PEP and sanctions screening

A politically exposed person (PEP) is someone who holds, or has held, a prominent public position, together with their immediate family and close associates. The AML/CTF Rules 2025 recognise three categories:

• Foreign PEPs — heads of state, ministers, senior politicians, senior judiciary, senior military, senior executives of state-owned enterprises and senior officials of major political parties in foreign countries. Foreign PEPs are automatically treated as high-risk and automatically trigger ECDD and senior-manager approval.
• Domestic PEPs — the same kinds of roles in Australia. Risk-rated on the role and the customer's circumstances. ECDD applies only if the customer is independently high-risk.
• International-organisation PEPs — senior officials of bodies like the UN, World Bank or IMF. Same treatment as domestic PEPs: ECDD only if independently high-risk.

Family and close associates include spouses, parents, children, siblings and known business partners. PEP status persists for at least 12 months after the person leaves the prominent position.

Sanctions screening is separate from PEP screening. The relevant lists are:

• Australian sanctions — DFAT's Consolidated List, maintained under the Charter of the United Nations Act 1945 (Cth) and the Autonomous Sanctions Act 2011 (Cth). This is the legally binding list for Australian reporting entities.
• United Nations Security Council sanctions — incorporated into the DFAT list.
• Foreign sanctions (OFAC, HM Treasury, EU) — not legally binding on Australian agencies, but commonly screened for reputational and counterparty-risk reasons.

Dealing with a sanctioned person — even unknowingly — is an offence under Australian sanctions law, separate from AML/CTF obligations. The penalties are severe.

When to screen. At onboarding (before or at the time of providing the designated service) and periodically afterwards. The DFAT list is updated frequently, so a one-off check is not enough.

What counts as a match. A "true match" is a confirmed identification of your customer with a listed person. A "potential match" — same name, different date of birth or country — needs investigation before being cleared. Document the screening decisions, including potential matches ruled out, with the reasoning.

What to do with a hit. A confirmed sanctions match means you cannot provide the designated service and you must report. A confirmed foreign-PEP match triggers ECDD and senior-manager approval but does not by itself prevent the relationship. A domestic or international-organisation PEP match triggers ECDD only if the customer is otherwise high-risk.

The DFAT Consolidated List runs to roughly 11,000 entries and changes often. Every party to every transaction needs to be screened on an ongoing basis.

What to do next. Subscribe to DFAT sanctions-list update notifications and decide how your agency will operationalise screening — manual checks, a screening service, or an integrated platform that runs the list nightly.