Not necessarily, and it is a great question because watchlists generally operate on a designee being added after proving to have engaged in illicit activity, not before.
Not so with PEPs, most of them have not yet committed any illicit activity, but due to their positions, they are considered high risk, and increasingly, watchlists look not only at past activity, but also risk posed, specifically with regards to corruption.
This stance, although somewhat controversial, is supported by the G20 and is being implemented globally after agreed to by members of the Financial Action Task Force (FATF), the global standard setter in the battle against financial crime. FATF provides two lengthy recommendations, specifically 12 and 22, that explain how to treat PEPs, their family members and close associates.
Key to the effective implementation of FATF guidelines is the effective implementation of customer due diligence requirements regarding PEPs. Organizations should have typologies, red flags and indicators for suspicion that can be used to assist in the detection of misuse of the financial systems by PEPs during a customer relationship. Examples of such red flags are the use of corporate vehicles to obscure ownership by PEPs, information being provided by the PEP being inconsistent with other publicly available information (such as asset declarations and published official salaries), or doing business with PEPs that are connected to higher risk countries (such as those for which FATF issues public statements) or high risk industries or sectors.