PEP Check: Politically Exposed Person Screening

A PEP check identifies whether your client or a person behind the client is a politically exposed person. Screen before providing a designated service, assess any match and keep the result. A PEP match and a sanctions match require different decisions.

When a Client is a Politically Exposed Person

A politically exposed person (PEP) holds a prominent public role, or has a qualifying family or business connection to someone who does. Political exposure creates a risk of bribery or corruption. It does not establish wrongdoing.

AUSTRAC’s PEP guidance distinguishes three categories.

• Domestic PEPs hold listed Australian positions. Examples include federal and state ministers, High Court justices, Supreme Court judges and heads of state government agencies with prominent public functions.
• Foreign PEPs hold prominent government, parliamentary or judicial positions in another country.
• International organisation PEPs hold prominent roles in public international organisations, such as the head or a board member of a United Nations body.

Qualifying family members and close business associates are PEPs too. Include immediate family connections in your questions. A shared surname alone does not prove the relationship.

A PEP check screens your client and beneficial owners against PEP information before and during the relationship. For an entity, identifying the people behind it comes first. Use the beneficial owner checks to establish who must be screened.

Who to Screen and When

Screen the client, anyone acting for them, each beneficial owner and anyone on whose behalf the client receives the designated service.

Accountants’ AML/CTF obligations depend on the services they provide. Apply AUSTRAC’s professional designated-service rules to the engagement before treating every accounting job as regulated.

Use this sequence for a new designated-service engagement.

1. Establish who the client is and identify the other relevant people. Collect enough identifiers to distinguish them from people with similar names.
2. Ask about public roles and relevant family or business connections. Search the names, aliases and spelling variations against the sources your policy requires.
3. Review possible matches. Record the identity evidence and the reason for confirming or clearing each result.
4. Put the result into the client’s risk assessment. Complete any required escalation and approval before the designated service starts.

Rescreen through ongoing due diligence and when circumstances change. A new public appointment, changed beneficial owner or unexplained financial activity can prompt a review. Set the review frequency and alert owner in your AML/CTF program.

AUSTRAC’s domestic PEP examples show that a domestic PEP can have medium risk. The role informs the rating alongside the service, transactions and other evidence. PEP screening is one part of due diligence for accounting clients.

PEP and Sanctions Screening

Sanctions screening checks whether a person or entity is listed under Australian sanctions laws. The Department of Foreign Affairs and Trade (DFAT) maintains the Consolidated List.

PEP screening identifies political exposure and the checks needed to manage its risk. A confirmed targeted financial sanctions match can prohibit making assets available or dealing with assets the listed person owns or controls.

Australian sanctions laws apply across businesses, including practices outside AUSTRAC’s reporting-entity regime. They also cover conduct beyond name matches. DFAT’s sanctions guidance for accountants explains risks involving services and controlled assets.

To run a manual Australian sanctions check:

1. Open DFAT’s Consolidated List and download the spreadsheet linked there.
2. Search the relevant names and aliases. Include alternative spellings and the names of entities involved in the work.
3. Compare any result with the client’s identifiers. Use DFAT’s guide to the list to interpret primary names, aliases and listing references.
4. Read the applicable sanctions measures. The list includes different restrictions, so establish whether targeted financial sanctions apply.
5. Keep the search date, list version, names searched and decision. Escalate a possible match before proceeding with affected dealings.

A result from another country’s sanctions list needs its own legal assessment. The DFAT list covers Australian sanctions, including relevant United Nations listings.

PEP Lists and Free Checks

A free PEP check can combine client questions with searches of public sources. AUSTRAC permits this approach alongside specialist databases. There is no single exhaustive Australian government PEP list that proves every relevant person has been checked.

Government directories, parliamentary records and official appointment notices can confirm a public role. Searches need to cover qualifying family and business connections as well as the officeholder. Foreign roles and name variations can make this work harder.

Paid databases bring those searches together and can provide match details and a search history. Coverage still depends on their data sources and matching rules. A commercial result needs review just as a manual result does.

A free search with no result cannot prove someone has no political exposure. Record where you searched, which names you used and why the evidence supports your decision. Keep dated extracts or search reports, so another staff member can retrace it. A saved result also distinguishes the original check from a later rescreen.

PEP Screening Tools and Software

Choose a PEP screening tool by the work your practice needs to do after the search.

A stand-alone search service suits staff who run checks separately and file the results against each client. NameScan is one example with PEP and sanctions screening and an application programming interface (API). Its published charging basis is pay as you go.

Identity services with screening can combine a person’s identity evidence with a separate PEP or sanctions search. AML suites can add monitoring and the practice’s review work. Compare those broader options in AML software for accountants.

A PEP and sanctions screening API sends identifiers from your onboarding form to a screening service and returns possible matches. Your practice still needs a place to resolve them and record decisions. Keep unresolved matches visible before the client moves to the next step.

Evaluate these features before choosing software:

• Data sources that cover AUSTRAC’s PEP definitions and Australian sanctions.
• Fuzzy matching that catches spelling variations, with identifiers that help staff assess the result.
• Ongoing monitoring alerts, with an assigned person who receives and resolves them.
• Exportable records showing the search, match evidence and staff decision.

Ask the provider to show how a common-name match and an alert are handled. Compare charges for initial screening and monitoring without assuming they cover the same work.

Handling a Match

Resolve a possible match by comparing identifiers before deciding that your client is the listed person.

For a false positive, compare date of birth, nationality, location and the public role or entity details. Keep the conflicting evidence and explain why it clears the match. Missing identifiers call for more investigation, rather than an automatic clearance.

Consider this hypothetical example. A company director shares a name with a foreign minister. The screening result gives a different birth year and country. Staff confirm the director’s identity and record both differences. They clear that result while keeping the separate sanctions check and risk assessment on file.

Confirmed PEP

Foreign PEPs trigger enhanced customer due diligence. Domestic and international organisation PEPs trigger enhanced due diligence when the customer’s risk is high. For a foreign PEP who is the client, beneficial owner or person receiving the service through the client, obtain senior-manager approval. Establish source of funds and source of wealth before providing the service. The same requirements apply to domestic and international organisation PEPs in those roles when the client’s risk is high.

The source of funds explains the money used for the service or transaction. Source of wealth explains how the person accumulated their wealth. Collect evidence for the explanation and set monitoring that addresses the risks found. A foreign PEP acting for a customer can trigger enhanced due diligence even where that person is not the customer or beneficial owner.

Explain the extra questions neutrally. Describe the public-role connection that prompted them, the information needed about the money and who will review it. Avoid presenting political exposure as an allegation.

Confirmed Sanctions Match

Stop affected dealings and obtain legal advice on the applicable restriction before proceeding. If you hold, or think you hold, a freezable or controlled asset, freeze it. Inform the Australian Sanctions Office at asset.freezing@dfat.gov.au and notify the Australian Federal Police through the reporting route linked on DFAT’s Consolidated List page.

Senior-manager approval cannot override a sanctions prohibition. Keep the evidence, escalation and action taken in the client record. Before releasing the engagement, confirm that every relevant person has a recorded screening outcome and every required approval or sanctions action is resolved.