What is considered a "politically exposed person" (PEP) in BSA regulations?

A politically exposed person (PEP) is defined in BSA regulations as an individual who holds a prominent public function. This includes people who are or have been entrusted with a prominent public role, such as heads of state, senior politicians, judicial or military officials, and leaders or important officials of international organizations. The designation of PEP is significant due to the associated risk of involvement in bribery and corruption, which heightens the need for enhanced due diligence in financial transactions involving such individuals.

While financial advisors may have extensive industry experience, they do not fall under the category of PEPs unless they occupy a prominent public function. Similarly, being a citizen of a foreign country or a government employee with limited financial history does not inherently qualify one as a PEP; it is the prominence and nature of their public role that defines their classification. Therefore, the correct answer highlights the key aspect of prominence in public functions that characterizes a politically exposed person under BSA regulations.