A client tells you they left parliament five years ago, yet your screening check still flags them as a politically exposed person (PEP). Do you still need enhanced checks? Does the answer change if they were a minister rather than a backbencher, or a foreign official rather than an Australian one?
There is no single global answer to when someone will stop being a PEP. Australia, the UK and the Financial Action Task Force (FATF) each take a slightly different approach. This guide explains all three and gives you a practical way to assess a former PEP. It is general information, not legal advice.
Why FATF looks at risk rather than a fixed time limit
FATF’s definition of a PEP covers someone who is, or has been, entrusted with a prominent public function. FATF notes that this wording allows an open-ended approach, where someone could remain a PEP indefinitely.
Its guidance says the handling of a client who is no longer in a prominent public function should be based on an assessment of risk, not on prescribed time limits. Firms are expected to assess the risk of the former PEP and take effective action to manage it. FATF also links how long family members and close associates should be treated as PEPs to the risk assessment of the PEP themselves.
The Australian position
AUSTRAC’s guidance under the reformed AML/CTF regime is that when a person leaves their position, they are no longer a PEP. It adds, however, that their former position can still affect their money laundering and terrorism financing risk.
AUSTRAC also says your AML/CTF policies must ensure that senior manager approval is obtained to provide a designated service, or continue a business relationship, where the customer, a beneficial owner or a person acting on the customer’s behalf was previously a PEP. The rationale, as explained when the rules were made, is that a former PEP may still have material influence over public policy and spending decisions.
In short, in Australia a former PEP is not a current PEP for the purposes of the PEP rules, but you cannot simply ignore their past role when you assess their risk.
The UK position
The UK Money Laundering Regulations 2017 set a minimum period. When a person stops holding a prominent public function, firms must continue applying the enhanced PEP measures for at least 12 months, or for longer if the firm considers it appropriate to address the risk. Once the PEP leaves office, firms are no longer required to apply those measures to the PEP’s family members and known close associates.
How the three approaches compare
| FATF | Australia | United Kingdom | |
|---|---|---|---|
| Does PEP status end? | Treat on risk; status can be open-ended | Yes, when the person leaves the position | PEP measures continue for at least 12 months after leaving |
| Does past role still matter? | Yes, through the risk assessment | Yes, it can still affect risk | Yes, the firm can extend the period |
| Senior approval for former PEPs | Through risk-based measures | Policies must require it where the customer or a related person was previously a PEP | Applies while PEP measures continue |
| Family and associates | Period linked to the PEP’s risk | Follow your program and risk assessment | Measures no longer required once the PEP leaves office |
A practical way to assess a former PEP
Whatever the jurisdiction, the useful question is whether the person still has influence or access that could be misused. These factors help answer it.
| Factor | Points to lower risk | Points to higher risk |
|---|---|---|
| Seniority of the former role | Mid-level or short-lived appointment | Head of state, minister, senior judge or head of a state-owned enterprise |
| Time since leaving | Several years with no further public role | Recently left, or moved between roles |
| Remaining influence | No ongoing links to government | Still advises government, holds party office or is close to the successor |
| Link between old and new roles | New career unrelated to the former office | New role trades on former contacts, such as consulting to the same ministry |
| Country | Low corruption risk, strong institutions | Higher corruption risk or weak oversight |
| The service you provide | Routine, low-value, easy to explain | Large, complex or cross-border transactions |
Illustrative example. A conveyancer acts for a buyer who was a deputy minister overseas until three years ago and now runs a consulting firm advising companies that bid for contracts with the same ministry. Although the person may no longer be a PEP under the Australian definition, the link between the old and new roles and the foreign context point to higher risk. The conveyancer applies enhanced checks, including source of funds, and follows the program’s senior approval requirement before proceeding.
When screening still flags a former PEP
Screening databases often keep former PEPs on file, sometimes with a “former” label and the dates in office. That is useful information, not an instruction. When a result shows a former PEP:
- Confirm it is your client, using date of birth, nationality and the role described.
- Note the position held, the country and when the person left it.
- Apply the rules for the jurisdiction that governs your relationship.
- Assess the risk using the factors above.
- Record your conclusion, any approval obtained and when you will review it.
Frequently asked questions
How long does someone remain a PEP in Australia?
AUSTRAC’s guidance says a person is no longer a PEP once they leave the position, although their former role can still affect their risk, and your policies must require senior manager approval where the customer or a related person was previously a PEP.
Is there a 12-month rule?
The UK sets a minimum of 12 months of continued PEP measures after someone leaves office. FATF does not set a fixed period, and Australia’s approach is risk-based.
Do family members stop being PEPs when the PEP leaves office?
In the UK, firms are no longer required to apply PEP measures to family members and close associates once the PEP leaves office. FATF links the period to the risk of the PEP. In Australia, follow your program and assess the risk.
My screening tool still shows a client as a PEP. Is it wrong?
Not necessarily. Many databases keep former PEPs on file. Check the dates in office and apply your jurisdiction’s rules.
Should I record why I treated someone as a former PEP?
Yes. Record the role, the dates, the rules you applied, your risk assessment and any approval, so the decision can be understood later.
How NameScan can help
NameScan’s PEP results show each role held, the country and the start and end dates of the term of office where available, so you can see whether a role is current. You can record your decision and risk level on each result in the dashboard, and re-screen on a pay-as-you-go basis when you review the client.
Start screening with NameScan, or read our guide to screening relatives and close associates of PEPs.
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