PEP Screening and Sanctions Checking: An Australian Accountant's Guide

# PEP Screening and Sanctions Checking: An Australian Accountant's Guide Australia's expanded AML/CTF regime has been in force since 1 July 2026. An accounting practice is in scope when it provides a covered professional designated service with an Australian geographic link. Political-exposure and sanctions controls depend on the service, customer, risk and applicable law; they are not a universal instruction for every accounting engagement. **Source review: 25 August 2026.** AML/CTF scope and timing reviewed against current AUSTRAC reporting-regime, professional designated-services and existing-customer transition guidance. General information only, not legal advice. Sanctions law is separate and should be checked with DFAT and an adviser for the facts at hand. This guide explains what PEP screening and sanctions checking involve, how to perform them, and what to do when you find a match. ## What is a Politically Exposed Person (PEP)? A PEP is an individual who holds -- or has recently held -- a prominent public function. PEPs are considered higher risk for money laundering because their position may provide opportunities for corruption, bribery, or misuse of public funds. ### Categories of PEPs **Domestic PEPs** (Australian): - Members of Parliament (federal, state, and territory) - Senior government officials (department secretaries, agency heads) - Senior military officers - Judges of the High Court, Federal Court, and Supreme Courts - Senior executives of government-owned corporations - Members of governing bodies of political parties **Foreign PEPs:** - Heads of state or government - Senior politicians and government officials - Senior judicial or military officials - Senior executives of state-owned enterprises - Important political party officials **International Organisation PEPs:** - Directors and deputy directors of international organisations - Members of senior management or governing boards - Equivalent positions in bodies like the UN, World Bank, IMF, and OECD ### Family Members and Close Associates Where your risk framework requires political-exposure assessment, relevant connections can extend beyond the individual and may include: **Family members:** - Spouse or de facto partner - Children and their spouses/partners - Parents **Close associates:** - Known business partners or associates - Individuals with joint beneficial ownership of legal entities or arrangements - Individuals who have close business relationships with the PEP - Individuals who are the sole beneficial owner of an entity known to benefit the PEP ### How Long Does PEP Status Last? Under Australian guidance, a person remains a PEP for a reasonable period after leaving office. No fixed timeframe is specified in the legislation, and there is no single number you can rely on -- the AML/CTF Rules require a risk-based judgement. Set your own cooling-off period in your AML/CTF program, document the reasoning behind it, and check the current AUSTRAC guidance before you fix the number. ## DFAT Consolidated Sanctions List The Department of Foreign Affairs and Trade (DFAT) maintains Australia's consolidated list of individuals and entities subject to targeted financial sanctions. Dealing with a sanctioned person or entity is a **criminal offence** under Australian law. ### What the Sanctions List Covers The DFAT Consolidated List consolidates sanctions imposed under: - United Nations Security Council resolutions (autonomous) - Australian autonomous sanctions regulations - Specific country and thematic sanctions programs Sanctioned individuals and entities may be subject to: - **Asset freezing** -- you must not make assets available to them - **Travel bans** -- relevant to immigration but flags risk for accountants - **Arms embargoes** -- less relevant for accountants, but flags the individual ### Countries and Programs Australia maintains sanctions programs targeting individuals and entities connected to: - Russia/Ukraine conflict - North Korea (DPRK) - Iran - Syria - Myanmar - Counter-terrorism (ISIL/Da'esh, al-Qa'ida) - Serious violations of human rights - Cyber-enabled threats - And various other country-specific programs ### Consequences of Dealing with Sanctioned Persons Australian sanctions law can impose serious civil and criminal consequences. Penalty units and legal requirements change, and the correct response depends on the sanctions measure and facts. Check current DFAT guidance and obtain legal advice rather than relying on a marketing article for a penalty figure or action plan. ## When Screening May Be Required For an accounting practice that is a reporting entity, its current program and the applicable law may require controls such as: 1. **Initial assessment** -- apply the political-exposure and sanctions procedures required for the covered service and customer 2. **Ongoing controls** -- re-screen or review when your program, a list update or a trigger event requires it 3. **Enhanced measures** -- apply the measures required by the current Rules and your risk assessment 4. **Sanctions response** -- follow current DFAT guidance and obtain advice before dealing with a potential match ## How to Perform Screening ### Manual Screening **DFAT Sanctions List:** The DFAT Consolidated List is publicly available at [dfat.gov.au/international-relations/security/sanctions/consolidated-list](https://www.dfat.gov.au/international-relations/security/sanctions/consolidated-list). You can: - Search by name on the DFAT website - Download the full list in XML, CSV, or PDF format - Check against UN Security Council lists separately **PEP Lists:** There is no single, official PEP database. Manual PEP screening involves: - Internet searches for the individual's name combined with political or government roles - Checking parliamentary and government websites - Reviewing media articles for political connections - Cross-referencing family connections **Problems with Manual