Adverse Media Screening

Enterprises, before they associate ties with customers or partner entities, need to make sure that they are not possibly involved in financial crime. In this regard, business prospects are checked against certain sanction lists to determine the level of risk they pose, and what possible measures could be taken. Entities that are not listed on regulatory watchlists and pose a moderate risk to financial organizations can be identified with adverse media screening.  

What is Adverse Media?

Adverse Media is a collection of negative or unfavourable news related to an individual or corporate entity that exists across various public platforms. Below are a few types of adverse media:

• Financial Crime:

  Includes acts like money laundering, bribing organizations or individuals, committing corruption to obtain black money, and insider dealing,  etc.

• Human and Drug Trafficking:

  This is a criminal offense involving the illegal transit of humans and drugs across borders. News regarding forced labor, illegal movement of narcotics are included in trafficking.   

• Terrorist Associations:

  Organized crime carried out by terrorist groups for a specific purpose. These groups receive financing from illicit sources that are likely involved in money laundering.   

• Property Crime:

  These normally include nefarious activities such as stealing  jewelry, artwork, cash and expensive items from someone’s home, a bank or any other physical property.

• Digital Fraud:

  Criminal activities such as identity theft, account takeovers, creating synthetic ID documents and stealing credit card information are forms of digital fraud

What are Adverse Media Sources?

Adverse Media Screening is carried out using information acquired from a wide array of credible sources. These often include the print and online newspapers, sanctions lists charted by governments, TV, and radio. Moreover, unstructured sources like blogs and social media feed also contribute to negative media screening. Apart from key sources like newspapers and media groups, here are some other means that provide information related to negative media:

Sanction Lists 

Entities placed on official watchlists are suspected to be involved in financial crime. When enterprises onboard new clients, they are screened against sanction lists to reveal any illegitimate ties. Below are listed some official watchlists that businesses use to carry out adverse media screening:

• Sanction lists issued by the OFAC (Office of Foreign National Control)
• HMT financial watchlists
• Lists compiled and consolidated by the United Nations (UN)
• Sanction lists chartered by the European Union

Global Regulatory Databases

Financial authorities regularly maintain a record for fines and penalties imposed on criminal entities. They conduct press releases so that the public could be aware of bad actors and enterprises could use it for negative media screening. For instance, the International Database (IDB) by the U.S. Census Bureau consists of reliable demographic information, updated by various institutes in the States. IDB offers accurate data for adverse media screening of high-risk customers.

What is Adverse Media Screening?

Businesses include adverse media screening in their AML compliance policy to verify a brand, customer or corporate entity’s credibility before initiating a relationship. This information usually comes from traditional news as well as from other unstructured data sources. Individuals and entities with an adverse media profile address a different level of risk to any business. Adverse 

Why is Adverse Media Screening Important?

Adverse media checks help businesses identify entities that are – or possibly can be – involved in financial crime such as money laundering, corruption, bribery, tax evasion, and terrorist financing. Creating ties with such figures can smear a firm’s market reputation and result in hefty fines and penalties. Adverse media screening helps financial institutions to discover suspicious customers and entities with a criminal profile while keeping intact KYC compliance policies. 

Regional and international authorities advocate sanction list screening for robust KYC and AML compliance. FATF recommends to perform adverse media screening to mitigate possible instances of money laundering and terrorist financing.    

AML Compliance using Adverse Media 

Manual screening of adverse media comes with certain challenges such as operational inefficiency and human negligence. Businesses are moving towards automated solutions to perform adverse media screening of their clients to meet all necessary Anti Money Laundering obligations. This helps them better manage risk profiles and determine the type of due diligence checks they require. 

Negative media screening includes analysing a large number of adverse content found in electronic/print media and official databases. This much information is time-consuming to analyse and an automated screening tool for adverse media is a good option. A comprehensive AML compliance program is one that combines both intelligent solutions with manual audits by verification experts. This is particularly helpful when ongoing adverse media checks are necessary for high-risk customers.