PEP Screening and Sanction Check

What is PEP Screening (Check)?

PEP check (screening) is an essential element of AML (Anti-Money Laundering) compliance and it enables institutions to take the following actions:

• Identify if the client is a PEP, a close associate or a family member of a PEP,
• Determine the risk factors,
• Apply Enhanced Due Diligence (EDD) measures when required,
• Reduce the risk of being connected to any financial crime.

What is the Role of PEP Screening in AML Compliance?

PEP Screening is required for AML compliance because it helps financial institutions identify risky individuals. By carefully screening PEPs, institutions reduce risk factors early by applying Enhanced Due Diligence (EDD) and complying with FATF, FinCEN, and EU AMLD requirements.

Why Does PEP Screening Matter?

Adhering to Anti-Money Laundering and Counter Financing of Terrorism (AML/CFT) laws is required to make your business transparent and reliable. One vital element here is to follow PEP (Politically Exposed Person) screening requirements.

Why is PEP Screening Required?

In many regions under the jurisdiction of the FATF, the EU’s AML Directives and FinCEN guidance, it is mandatory to screen PEPs so that institutions can 

Handle relationships with PEPs with extra caution,

• Document and monitor transactions,
• Conduct Enhanced Due Diligence (EDD) to determine where their funds come from,
• Check the financial status of PEPs regularly. An effective PEP screening also assists in
• Preventing the misuse of political power,
• Providing transparency in financial systems,
• Protecting institutions from damage and penalties,
• Following regulations such as FATF Recommendations, EU AML Directives, FinCEN guidelines, etc.

To be effective at PEP Screening, organizations and financial institutions must rely on advanced screening technologies that are proficient at AI-driven name matching and risk scoring. The up-to-date screening tools and the professional team of Sanction Scanner ensure your business can check PEPs, control their core KYC, onboarding and financial transactions.

Top PEP Monitoring Software Providers in 2025

What to Consider When Choosing a PEP Monitoring Tool

• Jurisdictional Coverage: Does the tool align with your client profile?
• Real-time Data: Are PEP lists recently updated?
• Customization: Can you obtain alerts for risk factors?
• Scalability: Can the tool scale with your business growth?
• Regulatory Alignment: Is it compliant with FATF, FinCEN, and EU AMLD requirements?

PEP Screening Requirements by Country 

Politically Exposed Person (PEP) screening is fundamental for global Anti-Money Laundering (AML) frameworks. Financial Action Task Force (FATF) set global rules, and yet every country has its own rules and regulation levels. You can find the summary of key jurisdictions and requirements for PEP screening below: 

United States (FinCEN) 

PEP Screening in USA is recommended but not directly mandated. It is regulated by the Bank of Secrecy Act (BSA) and FinCEN Guidance. While U.S. banks are urged to apply enhanced due diligence (EDD) to foreign PEPs, local PEPs do not meet the same behavior.  

European Union (EU AMLD) 

PEP Screening in Europe is mandatory for both foreign and domestic PEPs. It is regulated by EU Anti-Money Laundering Directives (5AMLD, 6AMLD). Enforced entities have to identify PEPs, lose associates (RCAs), and EDD. Another requirement is that transparency should be provided over beneficial ownership.  

United Kingdom (UK MLRs) 

PEP Screening is mandatory in the United Kingdom, which is regulated by Money Laundering Regulations (MLRs). Moreover, PEP Screening is applicable for both foreign and UK PEPs. Firms have to make a risk assessment, apply EDD, and maintain monitoring during the relationship.  

Canada (FINTRAC) 

PEP Screening is mandatory in Canada

Regulations: Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA). Applies to both foreign and domestic PEPs. Ongoing monitoring and source-of-funds checks are required for high-risk clients. 

Australia (AUSTRAC) 

In Australia, PEP Screening is mandatory for foreign PEPs. Anti-Money Laundering and Counter-Terrorism Financing Act regulate it. While screening is not rigorously required for Domestic PEPs, high-risk assessments are encouraged.  

Singapore (MAS Guidelines) 

PEP Screening is mandatory in Singapore, which is regulated by Monetary Authority of Singapore (MAS) and AML/CFT Notices. Furthermore, PEPs, their family members, and close associates must be detected and monitored nonstop. 

United Arab Emirates (UAE) 

United Arab Emirates (UAE) deem PEP Screening mandatory. Cabinet Resolution No. (10) of 2019 and UAE AML Law regulates it and it should be applied for all of the financial institutions and DNFBPs. 

Japan (FSA Guidelines) 

Japan makes PEP Screening obligatory for foreign PEPs. PEP Screening is regulated by Act on Prevention of Transfer of Criminal Proceeds. Foreign PEPs must apply EDD, and firsm are motivated to risk score domestic PEP properly.  

India (RBI/SEBI/IRDAI) 

India is another country in which PEP Screening is mandatory. Prevention of Money Laundering Act (PMLA) is responsible for the regulation. PEPs must be detected during onboarding and  before the establishment of relationships, senior management approval is required.  

