AUSTRAC defines Politically Exposed Persons as individuals who occupy a prominent public position or function in a government body or international organisation, both within and outside Australia. This definition also extends to their immediate family members and close associates.
See the full list of the PEP and Sanctions Watchlists bronID checks.
Knowing your PEPs
Politically exposed people can be organised into categories. These will act as a frame of reference for assessing the risk of each individual PEP and what measures and risk mitigation strategies should be performed for AML/CTF compliance:
- Domestic PEPs are individuals who hold a prominent public position or function in an Australian government body
- Foreign PEPs are individuals who hold a prominent public position or function in a government body of a foreign country
- International organisation PEPs are individuals who hold a prominent public position or function in an international organisation.
'PEPs by association' are individuals directly related to a PEP, such as an immediate family member or a close associate.
Refer to the bronID Customer Risk Profile Guide for more information on how to serve each customer risk profile.
Identifying a Politically Exposed Person
Classifying an individual as a PEP is a preventative system, and should not be interpreted as stigmatising PEPs as being involved in criminal activity.
Identifying a customer as a PEP is primarily used for measuring the increased risk associated with serving this customer due to their position in society. Checking a customer name against world leader and government ministry lists is included in the bronID Know Your Customer process.
As a reporting entity, your risk-based approach and procedures for these situations are drawn out in your AML program.
Any individual who is identified as a PEP should automatically be given a medium to high-risk score triggering ML/TF risk mitigation processes and trigger Enhanced Due Diligence procedures and controls.
Refer to AML/CTF Tools and Controls to see how you can mitigate the risk of PEP customers using the bronID portal.
Be aware of False Positives
Keep in mind that if a person matches on a PEP or Sanction list it is essential to confirm that your customer is the PEP or Sanctioned person, this requires performing enhanced due diligence to mitigate the risk, including verifying the customer is a PEP. People can have the same name as politically exposed people, the primary goal of KYC is to confirm the customer is who they say they are, checking the customer's details with the details of that of a Politically Exposed Person is a good first step to confirming your customer's identity.
See our blog post on how to Verify a Politically Exposed Person with bronID