Determining the PEP status is a general due diligence duty under § 10(1) no. 4 GwG and applies to every customer of your German entity. Only a hit leads to enhanced due diligence under § 15 GwG, including approval from a member of senior management (Führungsebene).
The check is not a special review for conspicuous customers. You must establish with appropriate, risk-based procedures whether the contracting party or the beneficial owner is a politically exposed person (PEP), a family member or a known close associate, and you must be able to show the supervisor that the extent of your measures is appropriate (§ 10(2) sentence 4 GwG). The statute does not prescribe a method.
§ 10(1) no. 4 GwG lists the PEP determination among the general due diligence duties. It applies to every new customer and, on a risk basis, to existing relationships (§ 10(3a) GwG). The statute prescribes no method, so you need a procedure you can justify to the supervisor.
If the check identifies a PEP, a family member or a known close associate, § 15(3) no. 1 GwG assumes a higher risk. § 15(4) sentence 1 GwG then requires approval from senior management, measures to establish the origin of the assets and enhanced ongoing monitoring. If you cannot meet these duties, the business relationship may not be established or continued (§ 15(9) with § 10(9) GwG).
Branches and establishments in Germany of institutions based abroad are obliged entities under § 2(1) nos. 1 to 3 GwG, so the duty is theirs to meet. Where group-wide measures apply under § 9 GwG, they operate without prejudice to the entity’s own statutory duties (§ 9(5) sentence 3 GwG). Plan the approval step and the justification of your procedure in the German entity.
Regulation (EU) 2024/1624 (AMLR) applies from 10 July 2027 and recasts the PEP rules in Articles 42 to 46. AMLA sent its final draft RTS on customer due diligence to the Commission in October 2026. They are not yet law and serve planning, not as a test standard.
Control, decision-making authority and overall responsibility stay with your firm. For internal safeguards, § 6(7) GwG requires you to notify the supervisor before you outsource and keeps the responsibility with you. § 17(1) GwG also leaves the responsibility with you where you rely on third parties for the due diligence duties in § 10(1) nos. 1 to 4 GwG.
§ 10(1) GwG lists the general due diligence duties. Number 4 requires you to establish, with appropriate, risk-based procedures, whether the contracting party or the beneficial owner is a politically exposed person (PEP), a family member or a known close associate.
The determination is not an enhanced due diligence duty. It applies irrespective of the risk of the individual customer, because only the determination shows whether there is a hit. Enhanced due diligence applies once the determination produces a hit: § 15(3) no. 1 GwG then assumes a higher risk, and § 15(4) GwG sets minimum measures.
The extent of the measures under § 10(1) nos. 2 to 5 GwG must match the risk of money laundering or terrorist financing (§ 10(2) sentence 1 GwG). You take into account in particular the risk factors in Annexes 1 and 2 to the GwG (§ 10(2) sentence 2 GwG).
In short: the determination is a general duty for all customers. A hit triggers enhanced due diligence under § 15 GwG, including approval from senior management.
A PEP is anyone who holds or has held a prominent public function at international, European or national level, or a public office below national level whose political significance is comparable (§ 1(12) sentence 1 GwG). Whether the latter applies is a case-by-case assessment. On its wording, the definition is not limited to German offices.
Sentence 2 introduces its list with “in particular”, so the list is not exhaustive. The table gives our own translation of the functions; it is not an official version.
| Reference | Function |
|---|---|
| § 1(12) sentence 2 no. 1 a | Heads of state, heads of government, ministers, members of the European Commission, deputy ministers and state secretaries |
| no. 1 b | Members of parliament and of comparable legislative bodies |
| no. 1 c | Members of the governing bodies of political parties |
| no. 1 d | Members of supreme courts, constitutional courts or other high courts whose decisions are generally not subject to further appeal |
| no. 1 e | Members of the management bodies of courts of auditors |
| no. 1 f | Members of the management bodies of central banks |
| no. 1 g | Ambassadors, chargés d’affaires and defence attachés |
| no. 1 h | Members of the administrative, management and supervisory bodies of state-owned enterprises |
| no. 1 i | Directors, deputy directors, members of the management body or other heads with a comparable function in an international or European intergovernmental organisation |
| § 1(12) sentence 2 no. 2 | Holders of offices on the list that the European Commission published under Article 1 no. 13 of Directive (EU) 2018/843 |
The Federal Ministry of Finance compiles and updates a list of offices and transmits it to the European Commission (§ 1(12) sentence 3 GwG).
