I did an OFAC scan on an International ACH Transaction and the person the money was sent to was flagged as a hit by our OFAC software. Upon further investigation the hit was due to the person being on a PEP list. Do I need to do anything with this as far as OFAC is concerned?

OFAC has nothing to do with PEP's. Assuming that your customer, PEP or not, isn't on the SDN List, OFAC could care less how you handle the situation. That aside, your overall BSA Compliance program should have a procedure in place to determine if this individual is actually a PEP and you should respond accordingly.

What is a PEP list? I know what a PEP is, but is there a list?

There isn't an official government sponsored PEP list like the SDN List Jenny. However, many software providers have their own verions of "PEP" Lists.

Adding to ACB's comment, you should look into third party softwares such as World-Check or World Compliance.