PEP - Learn about what a Politically Expelled Person list is

What Is PEP (Politically Exposed Person)?

PEPs, or Politically Exposed Persons, are individuals who are involved in politics or hold high office in governments.

If your business is subject to Anti-Money Laundering (AML) laws and regulations, it’s important that you can determine whether you’re involved with PEPs as they are often come with a higher risk of money laundering and financing of terrorism.

On this page we try to answer:

  • What is a PEP (Politically Exposed Person)?
  • How does a PEP list work?
  • What do you need to do as a business if you have a client who is a PEP?
  • How the NewBanking Identity platform can help you check your clients identity and do PEP screenings.
PEP image 1

What is a PEP?

A PEP (Politically Exposed Person) is an individual who has a high-ranking job in a government or some other type of political position. In other words, it’s a person who possesses a certain form of political and institutional power.

Because of that power they’re considered high risk in relation to money laundering, blackmail, bribery and other types of corruption – both voluntary and involuntary. Spouses, family and close business partners are also considered PEP, as their relationship can be exploited by criminals to pressure the person in the position of power.

Politically Exposed Persons illustration

Typically, PEPs include:

The Anti-Money Laundering Directive requires all businesses subjected to the directive to be extra careful when they have clients or customers who are PEPs – and therefore constitutes an elevated risk.

Because of this, it can be difficult for businesses to evaluate, by themselves, whether a current or potential client is a PEP. For that reason EU governments have established lists of present and former PEPs, the so-called PEP lists.

What is a PEP list?

A PEP list is an overview of people who are presently or have formerly been classified by the EU as a politically exposed person.

The PEP lists exist in order to make it easier for businesses to assess whether their clients are subject to aggravated circumstances. Every European government has its own PEP list that they maintain.

PEP lists illustration

It’s important to note that the lists are not seen as sufficient evidence of PEP status. It’s possible that a person is considered a PEP despite not appearing on the list, or if they have not yet been added.

That the PEP lists are incomplete – as well as the fact that spouses, close business partners etc. are also considered PEPs – makes it difficult for businesses to live up to the PEP requirement without accessing external data sources that have specialized in maintaining updated lists with all people defined as PEPs.

In these cases, a platform like NewBanking Identity can help. With our AML solution you can quickly and easily perform PEP checks of clients and customers by screening a number of PEP lists all over Europe.

What do you need to do as a business if your client is a PEP?

If you get involved with a PEP client, you need to conduct an enhanced KYC check and implement greater supervision and more audits of their business venture.

How you conduct an enhanced KYC check, you can read more about in our article about KYC (Know Your Customer).

The audit itself can, among other things, consist of you investigating their financial transactions more carefully as well as evaluating your client relationship in relation to their current risk assessment.

business account dashboard

NewBanking Identity makes it easy to perform a security check and cross-reference with PEP lists

With NewBankings platform you can easily verify your clients’ identity and cross-reference with a number of well-established PEP lists.

Furthermore, our platform ensures that your clients’ personal data is handled responsibly and in accordance with GDPR.