Politically Exposed Person (PEP) — the UK guide
Who counts as a PEP, how foreign and UK domestic treatment diverged after 2023, what EDD looks like in practice, and how to step PEP status down without dropping the ball.
By Mehmood Rajoka · Last updated 2026-06-08
TL;DR — Quick Summary
- •A Politically Exposed Person (PEP) is an individual who holds or has held a prominent public function — head of state, senior government minister, senior civil servant, judge, military officer, senior executive of a state-owned enterprise — together with their close family members and known associates.
- •PEPs carry elevated money-laundering risk because their position gives them potential access to public funds, political influence, or both. UK law requires Enhanced Due Diligence (EDD) for every PEP relationship under MLR 2017 Regulation 35.
- •Since the Financial Services and Markets Act 2023 (s.78) and the FCA's PS24/4 guidance, UK domestic PEPs are by default treated as lower risk than foreign PEPs — but they remain in scope and require risk-rated EDD.
- •PEP status extends beyond the office holder to family members (spouses, civil partners, parents, children, and children's spouses) and known close associates (business partners and joint beneficial owners).
- •A positive PEP match does not mean refusing to act. It means applying EDD: senior management approval, source-of-funds and source-of-wealth checks, and enhanced ongoing monitoring throughout the relationship.
Answer-first summary
What is a Politically Exposed Person?
A Politically Exposed Person (PEP) is an individual who holds or has held a prominent public function — heads of state, senior politicians and government ministers, senior judges, senior military and security officials, members of central bank boards, senior executives of state-owned enterprises, ambassadors, and senior officials of international organisations. PEP status extends to immediate family members and known close associates. The reason PEPs carry elevated money-laundering risk is access — to public funds, to political influence, or both. UK law (MLR 2017 Regulation 35) requires Enhanced Due Diligence (EDD) for every PEP relationship. Since the Financial Services and Markets Act 2023 and the FCA's PS24/4 guidance, UK domestic PEPs are treated by default as lower risk than foreign PEPs — but EDD remains required.
- MLR 2017 Reg 35 — EDD mandatory for every PEP relationship
- PEP status extends to family members and known close associates
- Foreign PEPs and UK domestic PEPs diverge in risk-treatment default since 2023
- EDD has 5 components: senior approval, source of funds, source of wealth, enhanced monitoring, adverse media
Who counts as a PEP
Eight prominent-public-function categories under MLR 2017 Regulation 35(12). The list is non-exhaustive — firms must apply judgement at the edges, but these are the statutory anchors:
Heads of state and government
Presidents, prime ministers, heads of government, monarchs in executive roles. The most senior category — invariably treated as higher-risk foreign PEPs even after leaving office. Includes equivalent roles in supra-national bodies (UN Secretary-General, EU Commission President, etc.).
Senior politicians and ministers
Cabinet members, senior government ministers, members of governing bodies of political parties. For UK domestic politics this includes UK Cabinet ministers and Whips, members of the devolved governments (Scottish Cabinet, Welsh Cabinet, Northern Ireland Executive), and members of the House of Lords with current or recent ministerial office.
Senior judges
Members of supreme courts, constitutional courts, and other high-level judicial bodies whose decisions are not generally subject to further appeal. Includes UK Supreme Court justices, Court of Appeal judges, and equivalents in Scotland and Northern Ireland.
Senior military and security officials
High-ranking officers — typically two-star generals and above — and senior officials in security and intelligence services. Equivalent positions in overseas military and intelligence apparatus are foreign PEPs.
Members of central banks and audit bodies
Members of the boards of central banks and members of courts of auditors. For the UK this means the Bank of England's Monetary Policy Committee, Financial Policy Committee, and senior members of the National Audit Office.
Senior executives of state-owned enterprises
Directors, deputy directors, and members of the board (or equivalent function) of state-owned enterprises. For the UK this includes senior executives of bodies such as the Bank of England, the NHS at executive level, and major state-owned companies.
Ambassadors and senior diplomatic representatives
Ambassadors, chargés d'affaires, and high-ranking officers in armed forces serving in diplomatic capacity. Foreign ambassadors based in the UK fall in this category.
Senior officials of international organisations
Directors, deputy directors, and members of the board of supranational organisations (the UN, the World Bank, the IMF, the IBRD). Their political exposure is treated similarly to that of senior national-government PEPs.
