Glossary
PEP (politically exposed person)
A PEP is a person who holds or has held a prominent public function, whose position creates a higher risk of involvement in bribery or corruption.
PEP (politically exposed person) explained
Politically exposed persons include heads of state, senior politicians, senior government and judicial officials, senior military officers, executives of state-owned enterprises and senior officials of political parties. The FATF Recommendations extend the category to their family members and close associates, because money connected to abuse of office often moves through relatives and business partners.
Being a PEP is not an accusation. It is a risk classification that tells an institution to look harder: to establish where the customer's wealth and funds come from, to obtain senior management approval before opening the relationship, and to monitor the account more closely.
For example, a permanent secretary opening a personal account is a legitimate customer, but the institution should understand and document the source of unusually large deposits.
Why it matters in life insurance
Zambian institutions are expected to identify domestic and foreign PEPs and apply enhanced due diligence to them, and the FIC publishes PEP information that institutions can use. Because PEP status changes with appointments and elections, one-off checks at onboarding are not enough. ERMAML, the Ontech Risk & Compliance Suite, ingests PEP data alongside sanctions lists and re-screens customers on a schedule so status changes trigger review.
Related terms
EDD (enhanced due diligence) · Sanctions screening · CDD (customer due diligence)