Who is typically included in the list of politically exposed persons?

The inclusion of senior figures in politics, government, and military in the list of politically exposed persons (PEPs) is significant because PEPs are individuals who hold prominent public positions and are considered to be at a higher risk of involvement in bribery and corruption due to their influence and access to substantial resources. This category typically encompasses heads of state, politicians, senior government officials, judicial or military officials, and their immediate family members and close associates.

The rationale for monitoring PEPs more closely in the context of anti-money laundering (AML) and counter-financing of terrorism (CFT) is based on the understanding that their position presents opportunities for corruption and financial crime. Financial institutions and other obligated entities are often required to implement enhanced due diligence measures when dealing with PEPs to ensure that they are not facilitating illicit activities.

While retail business owners, community volunteers, and corporate executives may hold significant social or economic influence, they do not generally possess the same level of public authority or risk associated with the misuse of power that characterizes PEPs. As a result, the regulatory focus remains firmly on those in positions of significant political or governmental authority.