What is a politically exposed person (PEP)?

A politically exposed person (PEP) refers to an individual who holds a prominent public position or function, such as heads of state, senior government officials, judicial or military officials, and executives of state-owned enterprises. PEPs may also include their immediate family members and close associates. Due to their influential roles and potential exposure to corruption risks, PEPs are subject to enhanced due diligence under anti-money laundering (AML) regulations. Financial institutions and other regulated entities typically must identify and assess the risks associated with PEPs to prevent financial crimes such as money laundering and bribery.