PEP Screening in Australia: What is a Politically Exposed Person and What Must You Do?

Politically Exposed Persons (PEPs) pose elevated money laundering and corruption risks. AUSTRAC requires all Tranche 2 reporting entities to identify PEPs among their clients and apply Enhanced Due Diligence. This guide explains who qualifies and what you must do.

What is a Politically Exposed Person?

A PEP is an individual who holds or has held a prominent public position. Under AUSTRAC's rules, this includes:

• Domestic PEPs: Australian heads of state, ministers, senior government officials, senior executives of state-owned enterprises, senior military officers, senior judiciary members, senior political party officials
• Foreign PEPs: The same categories in foreign countries — these are automatically treated as high risk
• International organisation PEPs: Senior officials of major international organisations (UN, World Bank, IMF etc)
• Close associates and family members: Spouses, children, parents and close business associates of any of the above

How long does PEP status last?

PEP status does not automatically end when someone leaves a position. Former PEPs may retain elevated risk for a period after leaving office — AUSTRAC expects you to use judgement based on the specific circumstances, the nature of the position held, and the time elapsed.

What EDD is required for PEPs?

When you identify a client as a PEP, you must apply Enhanced Due Diligence before providing any service. This typically includes:

• Obtaining approval from senior management before establishing the relationship
• Verifying the source of wealth and source of funds
• Conducting enhanced ongoing monitoring of the relationship
• Reviewing the relationship more frequently
• Obtaining certified copies of identification documents

Sanctions screening vs PEP screening

These are separate checks. Sanctions screening checks whether a person or entity appears on the DFAT Consolidated Sanctions List — a legal prohibition on dealing with them. PEP screening identifies elevated-risk individuals who are not necessarily sanctioned but require enhanced scrutiny. Both checks are mandatory.

How often must you rescreen?

Initial screening must occur before you provide a designated service. Ongoing screening must occur at appropriate intervals — typically when the DFAT list is updated, at minimum annually, and immediately if you receive information suggesting a client's circumstances have changed.

Related reading: Enhanced due diligence guide · Customer due diligence explained · AML risk assessment guide · Frequently asked questions