All about background checks on PEP and sanctions lists and adverse media

PEP and sanctions lists and adverse media are often checked for offences such as money laundering, committing (financial) fraud, financing and/or participating in terrorist organisations and regimes, and drug-related crime. It is therefore particularly important to prevent the risks involved when entering into an employment contract when hiring new and existing employees. Especially in the financial sector, which is subject to the Swedish money laundering and terrorist financing act. Here we explain in detail about checks on PEP and sanctions lists and adverse media.

What is PEP?

PEP stands for “Politically Exposed Person” and refers to an individual who, due to their public function, is at a higher risk of being involved in corruption, money laundering and other financial offences. Some examples of politically exposed persons are as follows:

• Political officials: High-ranking individuals within state structures, such as heads of state, heads of government, ministers and members of parliament.
• Civil servants: Senior officials in government agencies, courts and the military, such as judges, senior military officers and senior civil servants.
• International organisations: Leading figures in international organisations such as the UN, EU and NATO.
• Executive board of Riksbank (Swedish central bank): The Riksbank is headed by five members, all of whom are politically exposed persons.
• Family members and close associates: Family members and close associates of the above categories, including spouses, children and business partners are also covered by the PEP.

Checking PEP lists

The purpose of conducting checks on PEP lists is to detect and prevent financial offences such as money laundering and corruption. This does not mean that all politically exposed persons are involved in illegal activities, but their positions mean that they are considered to be at higher risk.

At Validata, we can help organisations perform checks on PEP lists where you get an overall picture of the person’s history. We do a complete background check so that your organisation gets all the information you need for employees.

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What are sanctions lists and why check them?

The EU Council of Ministers imposes sanctions on persons and entities suspected of involvement in terrorist acts and these are placed on the EU sanctions list.

Why you should care about sanctions lists:

• Compliance with laws and international rules: Sanctions laws are designed to enforce national and international security interests. Failure to comply with these laws can lead to serious legal consequences, including fines and criminal prosecution.
• Preventing financial risks: Doing business with sanctioned entities can result in significant financial losses, not only because of legal penalties, but also because of lost business and damaged reputation.
• Protection against involvement in illegal activities: By checking sanctions lists, companies can avoid unwittingly becoming involved in illegal activities such as money laundering, terrorist financing or other criminal behaviour.

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Checking adverse media (negative publicity)

An adverse media check, also known as negative publicity, is an important part of conducting a background check. An adverse media check examines the extent to which (potential) employees appear on a list of people convicted of certain categories of offences. Again, the focus is on money laundering, committing (financial) fraud, bribery and corruption, participation and/or financing of terrorism and drug-related offences.

The list consists of both convicted individuals and organisations and is maintained and supplemented daily by a team of researchers who scan lists from around the world for new publications. Sources used are lists of:

• Financial and other regulatory authorities and disciplinary bodies
• Law enforcement authorities and anti-corruption agencies such as Interpol, Europol, FBI, etc.
• Additional lists of people disqualified as board members of an organisation

Background check of PEP and sanction lists and adverse media

It is recommended to check both new employees and to regularly perform periodic background checks on existing employees to identify potential risks. Prevention is always better than cure. It is therefore advisable to check PEP and sanctions lists and adverse Media when filling an integrity-sensitive position. Please understand that each view is a snapshot that is often linked to situations and events from the past. It is therefore wise to continue to check not only potential employees, but also existing employees through periodic background checks. This way, you stay informed about the current situation and the quality and integrity of your organisation can be continuously guaranteed.

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Validata helps your organisation to prevent risks with background checks

Doing a background check yourself can be time-consuming, and it can be difficult to get accurate information. At Validata, we are specialised in background checks in accordance with both local and international rules and regulations. Our background checks go beyond PEP checks, sanction lists, and adverse media. Depending on your organisation’s needs, you can include ID checks, credit checks, criminal record checks, and more. This way, you get a comprehensive view of the individual’s background and can truly feel confident in your hiring decision.

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