Definition Politically Exposed Person (PEP)

A Politically Exposed Person (PEP) in the Philippines is an individual who is, or has been, entrusted with a prominent public position with substantial authority over policy, government operations, or the allocation of public resources. Under AMLA and BSP Circulars 706 and 950, all covered persons must identify PEP customers, obtain senior management approval before onboarding them, and apply Enhanced Due Diligence including source of wealth verification and ongoing transaction monitoring. The AMLC does not maintain a centralized PEP database: covered persons bear full responsibility for identification.

What Is a Politically Exposed Person (PEP)?

A Politically Exposed Person is someone whose position gives them substantial influence over public resources, policy decisions, or government operations, and whose access to that influence creates elevated risk of corruption, bribery, and money laundering. PEPs are not assumed to be corrupt. The classification exists because their position creates opportunities for financial crime that ordinary individuals do not have, and those opportunities require closer scrutiny.

Under Rule 2, Section 1 of the 2018 Implementing Rules and Regulations (IRR) of the AMLA, a PEP in the Philippines is defined as an individual who is or has been entrusted with prominent public position in: (a) the Philippines, with substantial authority over policy, operations, or the use or allocation of government-owned resources; (b) a foreign state; or (c) an international organization.

Critically, PEP status does not expire immediately when a person leaves public office. Covered persons must apply a risk-based assessment to determine how long former PEP status remains relevant, taking into account the nature of the former position, the time elapsed since leaving office, and any ongoing connections to public resources or influence.

Who Qualifies as a PEP in the Philippines?

Under BSP Circular No. 706 (Updated Anti-Money Laundering Rules) and Circular No. 950 (Guidelines on EDD for PEPs), the following categories qualify as domestic PEPs:

• The President, Vice President, and Cabinet Secretaries
• Senators and members of the House of Representatives
• Justices of the Supreme Court, Court of Appeals, and Sandiganbayan
• The Ombudsman and Deputy Ombudsmen
• Heads of constitutional commissions (COMELEC, COA, CSC)
• Governors and mayors of provinces, cities, and municipalities
• Senior executives and board members of government-owned and controlled corporations (GOCCs)
• Senior officers of the AFP and PNP at the rank of general or above
• Ambassadors and senior diplomatic officials

PEP coverage extends beyond the individual officeholder. The following are also subject to PEP-equivalent EDD:

• Immediate family members: spouses, children (including adopted), parents, siblings, and in-laws of PEPs
• Close associates: individuals known to have joint beneficial ownership of a legal entity or arrangement with a PEP, or known to be otherwise closely connected through business or personal relationships

Domestic PEP vs. Foreign PEP: What Is the Difference Under Philippine Law?

Philippine regulations treat domestic and foreign PEPs differently in terms of the default level of scrutiny required.

PEP Type	Definition	Default EDD Requirement	Senior Management Approval
Domestic PEP	Philippine national holding or having held prominent public position in the Philippines	Risk-based assessment required; EDD triggered when risk is elevated	Required before onboarding
Foreign PEP	Individual holding or having held prominent position in a foreign government or international organization	EDD required as a minimum for all foreign PEPs	Required before onboarding
Family member / close associate	Immediate family or known close associate of any PEP	Risk-based; treated at same level as associated PEP	Required where relationship is confirmed

This distinction matters operationally: a foreign PEP customer automatically triggers EDD without further risk assessment. A domestic PEP triggers a risk-based analysis first, and EDD applies once that assessment concludes the customer poses elevated AML/CTF risk. In practice, most covered persons apply EDD to all domestic PEPs by default to avoid the administrative burden of case-by-case assessments and to reduce regulatory exposure.

PEP Compliance Obligations for Philippine Covered Persons

Under AMLA and BSP Circular 950, covered persons have four specific obligations when dealing with PEP customers.

1. PEP Identification at Onboarding

There is no shortcut here. Covered persons must screen all customers against PEP criteria at account opening and at regular intervals afterward. The AMLC confirmed in January 2025 that it does not maintain a centralized PEP database, so the identification burden falls entirely on the covered person. That means building or subscribing to a screening process that checks customers against Philippine government official lists, international PEP databases, media and adverse information sources, and beneficial ownership data where the customer connects to a legal entity.

2. Senior Management Approval

This step is non-negotiable. Before establishing a business relationship with a PEP, or before continuing an existing relationship after a customer is identified as a PEP, covered persons must obtain approval from senior management. The approval must be documented and retained as part of the customer file.

