diligence on top of standard customer due diligence:- Senior management must approve opening or continuing the relationship.
- The provider must establish the source of wealth and source of funds involved.
- The relationship gets enhanced ongoing monitoring.
How PEP screening works
Providers check the names of clients, directors and beneficial owners against PEP databases at onboarding, then rescreen regularly, because people take up and leave office. Common names produce false positives, so an analyst confirms a match with date of birth, nationality and role before anything changes.PEP screening usually runs alongside sanctions screening and adverse media screening.When PEP status ends
After someone leaves a prominent public function, providers must keep treating them as a PEP for at least 12 months, and longer for as long as they still present a higher risk.What changes under the AMLR
From 10 July 2027, the EU Anti-Money Laundering Regulation (AMLR) replaces national rules with one regulation that applies directly in every member state. Its PEP rules sit in Articles 42 to 46, and the new EU anti-money laundering authority (AMLA) must publish guidelines by 10 July 2027 on identifying close associates and on the risk levels of different PEP categories.FAQ
No. PEP status is a preventive risk marker. It means the provider looks more closely at the source of wealth and the account's activity.
Yes, if the provider can manage the risk. Expect senior management approval, source of wealth evidence and a longer review.
Under EU rules the spouse is a family member of a PEP, which brings the same enhanced checks.
At least 12 months, and longer while the risk remains.
Last reviewed October 23, 2026Disclaimer
This publication is provided for general information purposes and does not constitute legal, tax, or other professional advice from Narvi Payments Oy Ab or its affiliates, and it is not intended as a substitute for obtaining advice from a financial advisor or any other professional.
This publication is provided for general information purposes and does not constitute legal, tax, or other professional advice from Narvi Payments Oy Ab or its affiliates, and it is not intended as a substitute for obtaining advice from a financial advisor or any other professional.
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