Regulatory Alerts2026-06-04
Attention to the Risk-Based Approach for PEPs in Client Due Diligence Remains Important
The Dutch Authority for the Financial Markets (AFM) issued this report following a thematic investigation into how financial firms handle Politically Exposed Persons (PEPs) under the Anti-Money Laundering and Counter-Terrorist Financing Act (Wwft). The regulator mandates that firms must apply a risk-based approach rather than automatically classifying all PEPs as high-risk, while strictly avoiding discrimination based solely on nationality. Additionally, firms are required to ensure consistent internal definitions, maintain comprehensive and auditable documentation, and provide targeted employee training to accurately identify and monitor PEP-related risks.
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