PEP, SIP, and RCA are three related but distinct categories used in AML/CTF screening. A PEP holds or has held a prominent public function; a SIP is flagged for known involvement in high-risk criminal activity; an RCA is a relative or close associate of either. All three typically require enhanced due diligence, but for different underlying reasons.
What is a PEP?
A politically exposed person is, per FATF's definition, an individual entrusted with a prominent public function — heads of state, senior politicians, government officials, and senior executives of state-owned corporations are common examples. The risk isn't that holding public office makes someone guilty of anything; it's that the position itself carries greater opportunity and incentive for corruption, which is why AUSTRAC requires enhanced due diligence for politically exposed persons and why PEP screening treats a match as a trigger for closer review, not an automatic red flag. See what a PEP is for the full FATF category breakdown.
What is a SIP?
A Special Interest Person is someone identified as involved in activity that carries a higher risk of money laundering or terrorism financing — drug trafficking, arms dealing, human trafficking, organised crime, and corruption are typical examples. Unlike PEP status, SIP designation has nothing to do with holding public office; it's based on known or suspected involvement in criminal activity itself, often sourced from law enforcement intelligence, court records, or credible adverse media rather than a single official list the way sanctions designations usually are.
What is an RCA?
Relatives and Close Associates extends screening beyond the PEP or SIP individual to the people around them — spouses, children, siblings, parents, and known business partners. AUSTRAC's own domestic PEP examples show how the associate relationship is treated in practice. The logic is straightforward: a PEP or SIP can move funds or assets through a close associate's accounts just as easily as their own, so screening the individual alone leaves an obvious gap. In practice, a screening system doesn't treat an RCA as a standalone entry — the record is linked back to the specific PEP or SIP that triggered it, so a compliance team reviewing a match can immediately see why that person is flagged rather than just that they are.
Why does the distinction between the three matter operationally?
Grouping PEP, SIP, and RCA matches together without distinguishing the underlying reason for the flag makes due diligence harder to document and defend to a regulator. Recording which category triggered a match — and why — is what lets a compliance team apply proportionate, risk-based enhanced due diligence rather than treating every flagged relationship identically.