3. Enhanced Due Diligence (EDD)

EDD for PEPs goes beyond standard CDD. Covered persons must establish the source of wealth of the PEP (not just source of funds for specific transactions), understand the nature and purpose of the business relationship, and collect enhanced documentation supporting both. EDD documentation must be sufficient to explain how the PEP’s overall net worth was accumulated in a manner consistent with their public service career and any legitimate private activities.

4. Ongoing Transaction Monitoring

PEP relationships require heightened ongoing monitoring. Transactions must be reviewed for consistency with the PEP’s known profile, declared source of wealth, and the nature of the relationship. Any transaction that deviates from this profile triggers an STR review process. Monitoring must continue for a risk-based period after the customer leaves public office.

Why PEP Screening Is Harder Than It Looks in the Philippines

Three operational realities make PEP compliance particularly challenging for Philippine covered persons.

No centralized PEP registry. The AMLC confirmed it does not maintain a PEP list. This means covered persons must build screening against multiple sources: Philippine government directories, Commission on Elections data, corporate registries for GOCC executives, and international databases for foreign PEPs. Relying on a single commercial PEP database is generally insufficient.

High volume of election cycles. The Philippines holds regular national and local elections. Every election cycle produces substantial PEP status changes: thousands of local government officials are elected, re-elected, or leave office across provinces, cities, and municipalities. Covered persons must have a process for identifying when existing customers become PEPs through election to public office.

Family and associate identification is operationally complex. Identifying that a customer is the spouse or sibling of a sitting governor or senator requires active intelligence, not just name matching. Commercial PEP databases vary considerably in their coverage of Philippine local government family connections. Covered persons in high-PEP-density regions (Metro Manila, Metro Cebu, Davao) face disproportionately complex screening environments.

PEP Status and the HARBOR UBO Registry

SEC Memorandum Circular 15-2025 (effective January 2026) introduced a new intersection between PEP compliance and corporate beneficial ownership. Under HARBOR, corporations must disclose whether any of their UBOs hold PEP status. That gives covered persons conducting KYB on corporate clients an additional data source: HARBOR UBO filings that should flag PEP connections at the entity level.

For KYB workflows, this creates a more complete picture: the HARBOR registry confirms UBO identity, and PEP screening against that UBO data reveals whether the entity’s beneficial owner is a politically exposed person who requires EDD. Covered persons that integrate HARBOR lookups into their corporate onboarding process can surface PEP exposure at the entity level that would otherwise require manual investigation.

Frequently Asked Questions About PEPs in the Philippines

What does PEP mean in banking in the Philippines?

PEP stands for Politically Exposed Person. In Philippine banking, a PEP is a customer who is or has been entrusted with a prominent public position, including government officials, legislators, judges, military leaders, GOCC executives, and their immediate family members and close associates. PEP status triggers Enhanced Due Diligence requirements under AMLA and BSP Circular 950.

Does the AMLC maintain a list of PEPs in the Philippines?

No. The AMLC confirmed in January 2025 that it does not maintain a database of politically exposed persons. The duty to identify PEPs rests entirely with covered persons under Rule 19, Section 1 of the AMLA IRR.

What is the difference between domestic PEP and foreign PEP?

A domestic PEP holds or held a prominent position in the Philippine government. A foreign PEP holds or held a position in a foreign government or international organization. Foreign PEPs automatically require EDD. Domestic PEPs require a risk-based assessment first, though most institutions apply EDD to all domestic PEPs by default.

How long does PEP status last after leaving public office?

There is no fixed period under Philippine law. Covered persons must apply a risk-based assessment to determine how long to treat a former official as a PEP, considering the nature of the position held, time elapsed since leaving office, and any ongoing connections to government resources or influence.

What EDD is required for PEPs in the Philippines?

Under BSP Circular 950, EDD for PEPs requires: senior management approval before onboarding, source of wealth (not just source of funds) verification, enhanced understanding of the purpose of the relationship, and ongoing heightened transaction monitoring. These requirements apply to family members and close associates of PEPs as well.

PEP Screening Is a Process, Not a Checkbox

The combination of no centralized PEP registry, high election cycle churn, and family/associate coverage requirements means PEP compliance in the Philippines is operationally intensive. Institutions that handle PEP compliance well do not treat it as a checkbox at account opening. They treat it as a continuous process: automated screening at onboarding through eKYC, periodic re-screening of the existing customer base against updated PEP data, and clear escalation protocols when PEP status is identified or when a customer becomes a PEP after onboarding.

Verihubs eKYC API provides the identity verification foundation that makes PEP screening reliable: government ID authentication, biometric liveness, and deepfake detection ensure that the identity being screened is the real identity of the person in front of the camera, not a synthetic or stolen identity designed to evade detection.

Talk to the Verihubs team about building PEP-ready eKYC into your Philippine compliance workflow.