Category: Compliance & AML · Reviewed by Al Jabbar, Broker · Specialist Risks · Last reviewed June 2026
A person entrusted with a prominent public function — together with their family members and known close associates — for whom Enhanced Due Diligence and senior management approval are mandatory under MLR 2017.
A Politically Exposed Person (PEP) is an individual who is or has been entrusted with a prominent public function (other than middle-ranking or junior officials). The category includes heads of state, heads of government, senior politicians, senior government, judicial or military officials, senior executives of state-owned enterprises, important political party officials, and (under UK and international definitions) certain related persons. Family members and known close associates are treated equivalently to the PEP.
MLR 2017, regulation 35 (enhanced customer due diligence — politically exposed persons). The statutory definition was updated by the Financial Services and Markets Act 2023, with the FCA’s PS24/8 reflecting the new treatment of domestic PEPs.
Firms must have systems to identify PEPs, their family members and close associates. Where identified, EDD is required: senior management approval to establish or continue the relationship, source of funds and source of wealth checks, and enhanced ongoing monitoring. Identification is typically by screening against commercial PEP databases at onboarding and on a periodic basis. A person remains a PEP for at least 12 months after ceasing to hold the relevant function, with the duration calibrated to residual risk.
The Financial Services and Markets Act 2023 amended MLR 2017 to treat UK domestic PEPs as inherently lower-risk than foreign PEPs unless other risk factors indicate otherwise. The FCA’s PS24/8 implements the related FCA guidance updates. Family members include spouse / civil partner, children and their spouses or partners, and parents. Close associates include known business partners and persons sharing beneficial ownership of an entity.
A senior diplomat’s spouse, identified through PEP screening at onboarding, would attract EDD: senior management sign-off, evidenced source of wealth, source of funds for the policy premium, and an enhanced ongoing monitoring trigger. Domestic PEPs (UK government ministers etc.) are calibrated under the lower-risk default unless heightened risk factors apply.
Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (S.I. 2017/692), regulation 35. Financial Services and Markets Act 2023. FCA Policy Statement PS24/8 (PEPs amendments). JMLSG Guidance Part I, chapter 5.5.18.
By Matt Bartlett, Director, on 2026-06-11.
This entry is part of the Apex Insurance Wiki. Last reviewed by Matt Bartlett on 2026-06-11. Apex Insurance Brokers Limited, FCA FRN 724952, Companies House 07014570. Not regulated advice — consult your broker on your specific position.
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