Brazil (COAF Guidelines) 

PEP Screening is mandatory in Brazil. Circular No. 3,978/2020 by the Central Bank of Brazil regulates it. It is applied to all financial institutions and fintechs. EDD and approval by higher management is required for PEP relationships. 

What is Included in a PEP Check?

• PEP (Politically Exposed Person) check involves the identification of sensitive information. Here we have summarized the key elements checked during a PEP screening process:
• Full Name and Aliases: Verify through global databases with exact and fuzzy matching.
• Public Role: Identify if the individual is a government official.
• Country of Exposure: Determine if the individual is a domestic or foreign PEP.
• Date of Exposure: Investigate if the individual is currently in the office. Treat former PEPs as high risk for at least 12–18 months after they end their duty.
• Close Associates: Check PEP spouses, relatives, and their business contacts.
• Industry Risk: Find out if PEPs are connected to the defense and energy sectors.
• Watchlists and Media Presence: Make sure PEPs are not on sanction lists, or that they are not involved in criminal investigations or negative news reports.

What Is a PEP Database and How is It Maintained?

A PEP database is a centralized list that includes detailed information about Politically Exposed Persons (PEPs). It contains:

Official roles such as ministers and ambassadors,

Relatives and close associates (RCAs) of PEPs,

Records of former PEPs,

Sanction Scanner’s advanced compliance tools provide an updated database that enables real-time PEP screening.

What are the Consequences of Failing to Screen for PEPs?

If financial institutions fail to identify and manage Politically Exposed Persons (PEPs) this can result in severe consequences. Here in this table we have summarized some of the consequences for you.

How can Sanction Scanner Help You Identify PEPs?

Sanction Scanner provides professional tools for financial institutions, fintech companies, and professional service providers so that they can effectively manage Politically Exposed Persons (PEPs).

1. Global PEP screening is for continuously monitoring customers against an up-to-date PEP database that involves 200+ countries.

2. Automated risk classification is another service that provides assessment and categorization of PEPs depending on their role, region, and risk level.

3. Ongoing monitoring or continuous due diligence is for institutions to receive automatic alerts when new risk details about PEPs emerge.

4. Detailed audit trails and reports can regularly meet internal and external compliance requirements.

5. Real-time API integration for screening your onboarding and transaction systems with the professional tools of Sanction Scanner.

What Is a PEP Database and How is It Maintained?

A PEP database is a centralized list that includes detailed information about Politically Exposed Persons (PEPs). It contains:

• Official roles such as ministers and ambassadors
• Relatives and close associates (RCAs) of PEPs
• Records of former PEPs

Sanction Scanner’s advanced compliance tools provide an updated database that enables real-time PEP screening.

How Often are PEPs Checked?

PEP screening is not a one-time or temporary process but must be continuous. As political roles and risk factors frequently change, institutions must follow regulatory updates.

Recommended PEP Screening Frequency

What are the Differences Between PEP Screening and Sanction Screening?

While both aim to reduce financial crime risks, PEP and sanction screening slightly differ. We have summarized key elements here in this table.

Why are PEP and Sanction Checks Critical in Compliance?

If businesses fail to implement PEP and sanction checks, they may face serious legal and reputational consequences. Here is why this process matters:

● Regulatory Compliance: Global AML/CFT frameworks like the Financial Action Task Force (FATF) and EU Anti-Money Laundering Directives (AMLD) require businesses strict due diligence.

● Crime Prevention: This process requires customers to be consistently screened.

● Reputation Protection: Being associated with high-risk individuals can damage credibility.

● Maintaining Banking Relationships: Weak compliance can label a business as high risk, leading banks to end relations.

How to Conduct Reliable PEP and Sanction Checks?

To ensure effective compliance, financial institutions must consider official sanctions lists. Here we have listed them for you:

1. Screening at onboarding includes checking all new customers against global watchlists.

2. Ongoing monitoring includes detecting status changes or risks.

3. Assessing and escalating risks includes a careful evaluation of PEPs through Enhanced Due Diligence (EDD).

4. Maintaining records includes checking documents and results to ensure full compliance.

What Global Sanctions Lists Must Be Considered for Effective Screening?

To sum uğ, financial entities must consider using official sanctions list. Here are the listed information.

Which Sectors Should Use PEP and Sanctions Screening?

PEP and sanctions screening is necessary in multiple industries. Here we have summarized them for you:

What are the Regulatory Requirements for PEP and Sanction Screening?

How does Sanction Scanner Support PEP and Sanction Screening?

Sanction Scanner provides automated tools that screen PEPs in real time so that you can stay updated. Our team checks global watchlists and databases to make sure you have powerful compliance solutions. Here are some of our services:

Real-time Screening: Scan entities instantly against over 3,000 global lists.

Risk Detection: Identify PEPs whether they are domestic or international. Get to know more about their associates.

Easy Integration: Connect directly with CRMs, integrate seamlessly with KYC flows, banking platforms with flexible APIs.

Audit-Ready Features: Keep detailed, secure logs for transparency checks. Trusted by financial institutions, Sanction Scanner makes compliance easy and safe.