TITLE: Netherlands' Authority for the Financial Markets Issues Guidance on Politically Exposed Persons Client Due Diligence
BODY:
On June 4, 2026, the Dutch Authority for the Financial Markets (AFM) published guidance addressing how financial enterprises should conduct client due diligence when dealing with politically exposed persons (PEPs). The AFM's research revealed that many financial enterprises fail to apply tailored approaches to PEP assessments, despite each PEP presenting distinct risk profiles.
The AFM identified several key concerns. Financial enterprises often apply generic measures without evaluating individual PEP-specific risks, and some use nationality as a standalone criterion in risk assessments, which risks unjustified discrimination. The AFM also found inconsistent definitions and applications of what constitutes a PEP across enterprises, with some using incorrect or outdated screening lists. Additionally, while enterprises frequently have policies in place, implementation often deviates from these policies, and documentation of client due diligence steps is frequently inadequate.
To address these issues, the AFM recommends that enterprises adopt tailored risk assessments recognising that not all PEPs present high risk; establish unified definitions and consistent application of PEP criteria, including understanding that PEPs encompass individuals with prominent political functions, their family members, and close business associates; ensure outsourcing and automated tools support rather than replace enterprise responsibility for verifying correct PEP identification, particularly as PEP status may change following elections; and invest in staff training and awareness programmes tailored to specific organisational roles and practical application.
The guidance stems from findings in the Financial Action Task Force (FATF) 2022 evaluation and is based on data from periodic questionnaires and thematic examinations of investment enterprises, investment institutions, and financial service providers regarding anti-money laundering, counter-terrorism financing, and sanctions compliance policies.
REFERENCES:
Dutch Authority for the Financial Markets (AFM) news article: https://www.afm.nl/nl-nl/nieuws/2026/juni/aandacht-cliëntenonderzoek-peps