A Politically Exposed Person (PEP) is an individual who holds a prominent public position. PEPs can include government officials, military officers, judges, senior sporting officials, and high-ranking executives of state-owned enterprises.
Due to their positions of influence; the decisions they may be involved in; and their access to financial resources, PEPs are often considered at higher risk of being associated with bribery and corruption. This elevated risk is commonly considered as part of Know Your Customer (KYC) and Know Your Business (KYB) processes.
Identifying Politically Exposed Persons can be an important component of compliance with anti-money laundering (AML) and counter-terrorist financing (CTF) requirements. In many jurisdictions, regulatory frameworks provide for PEPs to be subject to enhanced due diligence (EDD) and ongoing monitoring.
Moody's solutions can help support the identification of PEPs in your network, streamline aspects of EDD workflows, and inform ongoing risk monitoring.
Get in touch to discuss PEPs screening using Moody's data and analytics tools.
Managing PEP screening can put pressure on teams, particularly if processes rely on manual reviews, fragmented data, or disconnected systems.
Moody’s KYC workflow automation is designed to support more structured and consistent workflows, with capabilities for risk‑based screening, alert handling, and review processes.
PEP screening is a core part of customer due diligence (CDD), helping to support the identification of individuals who may present heightened risk of corruption, bribery, or misuse of their position.
Effective screening typically goes beyond a simple name check, bringing together relevant identifiers and context, so potential matches can be reviewed in line with internal risk policies and regulatory expectations.
AI‑enhanced PEP screening applies analytics across large and frequently changing datasets to support the review of complex identity information as part of PEP screening.
Moody’s solutions use AI functionality designed to support entity resolution and pattern‑based matching to help customers bring together names, aliases, transliterations, and supporting identifiers with additional context surfaced for review as part of a risk‑based approach.
Moody’s solutions can support efficient workflows, helping simplify the process of identifying and assessing Politically Exposed Persons (PEPs) and their associates.
With access to a global database that contains millions of PEP profiles, organizations can use this data to help identify high-risk individuals, better understand potential connections, and track changes in status.
Moody’s solutions use AI-supported tools that can help reduce false positives, supporting teams in prioritizing higher-risk alerts.
By combining data from sanctions lists, watchlists, and media news sources, teams can bring together relevant information to support their assessment of PEP related risk.
From screening Politically Exposed Persons (PEPs) to monitoring sanctions, adverse media, and beneficial ownership, Maxsight™ can help teams gain a more holistic view of customer and third-party risk, streamline workflows, and make more informed decisions.
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A Politically Exposed Person (PEP) is generally understood to be an individual who holds, or has held, a prominent public position. While definitions vary by jurisdiction, PEPs may include senior government officials, members of the judiciary or military, executives of state owned enterprises, and individuals with comparable influence.
Because PEP status can change over time and may extend to close family members and associates, organizations typically consider PEP exposure as part of a broader KYC or KYB risk assessment, in line with applicable AML and CTF requirements.
A PEP by association refers to an individual who may be closely connected to a PEP, such as a family member, close associate, or business partner, without holding a prominent public position. Due to their relationship with a PEP, these individuals may present elevated financial crime risk that is typically considered as part of KYC or KYB assessments.
Organizations subject to anti money laundering (AML) and counter terrorist financing (CTF) requirements commonly include PEPs by association within enhanced due diligence (EDD) and monitoring processes. This may involve assessing ownership or control links to legal entities and reviewing relevant risk indicators in line with internal policies and applicable regulations.
To identify PEPs, regulated businesses typically conduct enhanced due diligence (EDD) activities that involve a range of data checks, including reviewing publicly available sources, such as government websites, media reports, and international lists of PEPs. Organizations may also draw on information obtained through third-party providers, or data provided by customers or suppliers, in accordance with applicable policies and regulatory requirements.
When a PEP is identified, regulated businesses typically assess the risk profile based on factors such as their role, jurisdiction, relevant adverse media, and ownership or control interests to support due diligence and ongoing monitoring.
Regulated businesses typically monitor PEPs for ongoing and changing risk factors as part of due diligence and monitoring practices. This may involve automated screening and data checks to review and update risk profiles over time, using information such as sanctions or watchlist alerts, relevant adverse media, and other risk indicators. Some organizations also adopt more continuous or event driven approaches to KYC, often referred to as perpetual KYC (pKYC).
An individual is generally considered a PEP from the point at which they are elected to public office or appointed to a senior or prominent public role. At the same time, close family members and associates may be considered PEPs by association.
PEP status may also change over time due to factors such as changes in personal relationships or business activities, and definitions can vary across jurisdictions, with local rules typically applying.
The point at which someone is no longer considered a PEP can vary by jurisdiction and organization. In general, PEP status may change when an individual no longer holds a relevant public position, such as following resignation, retirement, or the end of an elected term.
In some cases, individuals and their close associates or family members may continue to be treated as PEPs after leaving public office, depending on ongoing access to influence or resources and the organization’s risk based approach. As a result, organizations typically determine how long PEP status applies in line with internal policies and applicable regulatory expectations.
Disclaimer * This content is for informational purposes only and does not constitute legal, financial, compliance or other professional advice. Please consult with a qualified professional for specific legal, financial, compliance, or other professional advice. For more terms and conditions pertaining to Moody’s products and services, refer to the https://www.moodys.com/web/en/us/legal/global-disclaimer.html on Moody’s website.
Politically Exposed Persons or PEPs may be associated with certain financial crime risks, such as fraud, corruption, money laundering, making it important, within regulated onboarding and due diligence processes, to understand if someone is a PEP before they are onboarded to your customer or supplier network. And, as PEP status can change over time, organizations may also seek to maintain awareness of where PEP relationships exist across their broader business networks.
How is an ultimate beneficial owner defined? How do ultimate beneficial owner (UBO) disclosure requirements differ across the world? What information, if any, needs to be collected for due diligence, and where does that data reside? It is time to take stock of the world of UBO definitions, disclosures, and data—and consider its role in the fight against financial crime and money laundering.
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