AML/CFT Risk: Politically Exposed Persons
There are a lot of different risks that can ultimately impact your BSA Program. The FFIEC’s BSA/AML Examination Manual outlines many such risks, one of those being politically exposed persons (PEPs). It states, while Bank Secrecy Act/Anti-Money Laundering (BSA/AML) regulations do not define the term Politically Exposed Person (PEP)…the term PEP is commonly used in the financial industry to refer to foreign individuals who are or have been entrusted with a prominent public function, as well as to their immediate family members and close associates.
PEPs are generally considered to have an overall higher risk of money laundering and terrorist financing, and you should have policies and procedures in place to mitigate those risks. While our BSA/AML regulation and guidance speak only to foreign PEPs,there are such things as domestic PEPs. We have seen some auditors and examiners expanding their scope to include domestic PEPs and criticizing financial institutions that don’t.
Kevin explains more in the video.
2026/02/11
Kevin Edwards
Kevin brings years of experience and a unique perspective on regulatory matters to our clients. A self-proclaimed geek and accredited CRCM, Kevin is also a recovering attorney with experience as in-house counsel for a large regional bank and one of the leading national title insurance providers. For reasons unknown, Kevin decided to leave the safety and serenity of his desk job to seek fortune and glory as a wandering adventurer. Like a bank compliance version of Kwai Chang Caine, The Man with No Name or Don Quixote, he now travels the land seeking to help those in need and righting compliance wrongs, wherever he may find them. Kevin lives in Sioux Falls with his two children, who are surprisingly normal after having endured their father’s vivid imagination for their entire lives. He won’t admit to having any hobbies, because apparently “Regulations never sleep.” (While he does say this in his Batman voice, we’re pretty sure he’s joking.) From the looks of his Facebook page, he likes the outdoors and spending time with his large extended family (who seem like relatively normal people).