Who Is a Politically Exposed Person (PEP)? UK Rules

A politically exposed person is someone who holds, or has held, a prominent public function, such as a head of state, minister, member of parliament, senior judge, ambassador or board member of a state-owned enterprise. In UK law the definition excludes middle-ranking and more junior officials, so a private sector consultant, a company chief executive or a head teacher is not a PEP merely because of their job.

What is a PEP under UK law?

The legal definition sits in regulation 35 of the Money Laundering Regulations 2017 (MLR 2017). A PEP is an individual entrusted with prominent public functions, other than as a middle-ranking or more junior official. The Regulations give examples of such functions, including heads of state and government, ministers, legislators, members of the governing bodies of political parties, senior judges, members of central bank and audit bodies, ambassadors, senior military officers, board members of state-owned enterprises and board members of international organisations.

The FCA's finalised guidance FG25/3 (published 7 July 2025, updating the FCA's original 2017 guidance, FG17/6) tells FCA-supervised firms how to apply that definition in a UK context. The aim is to keep the number of UK customers treated as PEPs small: firms should only treat people in the UK who hold truly prominent positions as PEPs.

Who counts as a PEP? Categories and UK thresholds

The FCA adds that in the UK it will not normally be necessary to treat public servants below Permanent or Deputy Permanent Secretary level as holding a prominent public function. A firm that goes beyond these categories in an exceptional case should record its rationale.

Family members and known close associates

The Regulations extend enhanced scrutiny to two groups, but neither is a PEP in its own right:

• Family members: a PEP's spouse or civil partner, their children and those children's spouses or civil partners, and their parents. The FCA's guidance says this includes siblings, and that the list is not complete. Firms should take a proportionate, risk-based approach to relatives outside the list, and in low-risk situations should not apply EDD to someone outside it.
• Known close associates: individuals known to have joint beneficial ownership of a legal entity or arrangement, or any other close business relationship, with a PEP; or who have sole beneficial ownership of an entity or arrangement known to have been set up for a PEP's benefit.

So a government minister's spouse or civil partner is a family member and in scope for enhanced due diligence. The partner of a PEP outside the listed relationships is a judgement call under your risk assessment.

How long does someone stay a PEP?

Regulation 35(9) requires the enhanced measures to continue for at least 12 months after the person leaves the prominent function, or longer if the firm judges the risk requires it. FG25/3 expects a risk-based approach: a longer period will normally be needed only for PEPs the firm has assessed as higher risk, and the rationale should be documented. Firms may keep applying enhanced measures to a former PEP where appropriate to address the risk, and where they do, FG25/3 says the firm should document its rationale.

Family members and close associates drop out of the enhanced regime once the PEP leaves office. They should be treated as ordinary customers, subject to normal CDD, unless other risks justify more.

What changed in 2024 and 2025?

• 10 January 2024: the Money Laundering and Terrorist Financing (Amendment) Regulations 2023 (SI 2023/1371) inserted regulation 35(3A). For UK PEPs, their family members and known close associates, the starting point is now a lower level of risk than for non-domestic PEPs. Where no enhanced risk factors unrelated to PEP status are present, the due diligence required is lighter.
• July 2024 to July 2025: the FCA's review of how firms apply its PEP guidance concluded that the guidance generally remained appropriate, and it consulted (GC24/4) on minor changes. FG25/3 followed on 7 July 2025, with a revised version on 15 July 2025.
• FG25/3 changes include: clarifying that non-executive board members of UK central government departments are not PEPs; more flexible senior management sign-off, with the SMF17 MLRO needing awareness rather than sign-off of every PEP decision; adding the Northern Ireland Assembly as a similar legislative body; and a link to the government's list of international organisations.

A dual domestic and foreign PEP is treated as a foreign PEP, but firms should still use the guidance to assess the risk and apply the appropriate lower or higher risk measures.

How do you identify whether a person is a PEP?

Regulation 35(1) requires appropriate risk-management systems to determine whether a customer or beneficial owner is a PEP, a family member or a known close associate. The FCA expects firms to use information that is reasonably available, which can include:

1. public-domain sources, such as parliament and government websites and reliable news;
2. reliable public registers, including Companies House and the persons of significant control register, and Electoral Commission registers;
3. work by reputable anti-corruption organisations; and
4. commercial databases, which are optional. A firm that uses one needs to understand how it is populated and check that flagged individuals actually meet the definition.

Ask the question at onboarding, include it in the application form, and re-screen throughout the relationship, since a customer can become a PEP, or leave the category, later. Our guide to AML trigger events covers how to build that into event-driven reviews.

Test your understanding on a standard question: which of the following might be classed as a PEP? A government minister is a PEP. A government minister's spouse or civil partner is a family member subject to EDD. The chief executive of a UK company, the manager of a high-street supermarket and the head teacher of a school do not hold prominent public functions in the sense of the Regulations, so they are not PEPs on that basis.

What controls apply when a customer is a PEP?

Where a firm proposes to have or continue a business relationship with a PEP, family member or known close associate, regulation 35(5) requires it to, in addition to the EDD in regulation 33:

• obtain senior management approval to establish or continue the relationship. FG25/3 says firms should document who counts as senior management, and that sign-off may be at a lower level of seniority in lower-risk situations;
• take adequate steps to establish source of wealth and source of funds relevant to the relationship or transaction; and
• conduct enhanced ongoing monitoring once the relationship starts.

The depth of the work should reflect the risk. The FCA's guidance gives lower-risk indicators (for example a low-risk product, a country with strong anti-corruption systems, rigorous disclosure requirements, or no executive decision-making role) and higher-risk indicators, and it expects a differentiated approach rather than a blanket one. It also states that a firm should not decline or close a relationship merely because a person meets the PEP definition. Only if, after assessment, the risks are higher than it can effectively mitigate is declining or exiting appropriate. If a firm cannot apply the EDD it has decided is necessary, it must not establish the relationship or must terminate it.

Everything should be documented: the identification, the risk assessment, the EDD decision and the approval. See also our financial crime service.

How MEMA can help

MEMA helps MLROs write PEP policies, calibrate screening and evidence risk-based decisions to the FCA. See our financial crime service or the support we offer MLROs and financial crime leads.