A politically exposed person (PEP) is an individual who is or has been entrusted with a prominent public function. PEPs are higher-risk customers for financial institutions because they have more opportunities than ordinary citizens to acquire assets through unlawful means like embezzlement and bribe-taking and thus are more likely to launder money. It is important to note that PEP status does not imply guilt or suggest a link to abuse of the financial system.
After determining that a customer is a PEP, financial institutions in most jurisdictions must apply additional AML/CFT measures to the business relationship. They are also responsible for conducting ongoing due diligence specifically tailored to the client’s PEP status. These requirements are preventive in nature and should not be interpreted as meaning that all PEPs are involved in criminal activity.
The term “politically exposed person” emerged in the late 1990s in the wake of the Abacha affair, a money laundering scandal in Nigeria which galvanised global efforts to prevent abuse of the financial system by political figures. The former Nigerian dictator San Abacha (1993–1998) transferred $321 from the Nigerian government to a secret bank account in Switzerland.
A similar term, often used interchangeably with PEP, is “Senior Foreign Political Figure”. Although there is no universal definition of who classes as a PEP, most countries base their definitions on the guidelines created by the Financial Action Task Force (FATF). The FATF defines a PEP as:
- a current or former senior official in the executive, legislative, administrative, military, or judicial branch of a government (elected or not)
- a senior official of a major political party
- a senior executive of a government owned commercial enterprise, being a corporation, business or other entity formed by or for the benefit of any such individual
- an immediate family member of such individual; meaning spouse, parents, siblings, children, and spouse’s parents or siblings
- any individual publicly known (or actually known by the relevant financial institution) to be a close personal or professional associate.
Research on corruption distinguishes four so-called syndromes of political corruption.This approach will be introduced here, as it can assist in matching the situation in a certain country with these four types. This in turn helps to understand the risks of money laundering or corruption with which a foreign financial institution or corporation is confronted. The following relationship patterns are ideal types.
How Can I Search for a Politically Exposed Person?
The WorldCompliance® screening database delivers the industry’s most robust compliance data and unmatched sanctions expertise to help your business increase transaction screening efficiency and mitigate costly risk. The database includes one of the largest listings of PEPs profiles as well as family members, State Owned Enterprises and a proprietary list of government-owned and government-linked corporations and businesses.
Another great resource is NameScan, which allows you to search for individuals by name, for free.
While most financial institutions subscribe to a Political Exposed Person (PEP) list, there are many cases where these lists lack coverage or additional research is required. Below is a list of seven free additional open sources to help you track down PEP information.
An online directory published by the CIA of “Chiefs of State and Cabinet Members of Foreign Governments.” The directory is updated weekly and can serve as a great reference aid.
A project to “collect and share data about every politician in every country in the world, in a consistent, open format that anyone can use.” Today the site has collected the data for 71,173 politicians from 233 countries.
3. CIBOD Biographies of Political Leaders (Spanish only)
Biographies on 766 political leaders from around the world. The service aims to be “useful in the fields of education, research, consulting, journalism and politics” or for any user interested in global political leadership.
Rulers.org contains a list of heads of state and heads of government of all countries and territories, going back to about 1700 in many cases.
Provided by the U.S. State Department, this publication covers foreign missions (embassies, interest sections) in the United States. It contains the names of members of the diplomatic staffs of these missions and their spouses.
6. Central Bank of Uruguay PEP List (Spanish only)
This is a PEP list made at the request of the Central Bank of Uruguay. The list includes approximately 1,800 people who hold or have held public functions of importance in Uruguay and abroad.
LittleSis.org cites itself as a “free database detailing the connections between powerful people and organizations.” The site also offers a free visualization tool named Oligrapher.