Politically exposed persons (Reform)

Learn what a politically exposed person (PEP) is and your customer due diligence (CDD) obligations when you provide them with a designated service. 

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You have additional obligations under the Anti-Money Laundering and Counter‑Terrorism Financing Act 2006 (the Act) for PEPs. 

This guidance outlines those obligations and helps you identify if a person is a PEP.

Overview of PEPs

This section refers to the Act sections 5 and 28.

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. Refer to the below definitions for more information on this. 

These people can be a target for bribery or corruption because they hold positions of power or influence or have close associations with such people.

For example, they may be able to influence any of the following: 

  • government spending and budgets
  • procurement processes
  • development approvals and grants.

This doesn’t mean that PEPs are automatically involved in unlawful activity. You must assess the money laundering, terrorism financing and proliferation financing risks (we refer to these as ML/TF risks) of each customer, including PEPs, on a case-by-case basis.

Types of PEPs

There are 3 types of PEPs:

  • a foreign PEP
  • a domestic PEP
  • an international organisation PEP.

Definition of foreign PEPs

This section refers to the Act section 5.

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 an individual who holds any of the following offices or positions:

  • head of state or head of government
  • member of the executive council of government
  • member of a legislature
  • minister, deputy minister or equivalent office or position
  • 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 a state‑owned bank
  • member of a governing body of a political party represented in a legislature.

A foreign PEP is also a family member of an individual listed above or an individual who is known (based on information that’s public or readily available) to have any of the following:

  • joint beneficial ownership of a body corporate or legal arrangement with an individual listed in the above positions
  • sole beneficial ownership of a body corporate or legal arrangement on behalf or for the benefit of an individual listed in the above positions
  • any other close business relations with an individual listed in the above positions.

Definition of domestic PEPs

This section refers to the Act section 5 and the Rules section 1–5.

A domestic PEP is an individual in who holds any of the following offices or positions:

  • member of the legislature of the Commonwealth or a state or territory
  • member of the governing body of a political party represented in the legislature of the Commonwealth or a state or territory
  • Governor‑General
  • Governor of a state
  • Administrator of a territory
  • Justice of the High Court
  • Judge of the Federal Court of Australia
  • Judge of the Supreme Court of a state or territory
  • accountable authority, or member of the accountable authority, of a Commonwealth entity within the meaning of the Public Governance, Performance and Accountability Act 2013 (PGPA Act)
  • member of the governing body of a wholly‑owned Commonwealth company within the meaning of the PGPA Act
  • Head (however described) of a department of state or territory, or an agency or authority of a state or territory that has a prominent public function
  • Head (however described) of a local government council in a state or territory
  • the chair of the board, chief executive officer or chief financial officer of a company or other incorporated body that’s wholly‑owned or majority‑owned by a state or territory
  • Chief of the Defence Force, Vice Chief of the Defence Force, Chief of Navy, Chief of Army or Chief of Air Force
  • officer of the Navy of the rank of Vice Admiral or a higher rank
  • officer of the Army of the rank of Lieutenant General or a higher rank
  • officer of the Air Force of the rank of Air Marshal or a higher rank

It also includes any of the following offices of the Commonwealth in a foreign country, or to a public international organisation, to which appointments are made by the Governor‑General:

  • Ambassador
    • High Commissioner
    • Consul‑General
    • Australian representative
    • Special representative
    • Representative
    • Permanent representative
    • Chargé d’Affaires 

A domestic PEP is also a family member of an individual listed above, or an individual who is known (based on information that’s public or readily available) to have any of the following:

  • joint beneficial ownership of a body corporate or legal arrangement with an individual listed in the above positions.
  • sole beneficial ownership of a body corporate or legal arrangement on behalf or for the benefit of an individual listed in the above positions.
  • any other close business relations with an individual listed in the above positions.

Definition of international organisation PEPs

This section refers to the Act section 5.

An international organisation PEP is an individual entrusted with a prominent public function, position or office of a public international organisation. This includes a head, deputy head or board member in a public international organisation. For example, a head, deputy head or board member of a United Nations body. 

An international organisation PEP is also a family member of one of these individuals, or an individual who is known (based on information that’s public or readily available) to have any of the following:

  • joint beneficial ownership of a body corporate or legal arrangement with an individual entrusted with a prominent public function, position or office of a public international organisation
  • sole beneficial ownership of a body corporate or legal arrangement on behalf or for the benefit of an individual entrusted with a prominent public function, position or office of a public international organisation
  • any other close business relations with an individual entrusted with a prominent public function, position or office of a public international organisation.

How to establish if an individual is a PEP

This section refers to the Act sections 26F(1), 28 and 26F(3)(b) and the Rules section 5–5.

You must establish on reasonable grounds if any of the following individuals are a PEP before you provide a customer with 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.

Your AML/CTF policies must outline how you’ll establish if a person is a PEP.

The processes you use to establish if a person is a PEP will depend on the size, nature and complexity of your business.

There are different ways you can do this. For example, you could:

  • ask a person if they, a family member or a close associate are a PEP during onboarding and throughout your relationship with the customer
  • check the person’s background on the internet, including sanctions lists and other government lists, and on social media
  • use databases and reports from third party providers that specialise in analysing corruption risks.

These lists can help you identify if a person is a domestic PEP:

You may use a specialist PEP database or reports from third-party providers to identify if a person is a PEP. For example, if you often need to conduct more thorough checks or are very likely to have PEPs as customers. 