Screening:** - Time-consuming -- a thorough manual s

earch takes real time per client, and it is time you cannot bill - Incomplete (you might miss foreign PEPs or close associates) - Not auditable (how do you prove you searched thoroughly?) - No ongoing monitoring (you would need to re-check manually every time lists are updated) - Name variations, transliterations, and common names create false negatives ### Automated Screening Depending on the provider and licensed data sources, automated screening tools can assist by: - Matching client names against comprehensive global databases as part of the screening workflow - Using fuzzy matching algorithms to catch name variations and transliterations - Screening against multiple lists simultaneously (DFAT, UN, EU, US OFAC, UK HMT, and more) - Providing ongoing monitoring with automatic alerts when lists change - Generating auditable reports for each screening Fedix screens against the DFAT Consolidated Sanctions List and surfaces AI-assisted political-exposure indicators. The indicators are not a licensed PEP database and are only a prompt for the practice's review. The practice must use a licensed source separately where its risk assessment requires PEP screening. ## What to Do When You Find a Match ### Sanctions Match If a customer may match a sanctioned individual or entity, pause and follow your documented procedure. Depending on the facts and current law, steps may include: 1. **Stop immediately** -- do not proceed with providing any designated services 2. **Verify the match** -- confirm it is a true positive (not a false positive due to a common name) 3. **Do not inform the client** about the sanctions match (tipping off provisions may apply) 4. **Assess reporting obligations** -- decide, with advice where needed, whether an AUSTRAC or DFAT report is required 5. **Follow current sanctions directions** if you hold or control relevant assets 6. **Seek legal advice** before taking any further action 7. **Document everything** -- your screening results, verification steps, and decisions ### PEP Match If a client is identified as a PEP (or family member/close associate): 1. **Do not automatically decline the relationship** -- being a PEP is not illegal 2. **Apply Enhanced Due Diligence (EDD)**: - Obtain senior management approval to establish (or continue) the relationship - Establish the source of wealth (how they accumulated their assets) - Establish the source of funds (where the specific funds come from) - Conduct enhanced ongoing monitoring of the relationship 3. **Document the EDD measures** applied and the rationale for your risk assessment 4. **Review the relationship** on the risk-based cycle and trigger events set by your program ### False Positives Not every name match is a true match. Common causes of false positives: - Common names (especially in certain cultural backgrounds) - Partial name matches - Similar dates of birth with different individuals For each potential match, verify by cross-referencing: - Full name (including middle names) - Date of birth - Country of residence or nationality - Other identifying information (address, aliases) Document your assessment of each match, including false positives -- AUSTRAC expects to see that you investigated and dismissed false positives rather than ignored them. ## Suspicious Matter Reports (SMRs) If your practice is a reporting entity and the statutory test for an SMR is met, the practice must make the report. A screening alert alone is not the legal conclusion; follow your escalation procedure and current AUSTRAC guidance. ### Timeframes | Type of Suspicion | Reporting Deadline | |------------------|--------------------| | Terrorism financing | **Within 24 hours** of forming the suspicion | | All other suspicious matters | **Within 3 business days** of forming the suspicion | ### What Triggers an SMR? The statutory test is fact-specific. Indicators that may require escalation include a reasonable suspicion that: - A client is not who they claim to be - A transaction may be related to money laundering or terrorism financing - A transaction may be related to a serious crime (tax evasion, fraud, etc.) - Information provided by a client is false, misleading, or incomplete - A transaction has no apparent economic or lawful purpose ### Tipping Off: A Criminal Offence Tipping-off restrictions are fact-specific and can carry criminal consequences. Follow your controlled process and obtain legal advice before communicating about a suspicion or report. This means: - Do not tell the client you have filed an SMR - Do not discuss your suspicions with the client - Do not discuss specific SMRs with colleagues who do not need to know - Do not alter your behaviour toward the client in a way that might alert them - Seek legal advice if you are unsure about your obligations ## Assist Screening Workflows with Fedix Fedix assists with defined parts of the workflow; it does not replace the practice's risk assessment, a licensed PEP data source or its legal decisions: - **Screening at verification time** -- sanctions screening against the DFAT Consolidated Sanctions List, plus political-exposure indicators (not a licensed PEP database). Additional international list coverage via licensed data partners is on the roadmap. - **Fuzzy name matching** to catch transliterations, aliases, and name variations - **Ongoing monitoring** -- automatic re-screening when lists are updated, with alerts for new matches - **Match resolution workflow** -- easily document and dismiss false positives with an audit trail - **Exportable workflow records** -- provide evidence for the practice to assess and incorporate into its own file - **Included in every verification** -- first 10 free, then $2.90+gst per verification, no additional cost for political-exposure indicators and sanctions screening [See the defined Fedix screening scope](/features/kyc-aml) or [book a demo](/contact). The practice remains responsible for deciding which sources, measures and reports are required.