The Wolfsberg Principles gives a rule of thumb of one year after giving up a political function but some other guides give a two year period and individual practice may vary from one financial institution to another. 

owever, any  time period suggested is of considerably less importance than an examination of the relationship in its context on a case by case basis. Some PEPs may be lower risk and some may be higher risk for foreign corruption or money laundering. Risk will vary depending on numerous factors such as geographic location, industry, level or nature of influence or authority, etc.

FATF and the EU have made some changes and there are no end of guidance papers which discuss the matter. For most, it all comes down to common sense and good KYC. There are those who have been in the PEP category and once they have left their function are probably no longer high risk. Others who quit their functions can still wield enormous infuence and power. There are many examples and it is sometimes prudent to keep them as PEPs or categorise the as higher risk

In some countries, there is a ruling that "Once a PEP always a PEP", which is very wise as you never know when the PEP will decide to come out and clean the illegal proceeds. The risk is diminishing as time goes by but it will never disappear. The risk very much depends on other factors as well and especially geographic location. If the country of the PEP is highly corrupted as per the Corruption Perceptions Index - Transparency International then the risk is higher.

One reason, though not fully valid, why domestic PEPs are not classified as high risk is because they will not launder their proceeds at a local financial institution. However, it is important to classify them as high risk and checked thoroughly. Investigate payments in and out from other countries as this could be a point of returning the laundered funds back to their country for spending purposes. 

For any PEP, one has to carry out enhanced due diligence but it cannot be stressed enough that this should be treated on a case by case basis and an examination of the level of risk involved. 

One professional commented very validly and his take is that once a PEP, always a PEP is a prudent method to ensure companies on-boarding this category of clients are aware of the risk and not be used as a conduit for money laundering. Setting a timeline to remove one out of the PEP list makes no sense as some PEPs do stay in office for a few terms; especially in emerging markets and hence accumulates wealth and assets in many forms and/or locations. An enhance due diligence is only as good as the information on hand and will further depend on the resources of a company evaluating, accumulating or analyzing the information; and on top of that is myopic. 

In the case of (high level) PEPs on-going due diligence should mean of course more frequent reviews but also a process of continuous monitoring (such as daily press reviews) which where appropriate should result in an adjustment of the client profile or trigger a more in depth investigation. Of course this has to be done intelligently. Above all that the lines of communication are well established with the department responsible for monitoring the presse/internet etc.if this is not done within compliance or AML