What is the difference between a PEP and an RCA?

A PEP is a person in a prominent political function, while an RCA is a close family member or known associate of a PEP. Both categories are treated as higher risk in AML customer due diligence.

When must a business check whether a customer is a PEP or RCA?

The check should be done before establishing a business relationship or executing occasional transactions, and then repeated periodically as part of ongoing customer due diligence. This is particularly relevant when risk increases or thresholds are met under the Swedish Anti-Money Laundering Act.

How long is a person considered a PEP?

A person is considered a PEP while holding a political function and for at least 18 months after the role has ended. During this period, enhanced customer due diligence measures may be required.

Politically Exposed Person (PEP/RCA)

PEP and RCA are central concepts in anti-money laundering legislation and are used to identify higher-risk individuals during customer due diligence.

Glossary
Politically Exposed Person (PEP/RCA)

Explained – politically exposed person (PEP) and RCA meaning

PEP stands for Politically Exposed Person (person i politisk utsatt ställning) and refers to an individual in a prominent political function, for example a government minister, member of parliament or a judge of a higher court. RCA, which stands for Relatives and Close Associates, covers close family members and known associates of a PEP. These individuals may present an elevated money laundering risk or corruption risk for obliged entities.

The concepts are regulated in the Swedish Anti-Money Laundering Act (2017:630) and are central to customer due diligence and risk assessment. An AML consultant or anti money laundering expert can help ensure an organisation has effective procedures to identify and handle PEP and RCA in its controls, including politically exposed person screening and RCA screening.

When does the politically exposed person question arise?

The question of a politically exposed person, including close family members and known associates, arises when a business is subject to the Swedish Anti-Money Laundering Act and must perform customer due diligence. This applies in particular when establishing a new business relationship, where there is a suspicion of money laundering or where transactions reach higher thresholds. Banks, law firms and estate agents are typical obliged entities that must determine whether a customer is a PEP/RCA before the relationship is established.

Illustration of business profiles under magnifying glass, symbolising politically exposed person (PEP) and RCA screening, enhanced due diligence and AML compliance checks.

Key considerations for a politically exposed person and their relatives and close associates

Organisations subject to the legislation should maintain clear procedures to identify and manage customers with PEP or RCA status. The following points are central.

Adopt procedures to ask new customers about PEP status when establishing a business relationship.
Use reliable sources or PEP databases to verify whether a customer is a PEP or RCA (RCA meaning: relatives and close associates).
Apply enhanced customer due diligence to customers identified as PEP or RCA, including a politically exposed person check and an RCA check.
Define who has decision-making authority to approve relationships with a PEP or RCA within the organisation.
Document all controls and decisions linked to PEP and RCA in a traceable manner.
Update customer information regularly to capture changes in status or risk level as part of ongoing customer due diligence.

Enhanced customer due diligence measures for PEP/RCA are essential to a sound and proportionate AML customer risk assessment. Without enhanced measures, the basis for the risk assessment is thin.

Politically Exposed Person (PEP/RCA)

Why are politically exposed person and RCA important?

Politically exposed person status and RCA meaning matter because they help obliged entities identify customers who may pose a higher money laundering risk. A politically exposed person often has influence and access to public funds, making robust politically exposed person due diligence and controls critical to prevent misuse of financial services.

Managing PEP and RCA correctly supports compliance with the Swedish Anti-Money Laundering Act, protects reputation and maintains trust with customers and supervisory authorities. A clear process for identification, pep check/rca check, and follow-up reinforces internal compliance and governance, and may be supported through AML compliance outsourcing where appropriate.

A PEP is an individual in a politically exposed position, while an RCA is a close family member or known associate of a PEP (RCA meaning: relatives and close associates).

The check should occur before a business relationship is established or occasional transactions are executed, particularly above relevant thresholds. It should be repeated periodically during the relationship as part of ongoing customer due diligence.

A person is considered a PEP while holding a political function and for at least 18 months after the role has ended.

If a customer is a PEP, the business must apply enhanced customer due diligence, which often involves:

Understanding the origin of the customer’s wealth and funds.
Ongoing monitoring and documentation of the business relationship.
Obtaining senior management approval for the relationship.

All obliged entities under the legislation, such as banks, auditors, law firms, gambling operators and estate agents, must identify and assess whether a customer is a PEP or RCA.

Effective work requires both clear procedures and the right tools. An organisation should:

Train staff to identify PEP and RCA, including examples of PEP and close associates of PEP.
Use up-to-date PEP databases and pep screening tools.
Integrate controls into the ongoing customer due diligence process and the broader risk assessment in AML.
Conduct independent reviews of procedures and controls.
Record decisions and follow-ups for traceability.

These measures create a robust structure for compliance with the anti-money laundering framework, supported by an AML consultant or anti money laundering expert where needed, and aligned to sound customer due diligence measures.