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What does PEP mean and how is PEP status identified in Germany? 

This article explains the meaning of Politically Exposed Person (PEP), the main categories of PEPs, and how PEP status is identified under German anti-money laundering law.

In the financial and legal sectors, PEP stands for Politically Exposed Person. Under the German Money Laundering Act, a politically exposed person is a natural person who holds, or has held, a high-ranking important public office at international, European, or national level. It can also include a public office below national level if its political importance is comparable.Because of their influential public functions, PEPs are treated as a higher-risk category for anti-money laundering purposes. This means that enhanced due diligence (EDD) may apply. Being classified as a PEP is not an accusation of illegal activity. It is a risk classification used for anti-money laundering checks.

PEPs can be grouped into several categories:

Domestic PEPs

Domestic PEPs are individuals who hold, or have held, a high-ranking important public office in their own country. This can include, for example, heads of state, heads of government, ministers, deputy ministers, state secretaries, members of parliament, members of governing bodies of political parties, high-level judges, members of courts of auditors, central bank board members, ambassadors, defence attachés, and members of administrative, management, or supervisory bodies of state-owned enterprises.

Foreign PEPs

Foreign PEPs are individuals who hold, or have held, a high-ranking important public office in another country. Examples can include foreign heads of state, heads of government, ministers, deputy ministers, state secretaries, ambassadors, or other comparable public office holders.

International Organization PEPs

International Organization PEPs are individuals who hold, or have held, high-ranking functions in international or European organizations. This can include directors, deputy directors, members of management bodies, or other leaders with comparable functions in international or European organizations.

Family Members and Close Associates

German anti-money laundering law also covers certain persons connected to a politically exposed person. Family members include, in particular, the spouse or registered partner of a PEP, children and their spouses or registered partners, and parents. Known close associates include persons who are known to have a close business or economic relationship with a PEP, or who are known to be beneficial owners of a legal entity or legal arrangement together with a PEP.

How PEP Status is Identified in Germany?

PEP status and anti-money laundering (AML) protocols are defined by the Money Laundering Act (GwG) (§ 1 para. 12 GwG). Since there is no single, freely accessible, government-run database of all PEPs, the responsibility for identification falls heavily on obligated parties (e.g., banks, insurance companies, and real estate agents).

Entities in Germany determine PEP status using the following methods:

  • Customer Declarations: Standard practice for banks and financial institutions is to require customers to complete a self-disclosure form declaring whether they or any close relatives hold a prominent political or public office.
  • Commercial Screening Databases: Because PEP identification is complex, most obligated firms subscribe to commercial compliance and PEP databases (e.g., LexisNexis, World-Check, or Dow Jones) that continually track public officeholders.
  • Global Monitoring Platforms: To consolidate data on public officeholders, firms also rely on open-source projects and directories like the global OpenSanctions PEP Dataset.
  • Official EU Lists: For cross-referencing European-level officials, companies can refer to the EU PEP-List.

What PEP status means in practice

If a contracting party or beneficial owner is identified as a politically exposed person, a family member, or a known close associate, enhanced due diligence may apply under the German Money Laundering Act. For former PEPs, the specific PEP-related risk must be considered for at least twelve months after the person has left the public function and for as long as a relevant risk remains.