The FATF defines a politically exposed person (PEP) as “an individual entrusted with a prominent public function”. Studies undertaken by the FATF and other international organisations identified that the positions held by PEPs are vulnerable to abuse for the purposes of corruption, ML and potentially TF. The FATF formulated an approach establishing specific requirements in relation to PEPs, in particular setting a number of additional requirements for the private sector subject to the FATF Recommendations. The measures provided for by the FATF do not aim to inhibit access to services by PEPs or to presume their participation in criminal activities, but to ensure that the private sector subject to the FATF Recommendations treats PEPs according to the risk they represent and undertakes additional measures necessary to mitigate this risk.

The requirements set in the FATF Recommendations apply to PEPs, as well as to their family members and close associates. The 2003 FATF Recommendations contained requirements related only to foreign PEPs (referring to persons undertaking the public function in a foreign jurisdiction, irrespective of their nationality). The current standards have been broadened to also cover domestic PEPs and those of international organisations. The scope of the requirements was broadened with a view to align the FATF Standards with the provisions of the United Nations Convention against Corruption (the Merida Convention, 2003). In accordance with the concept of applying AML/CFT measures on a risk-sensitive basis, the requirements differ between the two groups. Additional measures with regard to domestic and international organisation PEPs are to be undertaken solely when higher risks have been identified, whilst foreign PEPs are considered as representing a higher risk.

An important task of the state authorities is to provide the private sector with sufficient guidance on the possible ways to identify whether a person is a PEP. This is one of the most recurrent difficulties the private sector encounters. The FATF has issued guidance for countries on this matter which proposes different methods that may be applied, including the use of reliable databases, disclosure mechanisms and enhanced cooperation with competent authorities.