Politically Exposed Person
A person who holds, or has held, a prominent public position, making them a higher money-laundering and bribery risk that operators must scrutinise more closely.
Definition
A Politically Exposed Person (PEP) is an individual entrusted with a prominent public function — such as a head of state, senior politician, senior government, judicial or military official, or senior executive of a state-owned enterprise — a definition derived from FATF Recommendation 12. The status typically extends to their immediate family members and known close associates (RCAs), because they can be used to move or hold funds on the PEP's behalf. Because PEPs are more exposed to bribery, corruption and the abuse of public funds, being identified as one triggers Enhanced Due Diligence (EDD): senior-management approval to open or continue the relationship, establishment of source of funds and source of wealth, and closer ongoing monitoring. Operators identify PEPs by screening customers against specialist databases (e.g. World-Check, Dow Jones, ComplyAdvantage) at onboarding and periodically thereafter.
Worked example
A new customer registers at a UK-licensed casino and passes standard KYC. During screening, the operator's tool returns a match: the customer is a sitting member of a foreign national parliament — a foreign PEP, which under FATF and the UK Money Laundering Regulations 2017 always requires EDD regardless of amounts staked. The compliance team escalates for senior-management sign-off before play continues, and when the customer attempts a GBP 25,000 deposit it is held pending source-of-funds evidence. The customer supplies documentation showing the funds derive from a declared parliamentary salary and rental income rather than unexplained transfers; the account is approved with a reduced monitoring threshold (for example, review at cumulative deposits of GBP 10,000 rather than a standard higher trigger). Had the match instead been a domestic PEP, a UK operator would apply a risk-based assessment (per FCA guidance FG17/6, treating domestic PEPs as lower risk absent other red flags) rather than automatic full EDD.
Why it matters
PEP handling is a core, audit-tested AML control: failing to identify a PEP and apply the right level of due diligence exposes an operator to regulatory fines, licence review or revocation, and serious reputational damage. For compliance professionals, knowing the difference between foreign, domestic and international-organisation PEPs — and calibrating EDD proportionately without unfairly de-risking or excluding legitimate customers — is central to a defensible risk-based approach.
Related
Note: Definitions rest on FATF Recommendation 12, but application varies by jurisdiction and operator. Whether domestic PEPs and international-organisation PEPs attract automatic EDD or only a risk-based assessment differs between regimes (contrast EU AMLD 4/5, UK MLR 2017 with FCA FG17/6, and the Malta/other frameworks); de-classification timelines also vary (UK MLR permits ceasing PEP treatment no sooner than 12 months after the person leaves office, subject to risk). The scope of "family members" and "close associates," and the coverage of third-party screening lists, are operator- and vendor-dependent. Verify against the operator's specific licence conditions and current guidance.