In the United States, a PEP is generally considered to be an individual who holds a prominent public position, such as a high-ranking government official, senior executive of a state-owned corporation, or senior politician.
Examples of PEPs in the United States might include the President, Vice President, members of Congress, cabinet members, and governors. Financial institutions and other organizations are typically required to conduct enhanced due diligence when dealing with PEPs in order to identify and mitigate potential risks.
This may include more thorough background checks and ongoing monitoring of the individual’s transactions and activities.
Although PEP status itself does not incriminate individuals or entities, it does put the customer into a higher risk category.
Note that, from a U.S. regulatory perspective. U.S. public officials are not considered to be PEPs.
The following guidance is provided to clarify what is meant by the terms ‘prominent public function’, ‘immediate family member’, and ‘close associate’.
Prominent Public Functions
- Heads of state, heads of government, ministers, and deputy or assistant ministers;
- Members of parliaments;
- Members of supreme courts, of constitutional courts or of other high-level judicial bodies whose decisions are not generally subject to further appeal, except in exceptional circumstances;
- Members of courts of auditors or of the boards of central banks;
- Ambassadors, charges d’affaires and high-ranking officers in the armed forces; and (other than in respect of relevant positions at Community and international level);
- Members of the administrative, management or supervisory boards of State-owned enterprises.
These categories do not include middle-ranking or more junior officials exercising/discharging their duties at levels lower than national.
Reference:
See “Joint Statement on Bank Secrecy Act Due Diligence Requirements for Customers Who May Be Considered Politically Exposed Persons, https://www.fincen.gov/news/news-releases/agencies-issue-statement-bank-secrecy-act-due-diligence-requirements-customers
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This page was last updated on July 17, 2023.
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