PEP Checks – Politically Exposed Persons Checks

What are PEP checks?

Politically exposed persons (PEPs) occupy roles that can carry heightened exposure to influence, decision-making power, and access to public resources. Because these positions can be vulnerable to misuse, PEP checks form a crucial layer of anti-money laundering (AML) and corruption-prevention frameworks, helping organisations understand and manage elevated risk at the point of onboarding and throughout a business relationship.

A PEP check is the process of identifying whether an individual is a politically exposed person—or a relative or close associate—and assessing the financial crime risk linked to their position, connections, and jurisdiction. It is a mandatory element of AML, due diligence, and KYC programmes.

What Is a PEP?

A politically exposed person is an individual who currently holds, or has previously held, a prominent public function. The purpose of the designation is not to assume wrongdoing but to acknowledge circumstances that may create increased vulnerability to bribery, undue influence, or illicit enrichment.

PEPs generally fall into three established categories:

Foreign PEPs

Individuals who hold senior public roles outside the organisation’s own jurisdiction, such as heads of state, senior legislators, senior military figures, or leadership within judicial or central banking institutions.

Domestic PEPs

Individuals who hold similar high-level positions within the home jurisdiction, for example, ministers, senior judges, and individuals with significant authority in state-owned enterprises.

International Organisation PEPs

Individuals in senior leadership or decision-making positions within international bodies such as the UN, IMF, or regional development banks.

Relatives and Close Associates (RCAs)

Under guidance from the Financial Action Task Force (FATF) and the UK’s Money Laundering Regulations (MLR), screening must extend to individuals closely connected to a PEP, whether through family ties or close personal or business relationships. RCAs may inadvertently benefit from a PEP’s influence or act as intermediaries, making visibility critical for accurate risk assessment.

Why Are PEP Checks Necessary?

PEP checks exist to protect organisations from inadvertent exposure to illicit finance, corruption, or reputational harm. They form a formal requirement under:

• FATF Recommendations
• EU Anti-Money Laundering Directives
• UK MLR 2017

Financial institutions and regulated firms face increased scrutiny where PEP monitoring is weak or inconsistently applied. Insufficient checks can lead to significant penalties, operational disruption, and lasting reputational consequences, particularly if an institution becomes associated with a PEP involved in misconduct.

Robust screening helps organisations anticipate and mitigate risk while demonstrating compliance to regulators, auditors, and counterparties.

What’s Included in a PEP Check?

Modern PEP screening blends identity verification, structured data, and contextual analysis. Core components include:

Identity Verification

Confirming the individual’s identity using authoritative documentation and trusted data sources.

PEP Screening Against Trusted Databases

Checking names, aliases, dates of birth, offices held, and connections against global, licensed PEP datasets.

Sanctions and Watchlist Screening

Identifying whether the individual appears on sanctions lists or regulatory enforcement notices.

Adverse Media Screening

Searching for coverage that signals corruption, legal exposure, governance failures, or reputational concern. See Adverse Media Screening for further detail.

Risk Classification

Assigning a preliminary risk level (low, medium, high) based on the nature of the role, jurisdictional risk, business exposure, and media landscape.

Enhanced Due Diligence (EDD)

For higher-risk PEPs, EDD may include deeper background analysis, source-of-funds checks, transaction review, and senior management approval.

When Are PEP Checks Required?

PEP checks apply at multiple stages of a customer or counterparty lifecycle.

Onboarding

Financial institutions, regulated firms, and many professional service providers must screen individuals and beneficial owners as part of standard due diligence.

Ongoing Monitoring

PEP status can change abruptly following elections, cabinet reshuffles, or organisational appointments. Continuous monitoring ensures risk profiles remain current.

Trigger Events

Changes in beneficial ownership, emerging adverse media, or new sanctions listings necessitate re-evaluation.

Third-Party and Supply-Chain Due Diligence

Organisations increasingly assess PEP exposure among suppliers, intermediaries, and joint-venture partners as part of broader corporate intelligence and ESG oversight.

Understanding PEP Risk Levels

Risk associated with a PEP varies widely. The designation itself does not imply misconduct; instead, risk is assessed through contextual indicators:

• Nature of the role: seniority, public influence, proximity to state resources
• Jurisdictional profile: levels of perceived corruption, regulatory transparency
• Exposure to public funds: oversight of procurement budgets or major infrastructure projects
• Business affiliations: links to opaque corporate structures or high-risk sectors
• Media environment: ongoing investigations, controversies, or patterns of negative reporting

This produces three broad risk categories:

Low-risk PEPs

Individuals in jurisdictions with robust governance and limited influence over fiscal decisions.

Medium-risk PEPs

Senior figures with moderate decision-making authority, or those operating in mixed-risk environments.

High-risk PEPs

Individuals with substantial control over public assets or operating in high-corruption-risk jurisdictions, or those subject to significant media scrutiny.

Challenges in PEP Screening

Organisations often encounter operational complexities when performing PEP checks:

• High rates of false positives due to common names or incomplete identifiers
• Varied definitions of PEP status across jurisdictions and industries
• Outdated or unverified information on public websites
• Limited visibility into RCAs and beneficial ownership structures
• Manual review bottlenecks in high-volume customer onboarding environments

These challenges make the quality and provenance of data a decisive factor.

The Role of Technology in Conducting PEP Checks

Technology enables more precise, scalable PEP screening. AI-supported entity resolution, natural language processing, and structured datasets help distinguish meaningful matches from irrelevant noise while identifying connections across jurisdictions.

Nexis Diligence+ delivers integrated PEP, sanctions, and adverse media screening using licensed, multilingual sources to support defensible due diligence.

The Entity Search API provides programmatic access to entity structures, beneficial ownership pathways, and network relationships, strengthening corporate intelligence workflows.

Download the Due Diligence Checklist