Regulatory Alerts2026-06-04
Attention to the Risk-Based Approach to PEPs in Client Due Diligence Remains Important
The Dutch Financial Markets Authority (AFM) issued this analysis report to mandate that financial enterprises apply a strictly risk-based approach when identifying and assessing politically exposed persons (PEPs) during client due diligence. The regulator requires firms to abandon blanket high-risk classifications and nationality-based screening, instead implementing tailored risk assessments, clear internal definitions, and reliable external tooling while maintaining ultimate responsibility for compliance. Additionally, the AFM emphasizes that enterprises must provide targeted employee training, maintain fully traceable documentation for at least five years, and promptly update client risk profiles whenever PEP status changes.
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