Family members of a PEP
MLR 2017 Reg 35(12) defines the statutory family-member categories. Family member PEP status flows from the principal PEP's status:
- Spouses and civil partners
- Parents — both of the PEP and of the PEP's spouse or civil partner
- Children of the PEP
- Spouses and civil partners of the PEP's children
- Siblings (in some risk-assessed frameworks, though MLR 2017 limits the statutory list to the categories above; firm policies often extend to siblings for higher-risk PEPs)
Known close associates
The 'known' qualifier matters — the obligation is to identify close associates the firm becomes aware of through ordinary CDD, not to investigate every commercial contact:
- Individuals known to be joint beneficial owners of legal entities or arrangements with the PEP
- Individuals known to maintain other close business relationships with the PEP
- Individuals who are sole beneficial owners of a legal entity or arrangement that is known to be set up for the de facto benefit of the PEP
- Long-term romantic partners (where formal civil-partnership or marriage isn't in place)
- Trusted advisers and senior professional intermediaries who routinely handle a PEP's significant business or financial affairs (assessment-dependent, not statutory)
The 2023 UK domestic PEP change
The Financial Services and Markets Act 2023 (s.78) introduced a distinction between UK domestic PEPs and foreign PEPs. The FCA's PS24/4 guidance — published in 2024 — operationalised it. The practical effect:
- Default starting position is 'low risk' rather than 'high risk' — the opposite of foreign PEPs
- EDD remains required but the standard of evidence demanded should be proportionate to the assessed lower risk
- Family members and close associates of UK domestic PEPs receive the same lower-risk default starting position
- Where additional risk factors apply (jurisdiction, sector, transaction pattern, adverse media), the assessment escalates back to standard or higher-risk treatment
- Documentation of the risk decision is mandatory — supervisors expect firms to evidence the reasoning that supports the lower-risk treatment
The reform was prompted by parliamentary criticism that UK MPs and their family members were being routinely refused financial services. The change does not mean 'UK PEPs are not PEPs' — it means the EDD intensity starts at a different baseline.
Enhanced Due Diligence for PEPs — the five steps
MLR 2017 Reg 35(5) lists the EDD components. Every PEP relationship requires all five, calibrated to the assessed risk level:
Senior management approval
Onboarding (or continuing) a PEP client requires explicit, documented approval from senior management — partner level or director level. The approval must record the rationale for accepting the risk.
Source of funds evidence
Establish and document where the specific funds for the transaction or relationship come from. Documentary evidence — bank statements, sale contracts, salary contracts — not verbal assurance.
Source of wealth evidence
Establish and document the origin of the client's total net worth — built through business, inheritance, investments, salary. Cross-check against public information and the PEP's known historical earning capacity.
Enhanced ongoing monitoring
Apply a higher monitoring cadence than for non-PEP clients. Quarterly file reviews are typical for higher-risk PEPs; semi-annual or annual reviews for lower-risk UK domestic PEPs. Watch for transactions inconsistent with the documented profile.
Adverse media screening
Screen the PEP, their family, and known close associates against adverse media databases — historic and ongoing. Negative news findings change the risk picture and may trigger a SAR.
Step-down — how long PEP status lasts
There is no statutory expiry for PEP status. UK practice on step-down:
- Foreign PEPs: HM Treasury guidance suggests a 12-month minimum from leaving office before any reduction in EDD intensity. Most firms maintain enhanced monitoring for longer where the PEP retains active political influence (former ministers who continue to lobby, etc.).
- UK domestic PEPs: under FCA PS24/4, the default lower-risk starting position applies during office and may continue after office where no risk factors emerge.
- Family members and close associates: their PEP status typically falls when the principal PEP's status falls, subject to the same residual-risk-factor checks.
- Step-down is a documented risk decision, not an automatic process. The MLCO/MLRO records the rationale and the change in monitoring cadence.
Five common PEP mistakes
Treating PEP screening as one-off
PEP status changes over time — politicians come into office, leave office, family members are appointed. Static screening at onboarding only catches one moment. Ongoing screening at quarterly intervals (minimum) catches changes.
Refusing to act because of a PEP match
A positive PEP match is not in itself grounds for refusing the relationship. It is grounds for EDD. Reflexive refusal can be its own regulatory problem (discrimination against UK domestic PEPs is specifically called out in FCA guidance).
Skipping family member and close associate screening
PEP status extends statutorily to family members and (more broadly) to close associates. A PEP's spouse or business partner accessing your firm's services without being recognised as a PEP-linked individual is a common supervisory finding.
Documenting 'PEP — no concern' without evidence
The Source of Funds and Source of Wealth checks are the substance of PEP EDD. Recording the conclusion without recording the evidence is a documented MLR 2017 failing — and means the firm can't reproduce its risk reasoning under inspection.
