When a politically exposed person is identified: what to do first
Stop the transaction from moving further, and do not close the file as routine business. Confirm the match against an independent source, then open enhanced due diligence: source of wealth, source of funds, and the purpose of the account. Route the file to senior management before the relationship continues in any form. Nothing proceeds on the strength of the identity match alone.
Why this triggers a separate track
The duty to screen for a politically exposed person sits inside the wider anti-money laundering framework that applies to crypto-asset service providers as obliged entities. Where the underlying activity is authorised under Regulation (EU) 2023/1114 (MiCA), that authorisation covers market conduct and prudential terms; it does not substitute for the separate screening duty, and a valid authorisation does not close a flagged file on its own.
Where the case involves a transfer of crypto-assets, Regulation (EU) 2023/1113 (TFR) requires originator and beneficiary information to be complete and accurate before the transfer is executed. A completed politically exposed person check is part of that completeness, not something added afterwards. Both regulations apply from 30 December 2024.
What changes in practice
Two things change once a match is confirmed. First, the transaction or onboarding step that produced the match is held, not processed as usual, until a decision is recorded in writing. Second, the file moves out of standard monitoring into an enhanced track: closer review of where the money came from, shorter intervals between reviews, and a documented reason for whichever decision follows.
What to do, in order
- Confirm the match. The compliance officer checks the flagged individual against an independent source, not against the screening tool's own confidence score alone.
- Hold the transaction. Operations pauses the specific transfer or account step that triggered the match; the account is not closed and the transaction is not processed as routine.
- Escalate before continuing. The compliance officer submits the file, with the match evidence attached, to senior management before the relationship continues in any form.
- Establish source of wealth and source of funds. The compliance officer documents where the money came from and why the account exists, not only who the person is.
- Record the decision. Senior management signs off in writing, with reasons, on whether the relationship continues, continues with restrictions, or is declined.
- Set enhanced ongoing monitoring. The compliance officer schedules review at shorter intervals than the standard cycle for as long as the person remains politically exposed.
Who decides
Senior management, not the compliance officer alone, approves whether the relationship continues. The compliance officer prepares the file and the recommendation; the sign-off sits above that level, in writing, with reasons recorded against the evidence, not against a general impression of risk.
If the politically exposed person surfaces through a related entity within the same group, that entity's own permissions and its own file stay separate — see When a group entity holds a different permission: what. A group relationship does not merge two obliged entities' due diligence records into one file.
If your situation is different
If the match is against a former official whose function ended some time ago, the file still opens as enhanced due diligence; the same screening duty extends to close family members and known close associates, on the same evidentiary basis.
If the screening step is still a pilot rather than a live product — for example, a check built as a proof of concept before it reaches production, see When a proof of concept becomes production — the underlying screening duty applies from the first real customer, not from the date the tool formally goes live.
If the screening tool is licensed technology and the licensor stops maintaining the right to it, that lapse does not suspend the screening obligation itself — see When the licensor stops maintaining the right. The obliged entity remains responsible for finding a working alternative before the gap becomes a compliance failure in its own right.
| Signal | Immediate action | Who signs off |
|---|---|---|
| Screening match confirmed | Hold the specific transaction or account step | Compliance officer confirms; senior management approves |
| Group entity involved | Keep each entity's file separate | Each entity's own senior management |
| Screening still a pilot | Apply the same duty as in production | Compliance officer |
| Transfer of crypto-assets involved | Confirm originator and beneficiary data before execution | Compliance officer |
What this page does not cover
This page does not set the specific list of politically exposed person categories, and it does not fix the length of the look-back period after a public function ends; both depend on the applicable national anti-money laundering rules, which are not restated here. It also does not cover the underlying technology used to run the check. Questions about the intellectual property status of a screening tool — for example, when prior art surfaces after grant — belong to a separate practice area, not to this file. See When prior art surfaces after grant.
Verified
Checked against the source texts as published. Regulation (EU) 2023/1114 (MiCA) and Regulation (EU) 2023/1113 (TFR) both apply from 30 December 2024. No other act is cited on this page; where a rule depends on national transposition rather than on either regulation directly, that is stated above rather than filled in with a guess.
Related situations
A confirmed politically exposed person match is one of several signals that push a file out of standard monitoring. Another is a monitoring rule set that has not kept pace with how the business actually operates — see When transaction monitoring rules are stale.
Next step
A file like this usually needs a first response within minutes during business hours, so that the transaction hold and the escalation happen the same day, not after the next processing cycle. If the match evidence is already assembled, the sign-off decision itself can follow within the same working day.
FAQ
What is the first step when a politically exposed person is identified?
Hold the transaction or onboarding step that produced the match, confirm it against an independent source, and route the file to senior management before the relationship continues in any form.
Which deadline is already running?
The clock starts at the moment the match is confirmed, not at onboarding and not at the date the account was originally opened. Enhanced due diligence and the sign-off decision have to happen before the next transaction on that relationship is processed, not afterwards.
Who decides, and on what evidence?
Senior management decides, in writing, on the compliance officer's file: confirmation of the match, source of wealth, source of funds, and the stated purpose of the relationship. The compliance officer does not have authority to close the file alone.