In plain English
Politically exposed persons (PEPs) include, for example, heads of state, senior politicians, senior officials, judges, senior military figures and senior executives of state-owned enterprises, as well as their close family members and known close associates.
Being a PEP is not a sign of wrongdoing. It is a risk factor. International standards expect extra measures, such as senior management approval to start or continue the relationship, reasonable steps to establish the source of wealth and source of funds, and enhanced ongoing monitoring. The strictness can differ between foreign and domestic PEPs, depending on the risk.
Why it matters to a board
Corruption proceeds are a core money laundering risk. Boards should know how PEPs are identified, who approves them and how many the institution holds.
Common mistakes
- Screening only at onboarding and missing customers who later take office.
- Ignoring family members and close associates.
- Refusing all PEPs by default, which is neither required nor risk-based.
- Accepting a source-of-wealth statement without testing it.
What the standards and regulators say
- FATF Recommendations: international standards on combating money laundering and the financing of terrorism and proliferation
- UAE: Federal Decree-Law No. 10 of 2025 on anti-money laundering and combating the financing of terrorism and proliferation, and its executive regulations (Cabinet Resolution No. 134 of 2025)