Compliance guide
PEPs: family members and close associates
Updated: · Leutrim Miftaraj, FLIORE · Editorial standards · Other languages: Deutsch · Français · Español
Short answer
Not only politically exposed persons themselves, but also their family members and persons known to be close associates are subject to enhanced due diligence. Typically this includes spouses, partners, children and their partners and parents, as well as business partners with shared structures. In family offices this is particularly relevant because a single office can affect several family members and structures.
Who belongs to the circle
The German GwG defines family members as spouses or registered partners, children and their spouses or partners, and parents (section 1 para. 13 GwG). A person counts as a known close associate if, for example, they are a joint beneficial owner of a company together with a PEP or maintain close business relations with them (section 1 para. 14 GwG).
The Swiss AMLA speaks of persons closely associated: natural persons who are recognisably close to a PEP for family, personal or business reasons (Art. 2a para. 2 AMLA). The Swiss definition is therefore more open and requires a case-by-case assessment.
How long the status lasts
For domestic and international PEPs under Swiss law, classification as a PEP ends 18 months after leaving office (Art. 2a para. 4 AMLA); foreign PEPs remain PEPs under Swiss law without a fixed period. In Germany, the particular risks must continue to be taken into account for at least twelve months after leaving office. In practice, a documented case-by-case assessment is advisable rather than an automatic expiry.
What it means for due diligence
- Check the plausibility of the source of wealth and of funds with particular care.
- Obtain the approval of a member of senior management for the relationship.
- Monitor transactions more closely and shorten the review interval.
- Apply the PEP link to all affected structures, not just to the individual account.
The particular situation of a family office
A family office often manages several generations and many structures. If a family member is elected to political office, this may affect the holding company, the family foundation and the siblings' accounts. Without a central picture of the family and its structures, this link easily goes unnoticed – and that is exactly what audits criticise.
One rule helps: every new piece of information about an office, an appointment or a candidacy triggers a review of all connected mandates.
In FLIORE
In FLIORE persons are linked through their roles to every structure in which they appear. A PEP flag on a person affects the risk assessment of every connected mandate; the structure chart shows which companies, foundations and trusts are affected.
At a glance
| Family members (DE) | Spouses and partners, children and their partners, parents |
|---|---|
| Close associates (CH) | Recognisably close for family, personal or business reasons |
| End of status | CH: domestic and international PEPs 18 months after leaving office; DE: at least 12 months of continued effect |
Terms on this page
- Beneficial owner
- The natural person who ultimately owns or controls a company, foundation or trust, or on whose behalf a transaction is carried out.
- Source of wealth
- How a person's total wealth came about, for example through entrepreneurship, inheritance or employment.
- Family foundation
- A foundation whose purpose lies predominantly in the interest of one or more families.
Frequently asked questions
Are a PEP's siblings automatically covered?
Under the German definition, siblings are not among the family members. They can, however, be close associates, for example where there are shared companies. Under Swiss law this must be assessed case by case.
What applies to beneficiaries of a family foundation with a PEP link?
If a beneficiary is a PEP or closely associated with one, enhanced due diligence applies to the relationship with the foundation. This also affects the foundation's bank relationships.
How does the family office learn of a new office?
Through regular PEP screening and a clear agreement with the family to report changes. Together they close the gap that screening alone can leave.
Must the relationship end when a family member becomes a PEP?
No. PEP status calls for enhanced due diligence, not for the end of the relationship. Only if the obligations cannot be fulfilled may the relationship not be continued.
Sources
- German Money Laundering Act (GwG), section 1 – Definitions
- Swiss Anti-Money Laundering Act (AMLA/GwG, SR 955.0) – Fedlex
- German Money Laundering Act (GwG), section 15 – Enhanced due diligence obligations
- FATF Recommendations – Financial Action Task Force
This page provides orientation and does not replace legal or tax advice. The cited legal sources in their applicable version are authoritative.
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