PEPs, High-Risk Customers & EDD: Are You Managing the Risk or Just Creating the Paperwork?

When it comes to Politically Exposed Persons and high-risk customers, the gap between having an EDD process and having one that actually works is wider than most firms realise — and the FCA knows it.

Enhanced Due Diligence is one of the most scrutinised areas of AML compliance in UK financial services. The Money Laundering Regulations 2017 are explicit: certain customers require a materially higher standard of scrutiny, documented evidence, and ongoing monitoring. Yet supervisory findings, enforcement actions, and thematic reviews consistently reveal the same failures — inadequate identification of PEPs, superficial risk assessments, absent senior management approval, and monitoring arrangements that exist on paper but deliver nothing in practice.

In this episode, we go beyond the basics and examine what genuinely robust Enhanced Due Diligence looks like for PEPs and other high-risk customer categories. Whether you are an MLRO, a compliance officer, or a senior manager with AML accountability under SMCR, this episode gives you the practical framework to assess whether your current approach would withstand regulatory scrutiny.

We cover:

— The legal foundation: what the MLRs 2017 require for EDD and where FCA expectations go further than the minimum statutory standard

— Defining PEPs correctly: domestic versus foreign PEPs, the scope of family members and known close associates, and the common categorisation errors that create immediate regulatory exposure

— Why PEP status does not automatically mean refusal — and how to document a risk-based decision to onboard, decline, or exit a PEP relationship in a way that is fully defensible

— The EDD factors your workbook must capture: source of wealth, source of funds, nature of the business relationship, geographic risk, transaction profile, and adverse media findings

— Senior management approval requirements: who approves what, how that approval must be evidenced, and the governance trail regulators will look for

— Ongoing monitoring obligations: what "enhanced" monitoring means in practice, review frequency, and what should trigger an out-of-cycle reassessment

— The role of adverse media screening — why it is not optional and how to document your findings and decisions adequately

— Common EDD failures identified by the FCA and FATF, and how personal liability under SMCR applies when those failures are traced back to named individuals

This episode is essential listening if your firm:

— Has not reviewed its PEP and high-risk customer EDD procedures since the MLRs 2017 amendments

— Is preparing for an FCA supervisory visit, s166 skilled person review, or internal audit

— Has onboarded PEP relationships without a clearly documented, senior management-approved rationale

— Has not stress-tested its ongoing monitoring arrangements against actual transaction activity

Resources mentioned in this episode:

Compliance Consultant's PEP & High-Risk Customer Enhanced Due Diligence Workbook is a comprehensive, ready-to-use toolkit built for FCA-regulated firms and PSR-authorised payment service providers. It provides a structured EDD framework, fully formatted assessment workbook, and step-by-step guidance enabling compliance teams to complete, document, and evidence their EDD obligations to a standard that reflects current FCA and FATF expectations.

Built by qualified regulatory consultants who know exactly what "good" looks like — because they have seen what the alternative costs.

Visit complianceconsultant.org to find out more, or call us on 0800 689 0190.