PEP and sanctions checks
Screening for politically exposed persons and sanctions is part of customer due diligence. Here is who counts, when it applies, and what to do with a hit.
Two checks get bundled together in most conversations about customer due diligence, and they are not the same thing. A politically exposed person (PEP) result tells you to look harder. A sanctions match tells you to stop. Confusing them is the most common way an agency gets this wrong in either direction.
What a PEP is
A politically exposed person holds, or has held, a prominent public position. Ministers, senior public servants, judges, senior military officers, heads of state owned enterprises and senior officials of international organisations all fall in the category, and it extends to their immediate family and close associates.
The category also covers domestic and foreign positions, and the risk profile differs between them. A sitting foreign official from a jurisdiction with weak governance is a different proposition from a local council officer, and a sensible risk assessment says so rather than treating every PEP identically.
When it applies to an agency
Screening is part of customer due diligence, which attaches to providing a designated service. If your agency is brokering the sale, purchase or transfer of real estate, you are doing due diligence on the parties, and establishing whether someone is a PEP is part of knowing who they are.
Timing follows the same rule as the rest of initial customer due diligence (CDD), which in real estate has its own carve out because a sale does not wait for paperwork.
“You must complete initial CDD 28 days after the exchange of contracts, or at least 3 days before the initially agreed day for settlement (whichever is earliest).”
What to do with a hit
A PEP result
Enhanced due diligence, not refusal. In practice that means establishing where the funds come from, having someone senior in the agency approve proceeding, and writing down why the decision was made. The record matters as much as the decision, because the question a regulator asks later is not whether you dealt with a PEP but whether you knew and what you did about it.
A sanctions match
Different category entirely. Sanctions are legal restrictions on dealing with named individuals and entities, and a genuine match is a stop, not a scrutiny prompt. False positives are common on name matching, so the first job is confirming the match is real before acting on it.
Name matching is noisy
Both checks work on names, and names are a bad unique identifier. Common names generate false positives constantly, transliteration from other alphabets multiplies the problem, and an agency that treats every partial match as a finding will drown.
The practical answer is discriminating data: date of birth, address, and the verified identity document you already collected. A screening result attached to a verified identity is worth acting on. A name match against nothing is noise.
Recording it
Whatever you screen, the result has to be evidenced and kept, because a check you cannot prove you performed is worth roughly nothing when someone asks. Customer due diligence records are kept for seven years from the end of the business relationship.
For how this sits inside the wider program, see the AML/CTF program guide, and for which of your work triggers it at all, the designated services guide.
Common questions
What is a politically exposed person?
A politically exposed person, usually shortened to PEP, is someone who holds or has held a prominent public position, along with their close associates and immediate family. The category exists because those positions carry a higher risk of bribery and corruption, so transactions involving them warrant more scrutiny.
Do real estate agents have to screen for PEPs?
Screening sits inside customer due diligence, which applies to agencies providing a designated service. Identifying whether a customer is a PEP is part of understanding who you are dealing with, and a PEP result raises the level of due diligence rather than ending the transaction.
Does being a PEP mean the person is a criminal?
No, and this is the most common misunderstanding. Being a politically exposed person is a risk category, not an allegation of wrongdoing. The overwhelming majority of PEPs are ordinary public officials going about lawful business. The classification exists because those positions create opportunity for bribery and corruption, so the transaction warrants closer attention. Treating a PEP as a suspect is both wrong and, for an agency, commercially damaging.
Do we have to refuse a PEP as a client?
No. The obligation is enhanced scrutiny, not refusal, and declining every politically exposed person would be an overreaction to what the law actually requires. In practice enhanced due diligence means establishing where the funds come from, obtaining senior approval within your agency before proceeding, and recording the reasoning. The record matters as much as the decision, because the question asked later is not whether you dealt with a PEP but whether you knew and what you did about it.
Are family members and associates included?
Yes. The definition extends beyond the office holder to immediate family and close associates. That is deliberate: the risk the category addresses is funds moving through people connected to a prominent public position rather than through the position holder directly, which is the more common pattern. It means a screening result can attach to a buyer who holds no public office themselves, and the enhanced due diligence obligation applies in the same way.
What about sanctions screening?
Sanctions screening is a separate check against government lists of individuals and entities subject to restrictions, and unlike a PEP result a sanctions match is a hard stop rather than a prompt for more scrutiny. The two checks are usually run together but they mean different things.
General information about the obligations, not legal advice about your agency.