PEP screening is the process of identifying whether a merchant, business owner, or ultimate beneficial owner (UBO) is a politically exposed person  someone who holds or has held a prominent public position, such as a senior government official, judge, military leader, or head of a state-owned enterprise.

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Because PEPs are at higher risk of involvement in corruption, bribery, or illicit financial activity, acquirers and payment providers are required to apply enhanced due diligence (EDD) when onboarding or monitoring these individuals. This includes identifying their status, understanding the source of their funds, and maintaining closer scrutiny over their financial behavior.

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PEP screening is a regulatory expectation under AML regimes globally and is typically performed during merchant onboarding and monitored on an ongoing basis. Ignoring PEP status can expose payment providers to legal, reputational, and regulatory risks  especially if transactions later become linked to financial crime or public scandals.

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