If you use a third-party provider to screen for PEPs, check if they search for the positions or offices included in the definitions of PEPs in the Act. You may also need to check different spellings of names, and other names they are known by.

Identifying if a customer becomes a PEP

This section refers to the Act section 30(2)(c)(ii) and Rules section 6–24.

You must take reasonable steps to monitor your customer to determine if any of the following becomes a PEP during your business relationship:

  • your customer
  • any beneficial owner of your customer
  • any person on whose behalf the customer is receiving a designated service.

You can do this by:

  • asking your customer questions when you reverify their know your customer (KYC) information in ongoing CDD or during other interactions
  • periodically conducting open source checks or checks through specialist databases
  • identifying transactions that suggest the customer’s circumstances may have changed. 

Learn more about ongoing CDD.

Former PEPs

This section refers to the Act section 32 and the Rules section 5–5.

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 apply enhanced customer due diligence (CDD) measures if the customer’s ML/TF risk is high.

Your AML/CTF policies must ensure that senior manager approval is received to provide a designated service or continue a business relationship if one of the following individuals was previously a PEP:

  • your customer
  • any beneficial owner of your customer
  • any person on whose behalf your customer is receiving a designated service.

This includes setting out who is authorised to give the required approval.

For example, it may be appropriate to 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 that suggests the person may still have a high ML/TF risk because of their former PEP status. 

Record keeping

This section refers to the Act section 111.

You must keep records to show how you’ve established if a person is a PEP.

We expect that your AML/CTF policies set out how you’ll comply with your record keeping obligations. This will help you show how you’ve complied with your obligations to establish if a person is a PEP. 

For example, if you do an open source check to establish if a person is a PEP, you could:

  • keep extracts of website pages about the person that may suggest they’re a PEP
  • document any names and phrases you searched for
  • document why you consider they are or aren’t a PEP. 

Additional obligations for PEPs

This section refers to the Rules sections 5–5, 6–23 and 6–24 and the Act section 30.

You have additional obligations if you’re dealing with a PEP.

Important note about foreign PEPs if you provide designated services in a foreign country

A foreign PEP may be considered a domestic PEP for the purposes of:

  • seeking senior manager approval
  • establishing and/or reviewing the source of funds and source of wealth
  • reviewing, updating and reverifying KYC information. 

This is only the case if both the: 

  • designated service is provided to a customer at or through a permanent establishment in a foreign country
  • person is a foreign PEP because of their connection to that foreign country. 

You don’t need to establish their source of funds and source of wealth or obtain senior manager approval unless you identify their ML/TF risk as high or it is otherwise appropriate to manage and mitigate the ML/TF risk.

Senior manager approval for PEPs

You must get senior manager approval to provide the designated service to a customer if any of the following individuals is a foreign PEP or domestic or international organisation PEP (where your customer has a high ML/TF risk):

  • your customer
  • any beneficial owner of the customer
  • any person on whose behalf the customer is receiving the designated service (such as a beneficiary of a trust or foreign equivalent).

You must also get senior manager approval to continue a business relationship with an existing customer if one of the individuals listed above becomes a foreign PEP or a domestic or international organisation PEP (where your customer has a high ML/TF risk).

Learn more about senior managers.

Additional initial CDD obligations for PEPs 

Before you provide a customer with a designated service, you must establish the PEP’s source of funds and source of wealth on reasonable grounds. This only applies if any of the following is a foreign PEP or a domestic or international organisation PEP (where your customer has a high ML/TF risk):

  • your customer
  • any beneficial owner of the customer
  • any person on whose behalf the customer is receiving the designated service (such as a beneficiary of a trust or foreign equivalent).

Learn more about establishing source of funds and source of wealth.

Additional ongoing CDD obligations

You must review, and where appropriate, update and reverify KYC information relating to the customer if any of the following become a foreign PEP or a domestic or international organisation PEP (where your customer has a high ML/TF risk):

  • your customer
  • any beneficial owner of the customer
  • any person on whose behalf the customer is receiving the designated service (such as a beneficiary of a trust or foreign equivalent).

You must monitor all your customers for unusual transactions and behaviours. This includes indicators of corruption and bribery. For a PEP, this could include behaviours and transactions that suggest they’re using their position for an improper purpose. For example, it would generally be unusual if a person who is responsible for approving procurement activities, such as a mayor, forms or is a beneficial owner of a company that competes for those contracts. 

Learn more about what you must monitor for during ongoing CDD.

Enhanced CDD obligations

This section refers to the Act section 32.

You must apply enhanced CDD if any of the following individuals is a foreign PEP:

  • your customer
  • any beneficial owner of the customer
  • any person acting on behalf of your customer
  • any person on whose behalf the customer is receiving the designated service. For example, a beneficiary of a trust or foreign equivalent.

You must also apply enhanced CDD to high ML/TF risk customers. 

Learn more about measures you can apply in enhanced CDD.

This guidance sets out how we interpret the Act, along with associated Rules and regulations. Australian courts are ultimately responsible for interpreting these laws and determining if any provisions of these laws are contravened. 

The examples and scenarios in this guidance are meant to help explain our interpretation of these laws. They’re not exhaustive or meant to cover every possible scenario.

This guidance provides general information and isn't a substitute for legal advice. This guidance avoids legal language wherever possible and it might include generalisations about the application of the law. Some provisions of the law referred to have exceptions or important qualifications. In most cases your particular circumstances must be taken into account when determining how the law applies to you.

Last updated: 16 Oct 2025
Page ID: 1328

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