What is Adverse Media Screening?

Adverse Media Screening Defined:

Adverse Media screening involves the interrogation of third-party global data sources to check an individual’s background for any negative news associated with or pending against them. This is usually found in sources such as newspapers, magazines, TV, social media, radio, and other press releases.

This plays an important part in the customer due diligence (CDD) process where organisations are required to perform mandatory KYC and AML checks of individuals or businesses. These checks uncover any involvement in financial crime-related activities or determine whether they pose a reputational risk before onboarding them into their systems or giving them access to particular assets.

Although guidance on screening against global media sources has been less structured compared to other regular compliance requirements like PEP & Sanction Screening, ID Document Verification and ongoing monitoring, adverse media screening is increasingly becoming an important aspect in well- rounded anti financial crime processes.

Learn more: What is Customer Due Diligence.

Why is Adverse Media Screening Important?

Organisations doing business in regulated sectors such as financial institutions are required to adhere to laws such as the Sixth Money Laundering Directive (6AMLD), obligations by the Financial Action Task Force (FATF) and other compliance measures which require Anti Money Laundering (AML) checks to minimise financial fraud, money laundering and other criminal acts that may jeopardise an organisation.

Undertaking adverse media screening is also important in other sectors for organisations performing stringent identity verification procedures like insurance, healthcare, charities and so forth where employees in senior roles, potential clients or business partners may need to be screened for legal obligations to determine any poses of risk.

Screening individuals against global sanctions lists, politically exposed person lists and other international watchlists have been the main services in maintaining a strong AML strategy. While these tools are sufficient, adverse media screening and monitoring enable compliance teams and organisations to perform additional checks for any negative or pending news against individuals, even if they aren’t on any sanctions or international watchlists. This, in essence, adds an extra layer to give businesses assurance of an accurate risk profile and remain up to date on any new information that may present in the future.

Some of the checks that Adverse Media screens for are:

• Money laundering
• Financial fraud
• Drug trafficking
• Financial threats
• Organised crime
• Terrorism
• Corruption
• Violent or sexual crimes
• Involvement in cybercrime
• Appearing on a sanctions list, past or present

Learn more: What is Anti Money Laundering.

When Should Organisations Conduct Adverse Media Screening?

Organisations taking a wider approach to verifying a person’s identity may implement adverse media screening as part of their enhanced due diligence process; in most cases we see this as an addition to PEPs and sanctions screening.

This is usually done after an individual undergoes an AML check during the organisation’s onboarding process where adverse media screening should be the final part of the screening procedure. This is so it picks up any additional information, whether it’s negative or pending, even if there have been no alerts from the prior sanctions lists, PEPs and international watchlist checks.

Since most regulators prefer a risk-based approach to compliance, adverse media screening can aid in determining the risk score of individuals whether they are a client, businesses, or new customers. If a check yields no findings, this person should be assigned a low-risk score. On the other hand, if bad news surfaces, then a higher risk score should be flagged, which in this instance the obligated organisation should initiate further due diligence processes or end its relationship with that individual.

Common Challenges with Adverse Media Screening

There can be a range of challenges when having to perform adverse media screeening which are listed below.

1. The credibility of news sources - Risk information can vary, depending on how credible it is. While this is found in verified institutes like enforcement agencies, tax authorities and other government agencies, alerts may arise from other sources like free web news, social media, etc. that may give false positives. It can be a challenge to evaluate whether sources are reputable and include mere allegations rather than reporting on formal investigations or convictions.
2. The volume of news – There is no shortage of available news, especially in the digital age, but this sheer volume of information can be overwhelming and a big burden on internal resources that must check and separate relevant news from all the noise (if required).
3. Outlays between countries – Adverse media screening definitions can differ between countries and organisations operating in certain territories. This means the scope of compliance measures and programs could alter; for example, having to consider other factors like environmental, social and governance (ESG) and other internal country laws that may cause challenges.
4. Regulation in particular countries – following from the above as some countries may have different adverse media definitions, other countries may not even have definitions in place and lack specification in which methods are most effective in running successful adverse media checks, which entails the requirements may not be direct.

Adverse Media Screening Best Practices

Adverse media screening should be part of an automated identity verification practice where it checks and screens individuals in a friction-free process. Each organisation will have their customer due diligence requirements and particular use cases where different types of know-your-customer tools will be implemented. In addition, your adverse media screening tool should be part of a PEPs, sanctions and international watchlist service that screens against a wide array of global lists that are refreshed daily. This ensures the fidelity of underlying checks on top of this service.

You can see Melissa’s full list of global sanctions here.

When utilising the service, there are 5 key factors that organisations should also be aware of.

• Widening the screening approach: Organisations should be screening not just new prospects and their current customers, but related account parties and beneficial owners of the companies they do business with or corporate structures or assets which are involved in transactions.
• False positive remediation: With the amount of news in circulation and the challenge of determining what is credible and what is not, organisations need to control the false positive threshold. One example is matching customer names with similar names featured in new media. Having a grip on this element will balance regulatory obligations with their risk appetite and resources.
• Recordkeeping: Adverse media alerts should be logged and kept on record so that other members of compliance or internal resources can reference and analyse the reason for the alert and monitor this over time, if need be. Additionally, false positive alerts should also be recorded.
• Media relevance: Stories that emerge from adverse media checks should be assessed for their relevance to a company’s compliance priorities. This means determining how a piece of media relates to terrorism, money laundering or other crimes of interest. Organisations that are operating in other regions like the EU or particular countries may need to adjust their screening solutions to adhere to in-country requirements and to capture a broader spectrum of stories related to their expanded compliance priorities.
• Media categorisation: Firms should organise the stories they capture into risk categories so they can gauge the level of threat they may be exposed to. An example of this could be organising stories related to financial crime and the risk they may present compared to other stories which may deem a smaller risk of concern. This is a good practice to give firms a better compliance response.