Crypto Exchanges Must Identify Politically Exposed Persons
A Politically Exposed Person (PEP) is an individual who holds or has held a prominent public position, including heads of state, senior government officials, judges, military leaders, and executives at state-owned companies. Their close family members and business associates are also considered PEPs.
The main concern with PEPs is that their public power creates a risk of them receiving bribes, misusing public funds, or laundering money without getting caught. This is why banks and crypto exchanges treat PEPs as higher-risk customers and monitor their transactions more closely.
In the crypto space, a PEP is someone in or connected to public office who now holds or trades crypto assets. Exchanges and wallet providers are expected to identify these users during onboarding, just like traditional banks do.