PEPs and sanctions, explained

Two different checks, two different responses

People often lump “PEP and sanctions screening” together as one task. They are screened at the same time, but what you do with a potential result is completely different.

1. Check 01
   PEP status → assess the required CDD

   A PEP is not prohibited. Foreign PEPs require enhanced customer due diligence; domestic and international organisation PEPs require the response set by their risk. Document the assessment and decision.

2. Check 02
   Potential sanctions result → confirm and escalate

   A potential match needs identity checks and escalation. If sanctions status is established on reasonable grounds, do not deal with controlled assets or make assets available without appropriate advice and the required process.

What is a PEP?

A politically exposed person (PEP) is someone who holds, or has held, a prominent public position — plus their close family members and known close associates. The position gives them potential influence that can be misused for corruption or bribery. The AML/CTF response depends on the PEP category and the assessed risk.(Source: AUSTRAC, “Politically exposed persons (PEP)”, accessed 10 July 2026)

The Act recognises three categories:

• Foreign PEP — holds a prominent public position for a foreign country (e.g. head of state, government minister, senior judge, senior military officer, or executive of a foreign state-owned enterprise). A foreign PEP requires enhanced customer due diligence.
• Domestic PEP — holds a prominent public position in Australia. Assessed on a risk basis rather than automatically high risk.
• International organisation PEP — holds a senior position in an international organisation. Also assessed on a risk basis.

Crucially, the definition reaches beyond the individual. Spouses, partners, children and their spouses, parents, and known close business associates can all qualify — which is why an apparently ordinary buyer can still be a PEP by association.

A PEP is not a red card

A foreign PEP requires enhanced customer due diligence. For a domestic or international organisation PEP, the additional requirements apply when the agency assesses a high money laundering or terrorism financing risk. Depending on the program and risk, enhanced customer due diligence can include:

• Senior sign-off — a person with appropriate seniority approves entering or continuing the relationship.
• Source of funds and wealth— take reasonable measures to establish where the money for the purchase comes from, and how the customer’s wealth was built.
• Closer ongoing monitoring — keep a higher level of scrutiny on the relationship and transactions.

(Source: AUSTRAC, “Enhanced customer due diligence”, accessed 10 July 2026)

What are sanctions?

Sanctions law can prohibit dealing with controlled assets of a designated person or entity, or making assets available to them. Unlike Tranche 2, sanctions law is not new and does not start in July 2026. The applicable obligation depends on the relevant sanctions framework and the facts of the proposed dealing.

There are two overlapping regimes:

• Australian autonomous sanctions — imposed by Australia under the Autonomous Sanctions Act 2011 and Regulations.
• United Nations Security Council sanctions — implemented in Australian law under the Charter of the United Nations Act 1945.

Both are administered by the Department of Foreign Affairs and Trade (DFAT), which publishes the Consolidated List of every designated person and entity. Screening helps identify a potential match; it does not by itself establish sanctions status.(Source: DFAT, “Sanctions compliance for real estate professionals”, accessed 10 July 2026)

Confirm a sanctions result before deciding what to do

Most “hits” are false positives caused by common names. The job is to establish whether a potential match relates to the person involved by comparing dates of birth, nationality and other identifiers, then keep a record of the assessment. For the detail on penalties, see our blog post, the DFAT criminal penalty most agents have never heard of.

Why this matters in Australian property

Property is an attractive way to move and store value, and Australian real estate regularly involves the exact customers these checks are designed for:

• Overseas and migration-linked buyers, where a family member may be a foreign PEP.
• Purchases through trusts and companies, where the beneficial owner — not the named buyer — is the person to screen.
• High-value transactions that are exactly the kind sanctions evasion seeks out.

You screen the people required by your program and the relevant rules: this can include the customer, beneficial owner, a person acting on their behalf, and a representative. See how this fits the wider obligations in our real estate agency obligations guide.

Screening checklist

• I identify the customer, beneficial owner and other people my program requires me to screen.
• I screen against the DFAT Consolidated List and a PEP dataset.
• I assess the PEP category and risk before applying the required CDD response.
• I verify and escalate a potential sanctions result before dealing with controlled assets.
• Every screen — hit or no hit — is logged with a timestamp and result.

Frequently asked questions

Sources & further reading