A politically exposed person (PEP) needs a closer look, and so do the people around them. A minister’s adult child buying an investment property, or the business partner of a foreign official setting up a company, can fall within the PEP rules even though neither has ever held public office.<\/p>\n
These people are often called relatives and close associates, or RCAs. This guide explains who counts, why they are harder to spot than the PEP, and a practical way to identify and handle them. It uses Australian rules as the main example, with the UK for comparison. It is general information, not legal advice.<\/p>\n
A PEP who wants to move or hide money gained through corruption rarely puts it in their own name. Family members and trusted associates are the obvious alternative. The Financial Action Task Force (FATF) therefore applies its PEP Recommendation to family members and close associates as well as to the PEP.<\/p>\n
FATF also makes a point that matters for screening: relatives and close associates may never appear on any list, but they should still be treated as PEPs once they are identified. A database check is a useful starting point, not the whole answer.<\/p>\n
Under the reformed AML\/CTF regime, each type of PEP (foreign, domestic and international organisation) includes:<\/p>\n
The family member definition says ‘includes’, so it is not a closed list. Your AML\/CTF program can treat other close relatives, such as siblings, as family members where the risk calls for it.<\/p>\n
Two features of the Australian approach are worth noting. First, a relative or associate takes on the type of the PEP they are connected to, so the business partner of a foreign PEP is treated as a foreign PEP. Second, the close associate test turns on what is known publicly or is readily available. You are not expected to investigate a client’s private friendships, but you cannot ignore a business relationship that a quick search would reveal.<\/p>\n
UK rules use a similar structure but different detail. The Money Laundering Regulations 2017 list family members as including a spouse or civil partner, children and their spouses or civil partners, and parents, alongside known close associates. Once the PEP leaves office, UK firms are no longer required to apply the PEP measures to that person’s family members and close associates.<\/p>\n
If you have clients or operations in more than one country, apply the definition that governs each relationship rather than assuming they match.<\/p>\n
AUSTRAC suggests asking customers whether they, a family member or a close associate is a PEP, both at onboarding and during the relationship. A plain question on your client form works: “Do you, a member of your immediate family, or a close business associate currently hold, or have previously held, a senior public position in Australia or overseas? If yes, please give details.”<\/span><\/p>\n The answer is self-declared, so it does not replace screening. It does surface relationships that no database will hold.<\/p>\n Use a screening source that includes relatives and close associates, and screen every individual in scope: the client, beneficial owners and anyone acting for the client. Enter dates of birth and countries to keep false matches down.<\/p>\n When a result says a person is the relative or associate of a PEP, confirm two things separately: that the result is your client (the identifier check), and that the stated relationship is real and current. A record describing someone as a ‘business associate’ of a PEP may refer to a company they left years ago.<\/p>\n Record which PEP the person is linked to, what type of PEP that is, and the nature of the connection. This decides what comes next. In Australia, enhanced customer due diligence (CDD) applies to foreign PEPs, which includes their relatives and associates, and to domestic or international organisation PEPs where the risk is high.<\/p>\n For a higher-risk RCA, AUSTRAC’s examples show the kind of steps involved: establishing the source of funds and source of wealth, applying risk controls, and getting senior manager approval before proceeding. In one AUSTRAC example, an account manager onboarding a close associate of a foreign PEP identified the connection as a high-risk factor, applied enhanced CDD to establish where the money came from, and escalated to a senior manager for approval before the transaction went ahead.<\/p>\n For a lower-risk RCA, such as the relative of a domestic PEP where nothing else raises concern, your program may allow standard CDD with a note on file.<\/p>\n Keep the screening result, the relationship you confirmed, the PEP type, your risk rating and any approval. Re-screen when you would for any client, and also when you learn the PEP’s position has changed.<\/p>\n Not automatically. In Australia, the relative or associate of a foreign PEP requires enhanced CDD. For relatives and associates of domestic or international organisation PEPs, the level of checks depends on your risk assessment.<\/p>\n No. In Australia, the close associate test relies on information that is public or readily available. You should act on what you know or could easily find, not conduct private investigations.<\/p>\n Ask the client about the relationship as part of your normal questions, and check public sources. If you cannot confirm or rule it out, escalate under your AML\/CTF program.<\/p>\n It depends on the jurisdiction. The UK stops requiring PEP measures for family members and associates once the PEP leaves office. FATF guidance links the period to the risk assessment of the PEP. See our guide on when someone stops being a PEP.<\/p>\n You can ask about the relationship as part of onboarding without revealing a screening result. If you have formed a suspicion or lodged a suspicious matter report, be careful not to tip off the client.<\/p>\n NameScan’s PEP screening covers politically exposed persons and their relatives and close associates, on a pay-as-you-go basis. You can screen the client, each beneficial owner and each representative as separate checks, record your decision on every result in the dashboard, and keep a dated record for your file.<\/p>\n2. Screen with RCA coverage<\/h3>\n
3. Check the relationship, not just the name<\/h3>\n
4. Classify the link<\/h3>\n
5. Apply the right level of checks<\/h3>\n
6. Record and set a review point<\/h3>\n
Where firms go wrong<\/h2>\n
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Frequently asked questions<\/h2>\n
Is a PEP’s relative automatically high risk?<\/h3>\n
Do I have to investigate my client’s friends?<\/h3>\n
What if the screening result says ‘relative of’ but gives no detail?<\/h3>\n
Does RCA status end when the PEP leaves office?<\/h3>\n
Should I tell the client they were flagged as a PEP associate?<\/h3>\n
How NameScan can help<\/h2>\n