A family member is a close relative of a PEP, in particular:
A close associate is a natural person for whom the obliged entity must have reason to assume that the person
The statute prescribes no procedure. It requires appropriate, risk-based procedures (§ 10(1) no. 4 GwG). In practice, two building blocks come into consideration, alone or combined: the information the customer provides, and a comparison against databases or lists. The right combination depends on the risk.
A screening system does not take the decision on a hit for you, and it does not replace the justification of your procedure to the supervisor.
If the determination shows that the contracting party or the beneficial owner is a PEP, a family member or a known close associate, § 15(3) no. 1 GwG assumes a higher risk. § 15(4) sentence 1 GwG sets three minimum duties:
§ 1(15) GwG describes a manager or senior employee of an obliged entity with sufficient knowledge of the money laundering and terrorist financing risks to which the entity is exposed and with the authority to decide on them. The person does not have to be a member of the management body. On its wording, the definition refers to the obliged entity’s own manager or senior employee, so plan the approval as an internal decision. Recital 82 AMLR takes the same line: approval need not come from the board of directors, but from someone with sufficient knowledge and seniority.
For a former PEP you must consider the PEP-specific risk for at least twelve months after the person leaves office, and take appropriate, risk-based measures until the risk is no longer assumed (§ 15(4) sentence 3 GwG). Twelve months is a minimum, not an automatic end.
If you cannot fulfil the enhanced duties, § 10(9) GwG applies accordingly (§ 15(9) GwG). The business relationship may then not be established or continued and no transaction may be carried out. An existing relationship must be ended by notice or otherwise.
The AMLR applies from 10 July 2027. As a regulation it sets the customer due diligence rules directly at EU level. The PEP rules sit in Articles 42 to 46, the definitions in Article 2(1) nos. 34 to 36.
| Topic | GwG today | AMLR from 10 July 2027 |
|---|---|---|
| PEP concept | § 1(12) GwG: prominent public office at international, European or national level, comparable offices below national level, examples in sentence 2, list under sentence 3 | Article 2(1) no. 34 AMLR: natural person who is or has been entrusted with prominent public functions. Recitals 91 and 92 add heads of regional and local authorities with at least 50,000 inhabitants and senior executives of larger state-controlled enterprises; Member States may set lower thresholds |
| Family members | § 1(13) GwG: spouse or registered partner, child and the child’s partner, parents | Article 2(1) no. 35 AMLR: adds siblings, limited to the top tier of offices. Member States may apply a broader scope (recital 97) |
| Close associates | § 1(14) GwG: joint beneficial ownership, other close business relationships, structures set up for the benefit of a PEP | Article 2(1) no. 36 AMLR: comparable cases, including close business relations and structures set up for the de facto benefit of a PEP |
| Former PEPs | § 15(4) sentence 3 GwG: at least twelve months, then until the risk is no longer assumed | Article 45 AMLR: continuing risk is to be considered, for not less than 12 months after the function ends (recital 94) |
| Duties on a hit | § 15(4) sentence 1 GwG: approval from senior management, origin of assets, enhanced ongoing monitoring | Article 42 AMLR: senior-management approval, source of wealth and source of funds, enhanced ongoing monitoring |
| List of offices | § 1(12) sentence 3 GwG: list compiled by the Federal Ministry of Finance | Article 43 AMLR: lists of prominent public functions (recital 93) |
| Insurance | No separate provision in § 15 GwG | Article 44 AMLR: beneficiaries of certain insurance policies (recital 95) |
| Application | GwG as last amended by Article 12(4) of the Act of 29 June 2026 | AMLR applies from 10 July 2027. Article 46 extends Articles 42, 44 and 45 to family members and known close associates |
Recital 98 AMLR adds that the PEP rules are preventive, not criminal in nature. Refusing a business relationship simply because someone is a PEP, a family member or a close associate is contrary to the letter and spirit of the Regulation.