Not adjusting cadence for UK domestic vs foreign
Post-2023, applying the same intense EDD cadence to a UK back-bench MP as to a foreign sanctioned-jurisdiction minister is disproportionate. FCA guidance expects risk-rated EDD, with the UK domestic baseline starting lower.
FAQ
Answer-first summary
What is a Politically Exposed Person?
A Politically Exposed Person (PEP) is an individual who holds or has held a prominent public function — heads of state, senior politicians and government ministers, senior judges, senior military and security officials, members of central bank boards, senior executives of state-owned enterprises, ambassadors, and senior officials of international organisations. PEP status extends to the immediate family members of these office holders and to their known close associates. PEPs are treated as carrying elevated money-laundering risk because their position gives them potential access to public funds or political influence, and they are subject to Enhanced Due Diligence (EDD) under MLR 2017 Regulation 35.
Answer-first summary
What's the difference between a foreign PEP and a UK domestic PEP?
Foreign PEPs are individuals holding equivalent prominent public functions in a foreign jurisdiction — including supranational organisations like the UN, EU, World Bank, and IMF. UK domestic PEPs are individuals holding those functions in the UK (or in UK devolved governments and parliaments). Since the Financial Services and Markets Act 2023 (s.78) and the FCA's PS24/4 guidance, the default risk treatment differs: UK domestic PEPs start with a lower-risk default, while foreign PEPs retain the standard EDD baseline. Both remain in scope under MLR 2017 — the change is to the starting risk position, not to whether EDD applies at all.
Answer-first summary
Who counts as a PEP's family member under UK law?
MLR 2017 Regulation 35(12) lists the statutory family members: spouses or civil partners; parents (of both the PEP and the PEP's spouse or civil partner); children; and the spouses or civil partners of those children. Many firms extend the definition in policy to include siblings, particularly for higher-risk PEPs, but the statutory list is narrower. Family-member PEP status flows from the principal PEP's status — when the principal's status falls, the family member's status falls too (subject to any independent risk factors).
Answer-first summary
Who counts as a known close associate of a PEP?
Individuals known to be joint beneficial owners of legal entities or arrangements with the PEP; individuals known to maintain other close business relationships with the PEP; and individuals who are sole beneficial owners of a legal entity or arrangement set up for the de facto benefit of the PEP. The 'known' qualifier matters — the obligation is to identify close associates the firm becomes aware of through ordinary CDD, not to investigate every commercial contact. Adverse media and Companies House screening are the typical detection routes.
Answer-first summary
What is Enhanced Due Diligence for PEPs?
Under MLR 2017 Regulation 35, EDD for a PEP relationship requires five components. (1) Senior management approval before establishing or continuing the relationship. (2) Source of funds evidence — where the specific transaction funds come from, with documentary support. (3) Source of wealth evidence — the origin of the client's overall net worth. (4) Enhanced ongoing monitoring — more frequent file reviews than for non-PEP clients, calibrated to risk. (5) Adverse media screening against historic and ongoing news sources. All five are documented obligations, not optional add-ons.
Answer-first summary
How long does PEP status last after leaving office?
There is no statutory expiry. HM Treasury guidance suggests a 12-month minimum step-down review period for foreign PEPs leaving prominent public functions. In practice, most firms maintain enhanced monitoring for considerably longer — particularly where the former PEP retains active political influence (former ministers continuing to lobby, advisory roles, etc.). UK domestic PEPs under FCA PS24/4 retain a lower-risk default both during and after office where no risk factors emerge. Any step-down in EDD intensity must be documented as a risk decision, not applied automatically.
Answer-first summary
Can I refuse to act for a Politically Exposed Person?
Refusing on the basis of PEP status alone is not the regulatory expectation — it can itself be a problem, particularly for UK domestic PEPs where FCA guidance has specifically called out disproportionate refusal. The expected response to a positive PEP match is to apply Enhanced Due Diligence, document the risk decision, and obtain senior management approval. If the EDD process surfaces evidence that the relationship presents unacceptable risk that cannot be mitigated, refusal becomes appropriate — and may also trigger a SAR. Reflexive refusal without that assessment is regulatory exposure of its own.
Related glossary and guides
Politically Exposed Person
Canonical glossary entry
Enhanced Due Diligence
MLR 2017 Reg 33-35 — the EDD framework
Sanctions screening
Often combined with PEP screening
Source of wealth
Required for every PEP relationship
Source of funds
The transaction-specific evidence
UK Customer Due Diligence guide
The framework EDD sits inside