Politically exposed person (PEP): definition under the GwG

What is a politically exposed person?

A politically exposed person — PEP for short in anti-money laundering law — is, according to Section 1 (12) sentence 1 of the German Money Laundering Act (GwG), "any person who holds or has held a high-ranking prominent public office at international, European, or national level, or who holds or has held a public office below national level whose political significance is comparable". The definition is linked to an office, not to conduct: PEP is a status characteristic, not an accusation. And it has a lasting effect — "has held" means that former officeholders also remain covered. The term originates from European law on combating money laundering and is implemented in the German Money Laundering Act (GwG).

Who is included: the list of offices in the law

Section 1 (12) sentence 2 no. 1 GwG lists standard examples, introduced with "in particular" — the list is therefore not exhaustive. The following are listed:

• heads of state and government, ministers, deputy ministers and state secretaries, and members of the European Commission
• members of parliament and members of comparable legislative bodies
• members of the governing bodies of political parties
• members of supreme courts, constitutional courts, or other high-level courts against whose decisions, as a rule, no further appeal can be lodged
• members of the governing bodies of courts of auditors and of central banks
• ambassadors, chargés d'affaires, and defense attachés
• members of the administrative, management, and supervisory bodies of state-owned enterprises
• directors, their deputies, members of the management body, or other executives with a comparable function in an intergovernmental international or European organization

In addition, there are offices from a list that the European Commission compiles from the notifications of the member states and publishes in the Official Journal (Section 1 (12) sentence 2 no. 2 and sentence 3 GwG); BaFin has drawn attention to this list. For Germany, the supervisory authority states in its Interpretation and Application Guidance that, in principle, only functions at international, European, and national level come into consideration and that municipal functions are, in principle, not covered; regional functions can become relevant in federal structures if they are equivalent to national functions — BaFin cites the minister-presidents of the federal states, as members of the Bundesrat, in this regard.

Family members and close associates

As a family member, Section 1 (13) GwG — again with "in particular" — names the spouse or registered civil partner, children together with their partners, and each parent. The GwG does not list siblings. The person known to be a close associate under Section 1 (14) GwG, by contrast, is not linked to kinship but to a knowledge standard: It covers anyone who, together with a PEP, is the beneficial owner of an association or legal arrangement, who maintains other close business relationships with a PEP, or who is the sole beneficial owner of an arrangement that was in fact set up for the benefit of a PEP — in each case provided that the obliged entity must have reason to assume this. BaFin expressly states for its area of supervision that there is no obligation to investigate in this respect; what matters is what is publicly known or for which there are indications. This guidance is issued under Section 51 (8) GwG and is addressed to BaFin's area of supervision; for traders in goods, real estate agents, or tax advisors, Section 50 GwG makes other authorities responsible.

Why the law treats PEPs separately

Anti-money laundering law follows a risk-based approach. Anyone who holds a high-ranking public office typically has influence over public funds and decisions — a circumstance that can be abused and plays a role in the stages of money laundering. Under Section 15 (3) no. 1 GwG, there is a higher risk in particular if a contracting party or beneficial owner is a politically exposed person, a family member, or a close associate. Under Section 15 (1) GwG, enhanced due diligence obligations are added to the general ones; Section 15 (4) sentence 1 GwG specifies a minimum catalog for this. The status is not a suspicion: BaFin clarifies for its area that such a constellation does not mean that no business relationships may be entered into or no transactions carried out — and that clarifying the status is not itself an enhanced due diligence obligation, because it is carried out equally for all customers. It is therefore part of the normal know-your-customer process, not of the red flags. Because the status is linked to an office and not to conduct, the PEP concept is part of the basic vocabulary of any money laundering prevention training. The official statistics show how much movement there is in the reporting system: The Financial Intelligence Unit recorded 374,693 suspicious activity reports for the year 2025, around 41 percent more than in the previous year; the trend is shown by the series of FIU annual reports.