The official sources checked for this article do not show how or when the GwG will be aligned with the AMLR. This article will be updated once an official position is available. For planning, compare the AMLR concepts with your current parameters now.
AMLA specifies the AMLR through regulatory technical standards (RTS) and guidelines. Two AMLA papers and the lists of prominent public functions matter for the PEP determination. Neither AMLA paper is binding law at present.
| Paper | Legal basis | Content on the PEP determination | Status |
|---|---|---|---|
| Draft RTS on customer due diligence | Article 28(1) AMLR | Article 17 of the draft: timing, persons covered, re-assessment and screening tools for identifying PEPs | Final report dated September 2026, submitted to the Commission in October 2026. Adoption and publication pending. Proposed application six months after entry into force |
| AMLA guidelines on PEPs | AMLR (mandate in Article 42; recitals 90 and 96) | Criteria for identifying close associates and the level of risk per category of PEP, family member and close associate, including former PEPs | Not verified: no published draft found in the sources checked for this article |
| Lists of prominent public functions | Article 43 AMLR | The draft RTS ties the re-assessment of existing customers to updates of the list published under Article 43(5) AMLR | The lists themselves are not part of the AMLA documents reviewed |
Under draft Article 28, documents, data and information on existing relationships are brought in line on a risk-sensitive basis within the periods in Article 26(2) AMLR. According to recital 26 of the draft, the maximum periods of one and five years start only on the entry into force of the delegated regulation.
Until the Commission adopts the RTS and publishes them in the Official Journal, the text is a draft. It is suitable for planning, not as a test standard.
Decide which procedure your firm uses for the determination and how it shows that the procedure is effective. Decide who tracks updates of the lists of prominent public functions and triggers the re-assessment. The approval on a hit remains a decision of a member of your senior management; a screening tool cannot give it.
MLRO stands for Money Laundering Reporting Officer (German: Geldwäschebeauftragter). The split below applies to the PEP determination in a German entity.
Decides how the PEP status is determined and ensures that the appropriateness can be shown to the supervisor. Decides which functions may give approval under § 15(4) GwG. Appointing an MLRO leaves the responsibility of the management body (Leitungsebene) unaffected.
Gives or refuses approval to establish or continue the relationship. Needs sufficient knowledge of the firm’s money laundering risks and the authority to decide on them. Does not need to be a member of the management body.
Assesses hits and supports the design of the procedure and the re-assessment on a status change. On the wording of the statute, the approval itself lies with senior management. The MLRO must perform the function in Germany and reports directly to the management.
Carries out the determination in daily operations, records the result and the information it is based on, and passes status changes to the responsible function.
Can provide group policies and data. Where group-wide measures apply under § 9 GwG, they do not displace the German entity’s own duties.
Carries out tasks under a contract. Before internal safeguards are outsourced, the supervisor must be notified, and responsibility stays with the obliged entity. From 10 July 2027, Article 18 AMLR requires notification before the provider starts and leaves the entity fully liable.
Six weak points recur in practice. Each one has a basis in the statute.
The status is collected once and not re-assessed, although offices and circumstances change.
The comparison runs only at the level of the contracting party. The duty also covers the beneficial owner.
Family members and known close associates are not in the procedure or the data model, for example for structures set up for the benefit of a PEP.
The status is removed after twelve months across the board. The statute names twelve months as a minimum.
Approval is given without documented origin of assets and monitoring measures, or by a function without authority to decide.
The procedure exists in the system but cannot be shown to the supervisor as a reasoned description.
The table assigns a question, a legal basis and a typical finding to each of eight check areas. Use it as the basis for a self-assessment at management level.
