In this article, we introduce a new type of Characteristic Basis Finite Element Method (CBFEM), which is based on the concepts of Physical Optics (PO) and Perfectly Matched Layers (PMLs), for solving large-scale electromagnetic scattering problems in a rigorous and efficient manner. This parallel and iteration-free technique, called CBFEM-PO, decomposes the computational domain into a number of subdomains, and generates three types of characteristic basis functions (CBFs) that are specially-tailored to each individual subdomain. Of these, the first two types of CBFs are comprised of primary and secondary bases arising from the self-interactions in each subdomain and mutual-couplings between different subdomains, respectively. They are obtained by solving the localized problem in each subdomain, isolated by PML regions. The third-type of CBFs are derived by using the PO fields for different incident angles, polarization, and frequency. Two important salutary features of the proposed technique are: considerable reduction in the matrix size, which makes it feasible to use direct solvers; and convenient parallelizability that enables us to decrease the overall computation time by utilizing parallel platforms. We present a number of representative examples to illustrate the versatility of the method in solving 3D electromagnetic scattering problems.