Foreign PEP
Holds a prominent office in the legislature, executive or judiciary of a foreign country. Includes heads of state, ministers, judges, military officers, and state-owned company heads.
2026 AML/CTF Reforms
Politically Exposed Person (PEP) Definition
Complete guide to Politically Exposed Persons (PEPs) under Australian AML/CTF law including 2026 reforms. Learn the three types of PEPs, detailed position lists, CDD obligations, and senior manager approval requirements based on AUSTRAC guidance.
Key Information
PEPs under the 2026 AML/CTF Reforms
What is a Politically Exposed Person (PEP)?
Politically exposed persons (PEPs) are individuals entrusted with significant public responsibilities and power. PEPs also include individuals who have a particular connection to those that have significant public responsibilities and power.
These people can be a target for bribery or corruption because they hold positions of power or influence. For example, they may be able to influence government spending and budgets, procurement processes, development approvals and grants.
Important: This doesn't mean that PEPs are automatically involved in unlawful activity. You must assess the ML/TF risks of each customer, including PEPs, on a case-by-case basis.
Definition of Foreign PEPs
A foreign PEP is an individual who holds a prominent office or position or public function in or for the legislature, executive or judiciary of a foreign country. This includes:
- Head of state or head of government
- Member of the executive council of government
- Member of a legislature
- Minister, deputy minister or equivalent
- Judge of a supreme court, constitutional court or other court of general jurisdiction or last resort
- Ambassador, high commissioner or charge d'affaires
- High ranking military officer
- Head or board member of a government body
- Head or board member of a state-owned company or bank
- Member of a governing body of a political party represented in a legislature
A foreign PEP also includes family members and those with joint/sole beneficial ownership or close business relations with the above individuals.
Definition of Domestic PEPs
A domestic PEP includes individuals holding any of the following positions:
- Member of the legislature of the Commonwealth or a state/territory
- Member of a political party governing body represented in Commonwealth/state/territory legislature
- Governor-General, state Governors, territory Administrators
- Justice of the High Court, Federal Court judges, state/territory Supreme Court judges
- Accountable authority of Commonwealth entities under the PGPA Act
- Head of a state/territory department or agency with prominent public function
- Head of a local government council
- Chair/CEO/CFO of state/territory wholly-owned or majority-owned companies
- Chief of the Defence Force, Vice Chief, and service chiefs
- Navy Vice Admirals+, Army Lieutenant Generals+, Air Force Air Marshals+
- Senior diplomatic appointees (Ambassadors, High Commissioners, etc.)
Family members and close business associates of domestic PEPs are also considered domestic PEPs.
Definition of International Organisation PEPs
An international organisation PEP is an individual entrusted with a prominent public function, position or office of a public international organisation. This includes heads, deputy heads or board members of organisations like the United Nations, WTO, or NATO.
Family members and close business associates are also considered international organisation PEPs.
How to Establish if Someone is a PEP
You must establish on reasonable grounds if any of the following individuals are a PEP before providing a designated service:
- Your customer
- Any person acting on behalf of your customer
- Any beneficial owner of your customer
- Any person on whose behalf the customer is receiving a designated service
Methods include:
- Asking during onboarding and throughout your relationship
- Checking internet, sanctions lists, and social media
- Using specialist PEP databases from third-party providers
- Checking the Australian Government Directory
- Checking DFAT's senior diplomatic appointments
Additional CDD Obligations for PEPs
Senior Manager Approval: Required to provide designated services if any relevant individual is a foreign PEP, or a domestic/international organisation PEP where the customer has high ML/TF risk.
Source of Funds and Wealth: You must establish the PEP's source of funds and source of wealth on reasonable grounds before providing services to foreign PEPs, or domestic/international organisation PEPs with high ML/TF risk.
Enhanced CDD: You must apply enhanced CDD if any relevant individual is a foreign PEP, or for high ML/TF risk customers.
Ongoing Monitoring: Monitor for unusual transactions and behaviours, including indicators of corruption and bribery. This includes behaviours suggesting the PEP is using their position for improper purposes.
Former PEPs
When a person leaves their position, they're no longer a PEP, however their former position can still affect their ML/TF risk. You must get senior manager approval to provide services to former PEPs.
Consider:
- If the person still has influence over public policy or expenditure decisions
- The time that has elapsed since the person was a PEP
- If the person is still prominent and politically connected
- Other information suggesting high ML/TF risk from their former PEP status
Record Keeping
You must keep records showing how you've established if a person is a PEP. For example, if you do an open-source check, keep extracts of website pages, document names and phrases searched, and document why you consider they are or aren't a PEP.
Types of Politically Exposed Persons
Domestic PEP
Australian legislators, Governor-General, state Governors, High Court justices, Defence Force chiefs, department heads, and senior diplomatic appointees.
International Organisation PEP
Head, deputy head or board member of a public international organisation such as the UN, WTO, or NATO.
Family & Close Associates
Family members of PEPs, and those with joint/sole beneficial ownership or close business relations with a PEP are also considered PEPs.
Senior Manager Approval
Required for foreign PEPs and high-risk domestic/international PEPs before providing designated services.
Source of Funds/Wealth
Must establish source of funds and source of wealth for foreign PEPs and high-risk domestic/international PEPs.
Frequently asked questions
What is a Politically Exposed Person (PEP)?
PEPs are individuals entrusted with significant public responsibilities and power, including those with close connections to such people. They can be targets for bribery or corruption because they may influence government spending, procurement processes, development approvals and grants.
What positions qualify as a Foreign PEP?
Foreign PEPs include: head of state/government, executive council members, legislators, ministers, supreme/constitutional court judges, ambassadors, high ranking military officers, heads/board members of government bodies and state-owned companies, and political party governing body members.
What positions qualify as a Domestic PEP?
Domestic PEPs include: Commonwealth/state/territory legislators, political party governing body members, Governor-General, state Governors, High Court justices, Federal Court judges, state Supreme Court judges, Commonwealth entity heads, Defence Force chiefs (and Vice Admirals, Lieutenant Generals, Air Marshals or higher), department heads, local government council heads, and senior diplomatic appointees.
How do I establish if someone is a PEP?
You must establish on reasonable grounds if your customer, anyone acting on their behalf, any beneficial owner, or any person receiving the service is a PEP. Methods include: asking during onboarding and throughout the relationship, checking internet/sanctions lists/social media, using specialist PEP databases, and checking the Australian Government Directory.
What are my CDD obligations for Foreign PEPs?
For foreign PEPs, you must: apply enhanced CDD, obtain senior manager approval, establish source of funds and source of wealth before providing services, and monitor for unusual transactions including indicators of corruption and bribery.
What about Domestic and International Organisation PEPs?
For domestic and international organisation PEPs with high ML/TF risk, you must: obtain senior manager approval, establish source of funds and wealth, and apply enhanced CDD. The key difference is these obligations only apply when the customer's ML/TF risk is assessed as high.
What happens when a PEP leaves their position?
When a person leaves their position, they're no longer a PEP, but their former position can still affect ML/TF risk. You must get senior manager approval to provide services to former PEPs. Consider: if they still influence policy, time elapsed since being a PEP, if they remain prominent and politically connected.
What records must I keep for PEPs?
You must keep records showing how you established if a person is a PEP. This includes: extracts of website pages, documentation of names/phrases searched, and reasons why you consider they are or aren't a PEP.
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