A Politically Exposed Person (PEP) is an individual who holds or has held a prominent public position, or has close ties to such individuals, requiring enhanced scrutiny in financial transactions due to potential corruption risks.
Key Categories
- Government officials
- Senior politicians
- Judicial officials
- Military leaders
- State enterprise executives
Risk Factors
- Position influence
- Access to funds
- Decision authority
- Network connections
- Public exposure
Monitoring Requirements
- Enhanced due diligence
- Transaction screening
- Source of wealth verification
- Relationship monitoring
- Regular reviews
Detection Methods
- Database screening
- Media monitoring
- Network analysis
- Transaction patterns
- Background checks
Best Practices
- Risk assessment
- Documentation
- Ongoing monitoring
- Clear procedures
- Staff training
PEP status requires financial institutions to implement enhanced due diligence measures while maintaining legitimate business relationships.