How long someone remains a PEP

The notion of a rigid one-year period persists stubbornly; the text of the law does not support it. Section 15 (4) sentence 3 GwG requires, in the case of a former politically exposed person, "to take into account, for at least twelve months after leaving public office, the risk that is specific to politically exposed persons, and to take appropriate and risk-based measures until it can be assumed that this risk no longer exists". Twelve months are therefore a lower limit, not an expiry date; the end is risk-based and open. BaFin puts it in the same sense for its area of supervision: In principle, the status does not lapse before one year after giving up the qualifying function. For family members and close associates, Section 15 (4) sentence 3 GwG contains no explicit period of its own.

Outlook: what the EU Anti-Money Laundering Regulation changes

From 2027, European law will largely replace the GwG. The EU Anti-Money Laundering Regulation (Regulation (EU) 2024/1624) has been in force since July 9, 2024 and will apply directly to the vast majority of obliged entities from July 10, 2027 (Article 90; for football agents and professional football clubs only from July 10, 2029). BaFin also names July 10, 2027 for the obliged entities it supervises. Until then, the GwG remains authoritative — the two regimes should not be mixed. For the PEP concept, the supervisory authority announces that the definition will be drawn up in more detail. Two points can already be named: Under Article 43, each member state will continue to keep and report a list of the functions that constitute a prominent public office — in future, the Commission will combine them into a single list and publish it in the Official Journal. And Article 46 will expressly extend the rules for former officeholders to family members and close associates as well — precisely the point that the GwG leaves open in its wording.

What does PEP mean in anti-money laundering law?

PEP stands for politically exposed person. Under Section 1 (12) GwG, this is anyone who holds or has held a high-ranking prominent public office — or an office below national level of comparable political significance. The status is linked to the office and is not a suspicion against the person.

Are mayors politically exposed persons?

According to BaFin's Interpretation Guidance, municipal functions are, in principle, not covered; the offices that primarily come into consideration are those at international, European, and national level. Regional functions can become relevant in federal structures — BaFin names the minister-presidents of the federal states, including the heads of government of the city-states with the title of mayor. From July 10, 2027, the EU Anti-Money Laundering Regulation will additionally cover regional and local authorities with 50,000 or more inhabitants.

Do you remain a PEP after leaving office?

Under Section 15 (4) sentence 3 GwG, the PEP-specific risk must continue to be taken into account for at least twelve months after leaving office — and beyond that until it can be assumed that it no longer exists. The twelve months are a lower limit, not a fixed period with an automatic end.

Do siblings count as family members?

In Section 1 (13), the GwG names spouses and registered civil partners, children together with their partners, and parents; it does not list siblings, although the list is not exhaustive. From July 10, 2027, the EU Anti-Money Laundering Regulation will expressly name siblings, but only for certain top offices.

• Section 1 GwG – Definitions, subsections (12) to (14) (as of 30 Dec 2024)
• Section 15 GwG – Enhanced due diligence obligations, authorization to issue ordinances, (1), (3) no. 1, and (4) sentence 3 (as of 30 Dec 2024)
• German Money Laundering Act (GwG) – full version (as of: last amended on 29 Jun 2026)
• Section 51 GwG – Supervision, authorization to issue ordinances, (8) sentence 1 (as of 10 Feb 2026)
• Section 50 GwG – Competent supervisory authority (as of 1 Sep 2026)
• BaFin – Interpretation and Application Guidance under Section 51 (8) sentence 1 GwG, chapters 5.4 and 7.1 (as of July 2025)
• BaFin – European Commission publishes PeP list (news item of 26 Feb 2024)
• Regulation (EU) 2024/1624 – EU Anti-Money Laundering Regulation, Articles 2, 43, 46, and 90 (OJ L, 19 Jun 2024)
• Regulation (EU) 2024/1624 – Official Journal version, English language version (unofficial mirror by FIAU Malta)
• FIU – Annual Report 2025 (reference year 2025, published 21 Jul 2026)
• FIU – Annual reports, overview (time series of the reporting volume)

All sources accessed on 4 Sep 2026 unless otherwise stated in the entry. The article image is AI-generated and bears the notice "Created with AI" as an overlay.