| Check area | Question | Basis | Typical finding |
|---|---|---|---|
| Procedure | Is there a written, risk-based method for the determination? | § 10(1) no. 4, (2) sentence 4 GwG | System in place, no reasoning |
| Persons covered | Are contracting parties, beneficial owners, family members and close associates covered? | § 10(1) no. 4, § 1(13) and (14) GwG | Comparison only at the level of the contracting party |
| Timing | Is the status re-assessed on establishment, occasional transactions and status change? | § 10(3), (3a), § 15(4) sentence 2 GwG | Check at onboarding only |
| Decision | Is it set who gives approval as a member of senior management, and on which documents? | § 15(4) sentence 1 no. 1, § 1(15) GwG | Approval without a documented decision basis |
| Former PEPs | Is the PEP-specific risk considered for at least twelve months and until it falls away? | § 15(4) sentence 3 GwG | Blanket removal after twelve months |
| Group and outsourcing | Are local duties, notification to the supervisor and retained decisions documented? | § 6(7), § 9(5), § 17(1) GwG; Article 18 AMLR from 10 July 2027 | Group procedure assumed to cover local duties |
| AMLR and RTS comparison | Are concepts, screening method and triggers compared with Article 2(1) nos. 34 to 36 AMLR and the draft RTS (Article 17)? | Article 2, 42 to 46 and 28(1) AMLR | Parameters still follow § 1 GwG, comparison not documented |
| Documentation | Are the determination, its result and the approval recorded? | § 8 GwG | Result recorded, reasoning missing |
These five measures make sense whatever form the AMLR alignment takes in German law.
Describe method, data sources and risk criteria so that you can show the appropriateness to the supervisor.
Include beneficial owners, family members and known close associates in the procedure and the data model.
Define a status change and relevant changes at the customer as triggers, not only fixed review cycles. The draft RTS adds updates of the list of prominent public functions.
Name who may approve and prescribe a decision template that covers the origin of assets and the monitoring concept.
Compare the concepts and the screening method with the AMLR and the draft RTS before 10 July 2027, and label the draft status as such.
Determining the PEP status is less a question of systems than of clear responsibilities, justified procedures and documented decisions. Where capacity is missing, tasks can be supported by an external provider while the decisions stay with your firm.
You must establish, with appropriate, risk-based procedures, whether your contracting party or the beneficial owner is a politically exposed person, a family member or a known close associate. The statute prescribes no method and does not require a commercial PEP database. What counts is that you can show the supervisor why your procedure is appropriate (§ 10(2) sentence 4 GwG).
No. It is a general due diligence duty and applies to all customers, because only the determination shows whether there is a hit. Enhanced due diligence under § 15 GwG applies once the determination identifies a PEP, a family member or a known close associate (§ 15(3) no. 1 GwG).
A PEP holds or has held a prominent public function at international, European or national level, or a comparable office below national level (§ 1(12) GwG). Family members include the spouse or registered partner, children and their spouses or partners, and parents (§ 1(13) GwG). Known close associates include persons who are joint beneficial owners with a PEP, maintain other close business relationships with a PEP, or solely own a structure set up for the benefit of a PEP (§ 1(14) GwG).
You must consider the PEP-specific risk for at least twelve months after the person leaves office and take appropriate, risk-based measures until the risk is no longer assumed (§ 15(4) sentence 3 GwG). Twelve months is a minimum, not an automatic end.
The AMLR applies from 10 July 2027. Articles 42 to 46 set the PEP measures, and Article 2(1) nos. 34 to 36 redefine the terms, for example by adding siblings of holders of the top offices and heads of larger regional and local authorities. How the GwG will be aligned is not shown in the official sources checked for this article. AMLA’s draft RTS on customer due diligence are not yet adopted.
A provider can carry out tasks such as screening and preparing files under a contract. You hand over the task, not the control: approval from senior management, the decision on suspicious activity reports and the overall responsibility stay with your firm. Where outsourcing concerns internal safeguards, § 6(7) GwG requires you to notify the supervisor first and leaves the responsibility with you. § 17(1) sentence 3 GwG does the same where you rely on third parties for the duties in § 10(1) nos. 1 to 4 GwG. From 10 July 2027, Article 18 AMLR points the same way.
This list contains official sources only. Where the only official version is in German, the entry says so.
Whatever you outsource, you hand over the task, not the control: approvals, reports to the FIU and the overall responsibility stay with your firm.
External Money Laundering Reporting Officer for entities in Germany, including German branches of foreign institutions.
Outsourced customer identification and verification, including multi-level UBO structures, with digital documentation and an audit trail. The scope of PEP-related tasks is agreed in the outsourcing agreement.
Overview of S+P Compliance outsourcing for firms in Germany.
Discuss how a split of tasks and decisions for your German entity could look.
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