Account Opening
Enhanced verification required: source of wealth, source of funds, beneficial ownership, and senior management approval before onboarding.
PEP Banking
Politically Exposed Person Banking in Australia
How Australian banks handle politically exposed person (PEP) accounts. Enhanced due diligence, senior management approval, ongoing monitoring, and AUSTRAC compliance obligations.
PEP banking requirements under AUSTRAC
Politically exposed person (PEP) banking presents unique challenges for Australian financial institutions balancing customer service with AML/CTF compliance obligations.
Banks and ADIs must implement robust PEP identification processes, conduct Enhanced Customer Due Diligence (ECDD), obtain senior management approval for all PEP relationships, and maintain heightened ongoing monitoring for the life of the relationship.
Banking obligations for PEPs
Enhanced Due Diligence
Additional identity verification, understanding political connections, and verifying the legitimacy of wealth and fund origins.
Ongoing Monitoring
Enhanced transaction monitoring, lower alert thresholds, regular relationship reviews, and prompt investigation of changes.
Senior Management
Documented senior management approval required. Management must be informed of significant transactions, risk changes, and adverse information.
Frequently asked questions
Can Australian banks refuse PEP accounts?
Yes, banks can decline based on risk assessment. However, blanket policies refusing all PEPs may be discriminatory. Decisions should be risk-based, documented, and consistent with AUSTRAC obligations.
What documentation do PEPs need?
Beyond standard KYC: source of wealth evidence, employment verification, tax returns, asset declarations, and explanation of large deposits. Senior management approval is required.
How often should PEP accounts be reviewed?
At least annual reviews, with more frequent reviews for higher-risk PEPs. Banks must assess the continued appropriateness of the risk rating and investigate any significant changes in activity.
Simplify Your AML Compliance
ARCaml helps Australian businesses meet PEP screening and CDD obligations with purpose-built technology and analyst support.