Adverse media, sanctions and PEP screening explained

Screening is usually described as one control and bought as one product, but it is three separate checks answering three unrelated questions. Confusing them is what produces both kinds of failure: an entity that should have been declined getting through, and an ordinary customer with a common surname being treated as a risk case for a fortnight.

The three checks

Sanctions

A sanctions check asks a binary legal question: is this person or entity subject to a measure that restricts dealing with them? The relevant lists are maintained by governments and international bodies, and in New Zealand include designations under the Terrorism Suppression Act 2002 and the Russia Sanctions Act 2022, alongside the major international regimes that a New Zealand business may be exposed to through its counterparties.

This is the only one of the three where a confirmed match is close to determinative. If the subject genuinely is the listed party, the question is not appetite, it is legality.

Politically exposed persons

A PEP is someone entrusted with a prominent public function, along with close associates and family members. The status is not an allegation. It is a statement that this person's position creates a higher inherent exposure to bribery and corruption risk, and that the relationship therefore warrants closer scrutiny.

Under the AML/CFT Act 2009 the practical consequence of a PEP determination is enhanced customer due diligence: establishing source of wealth and source of funds, obtaining senior management approval, and monitoring the relationship more closely. That workflow is set out in more detail in customer due diligence in practice.

Adverse media

Adverse media screening scans published reporting for negative coverage associated with a name. It is the loosest of the three and the most easily misused. Coverage is not a finding, an allegation is not an outcome, and the absence of coverage says nothing at all about conduct that was never reported.

Its value is as a trigger. A credible hit tells you where to look next, usually at a published decision through a litigation history search or at the underlying reporting through a media archive search.

False positives, and how to clear them

Screening engines match strings. They fuzzy match to catch transliteration and spelling variation, and that tolerance is exactly what generates volume. In a New Zealand book, three patterns dominate: very common surnames, names transliterated from non Latin scripts with several accepted spellings, and entity names that repeat across jurisdictions.

Clearing a hit properly means adding discriminators rather than raising the match threshold. Date of birth, nationality, country of residence, and for entities a registration number or incorporation date will resolve the large majority. For New Zealand entities the register record is the reliable discriminator, which is why screening works best downstream of a company and director search.

Record the discounting decision, not just the outcome. A file that shows forty hits and no reasoning looks identical whether the analyst examined each one or none. A short note saying the listed party has a different date of birth and nationality is what makes the clearance defensible.

Timing and re screening

Screening at onboarding captures a moment. Sanctions designations are added continuously, PEP status changes with appointments and elections, and adverse coverage appears after the relationship starts. Ongoing screening at a defined interval, plus event driven re screening when the relationship changes materially, is what turns a point in time check into a control.

What screening does not cover

Screening does not establish identity, financial position, asset holdings or corporate control. It is a risk overlay applied to an identity you have already established. Doing it the other way around, screening a name you have not verified, produces confident results about a person who may not be your customer. Identity comes first, through the process described on the identity verification page.

Sanctions, PEP and adverse media screening is listed as an upcoming source on the data sources page, alongside the sources available today. Compliance teams will find the wider workflow on the corporate and compliance page, and access is issued to verified professional users through the request access page.