Politically exposed persons (PEPs)
FATF defines a PEP as an individual who is or has been entrusted with a prominent public function, such as a head of state, senior politician, senior government/judicial/military official, senior state-owned-enterprise executive, or senior political-party figure. The category splits into foreign PEPs, domestic PEPs, and those in international organisations, and it extends to their relatives and close associates (RCAs). PEPs are not assumed to be criminals; they are treated as higher risk because their position can be abused for bribery, corruption, and laundering the proceeds. Rules therefore require enhanced due diligence, source-of-wealth and source-of-funds checks, senior-management approval, and enhanced ongoing monitoring.
FATF definition: an individual entrusted with a prominent public function; being a PEP is about risk exposure, not proof of wrongdoing.
Three categories: foreign PEPs, domestic PEPs, and persons entrusted with a prominent function by an international organisation.
The scope extends to relatives and close associates (RCAs) - e.g. family members and known business/personal associates - who share the elevated risk.
FATF Recommendation 12 requires enhanced measures for foreign PEPs: senior-management approval to establish/continue the relationship, establishing source of funds and wealth, and enhanced ongoing monitoring.
PEP status generally persists after the person leaves office for a risk-based period rather than ending automatically on the last day in post.
In the UK, since 10 January 2024 the starting point is that a domestic (UK) PEP is treated as lower risk than a foreign PEP absent other risk factors, but EDD, senior-management approval, and SoW/SoF checks still apply.
Gambling operators must screen customers to detect PEPs and their RCAs and, once identified, apply enhanced due diligence including establishing source of wealth and funds and obtaining senior-management (rather than front-line) approval to open or continue the account. Because a PEP can never receive simplified due diligence, an operator that misclassifies or fails to detect a PEP risks both AML breaches and regulatory action from its licensing authority.
Reference, not advice. This is a teaching summary of the AML framework — not legal advice, and not an operational compliance procedure. Confirm requirements against the primary regulator and your own counsel.