The Importance of Adverse Media In The AML Space

3 mins

What is Adverse Media?

Adverse media, often known as bad press, refers to any undesirable material that may be obtained in a range of news sources, including both ‘conventional’ news channels and unstructured sources. The dangers of doing business with people or firms who have a bad reputation in the media are numerous and varied.

 

Where Does Adverse Media Originate From?

Adverse media might originate from a variety of places. This covers conventional news outlets such as print and online newspapers, as well as broadcast news on radio and television.

More recently, negative news is increasingly coming through blogs, web postings, and unstructured sources including social feeds and unstructured forums.

 

Adverse Information and Its Consequences

The prior criminal conduct of an individual is one of the most prevalent forms of negative information. If authorities suspect a person of being involved in financial crime and learn that person has already been arrested for another crime, they have even more grounds to accuse that person of being involved.

In contrast, if a person has no criminal background and is not known for associating with others who do, they are considerably less likely to become engaged in a money-laundering operation.

Another kind of negative information that people frequently look at is whether or not someone is on a sanctions list. If he or she is, it is likely that it is not for a legitimate purpose, and authorities should be on the watch for any financial crimes they may be involved in.

 

What Is the Purpose of Adverse Media Checks?

Money laundering, financial fraud, drug trafficking, financial danger, organised crime, financial terrorism, and other issues might be revealed by negative media checks.

These ties endanger companies’ reputations and can result in legal ramifications, especially if they operate in a regulated industry.

As a result, many financial institutions that are tightly regulated by KYC standards are obligated to be on the lookout for pertinent unfavourable information at all times in order to find any indications or tip-offs that may help their investigations.

 

What are the Current Challenges with Adverse Media Screening?

Various public domains and extra sources are used to complete the adverse media screening. Because the bank manager will try to cover all possible variations of the customer’s name and relevant terms, these manual searches might result in massive quantities of data. Analysts would next look over the screening findings to see whether there were any matches. However, this can also prove to be an ineffective method due to the following reasons:

  1. Adverse media screening can result in great volumes of data, so analysing these results manually can be a tedious and inefficient task.
  2. It must be noted that screening results are frequently associated with the target consumer in a different context, and unfavourable news may reference the bank customer but in a different context.
  3. The problem with public domain searches is that they only reveal open online content, despite the fact that there are several alternative news items and data sources.
  4. If the adverse media or negative news is written in a different language than the keywords used for searching, then it wouldn’t show the screening results.
  5. Due to the fact that adverse media screening takes a large amount of time and effort, the firms would not be able to conduct the screening process on every customer, as part of their routine risk assessment.
  6. High-risk clients must be monitored on a continuous basis to comply with basic EDD criteria. However, the procedures for classifying people as high-risk and then monitoring them frequently leave a lot to be desired.
  7. Institutions conduct manual searches for unfavourable news on each high-risk client using internet searches and “googling” news stories. The compliance team must next look over these possible matches to see if the person mentioned in the media is the person they’re looking into. This sort of search is extremely time-consuming, resulting in substantial compliance costs for institutions.
  8. Because of the limitations of human monitoring, certain media sources may be overlooked. Furthermore, these searches only give a static picture of risk levels, which is insufficient in a world where media coverage changes by the second.

 

Why is it critical to automate adverse media checks?

Despite the pressing need for fast and effective adverse media monitoring, today’s compliance teams face major hurdles with legacy and manual solutions. In today’s fast-paced media environment, a procedure based on user-initiated searches can’t compete with automated systems that alert institutions when anything of interest arises.

Adverse media may be exploited to provide you with a better perspective of your clients by leveraging next-generation technologies to conveniently customise searches to your client profiles and regulatory needs.

Learn more about Adverse Media Screening

We are at the forefront of machine learning categorisation, compiling all negative data and media into full, structured profiles. Speak to a member of our team today to learn more about our unique solution.

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