A Politically Exposed Person (PEP) is an individual who is, or has been, entrusted with a prominent public function. This includes government officials, senior politicians, judicial figures, military leaders, and executives of state-owned enterprises, as well as their immediate family members and close associates.
Why is PEP Screening Important?
Because of their positions of power and influence, PEPs are considered to carry a higher risk for involvement in bribery, corruption, and money laundering. Financial institutions and acquiring banks are legally required by AML regulations to identify if a merchant or its Ultimate Beneficial Owner (UBO) is a PEP.
Does Being a PEP Mean Rejection?
No. Being identified as a PEP does not mean a merchant is a criminal or that they must be denied a merchant account. However, it does require the payment processor to apply Enhanced Due Diligence (EDD). The risk team must take extra steps to verify the source of the individual's wealth and closely monitor their transaction behavior.
Automated PEP Detection with Onlayer
Manually identifying PEPs during the KYM process is impossible. Onlayer screens merchants and beneficial owners in real-time against comprehensive, continuously updated global databases. If a PEP is detected, Onlayer flags the profile instantly, generating transparent audit logs and AI-driven summary outputs so your team can apply the appropriate risk-adjusted rules.
