Politically exposed person
PEP
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A person who holds or has held a prominent public function, as well as their family members and persons known to be close associates.
Enhanced due diligence applies to PEPs: approval by senior management, clarification of the source of funds and wealth, and closer ongoing monitoring.
In practice
If a family member or a member of a governing body in the structure is politically exposed, enhanced due diligence applies: approval of the relationship by senior management, an in-depth review of the source of wealth and closer ongoing monitoring. In practice, PEP status is checked again at each periodic review and after elections or appointments. When the function ends, the status does not lapse immediately; the remaining risk is assessed for an appropriate period.
Distinctions and common mistakes
PEP status is a risk factor, not a reason in itself to refuse a relationship. Typical mistakes are screening only the account holder and not family members and close associates, and ending the enhanced measures on the day the public function ends.
Relevant in: Switzerland · Germany · Austria · Liechtenstein · EU-wide
Related terms
- Enhanced due diligence
- Additional measures where the money-laundering risk is higher, for example for PEPs, high-risk countries or unusually complex structures.
- Screening
- Checking persons and companies against sanctions lists, PEP databases and negative media reports.
Mentioned in these guides
- Enhanced due diligence in practiceWhen enhanced due diligence applies and what to do in practice: PEPs, high-risk countries, complex structures, senior management approval, source of wealth.
- Due diligence obligations under the Swiss Anti-Money Laundering ActDue diligence under the Swiss AMLA: identifying the contracting party, establishing the beneficial owner, special clarifications, records – and practice.
- Evidencing source of wealth: the evidence matrixWhich documents evidence the source of wealth and funds – by source: earnings, sale of a business, inheritance, gift, real estate, investment income, crypto.
- PEPs: family members and close associatesWho counts as a family member or close associate of a politically exposed person, how long the status lasts and what it means for due diligence.