What Is Adverse Media Screening?
Adverse media screening refers to searching for negative news, blogs, and legal records that may indicate fraud, corruption, or money laundering involving a person or business. In this post, we explain its importance, best practices, regulatory requirements, and must-have features.
Why Is Adverse Media Important for AML?
Detects high-risk individuals and entities: As mentioned in the introduction, it is a tool used to reveal links to money laundering, terrorist financing, fraud, corruption, and other criminal activities. Therefore, businesses can identify risks related to entities early on and proceed accordingly.
Fulfills CDD and EDD requirements: Many regulators and international standards, such as the Financial Action Task Force (FATF), encourage adverse media checks among the requirements of Customer Due Diligence (CDD) and Enhanced Due Diligence (EDD).
Prevents reputational damage: Even if an organization does not face any problems throughout a business relationship with a business partner or individual who has negative media exposure, engaging with them is sufficient to undermine its reputation and leave it vulnerable to regulatory scrutiny.
Improves traditional AML screening: While including sanctions lists and politically exposed person (PEP) lists in Anti-Money Laundering (AML) screening is invaluable, incorporating adverse media screening alongside these lists dramatically increases the chances of capturing all risks.
7 Best Practices for Adverse Media Screening
1. Real-Time Screening
Adverse media databases are much more dynamic compared to sanctions lists and PEP lists, which also allow organizations to capture emerging risks the moment they happen. Therefore, including these in real-time screening and continuous monitoring checks dramatically decreases the chances of missing a risk, especially after onboarding.
2.Multilingual Coverage
There are tools that allow the analysis of unstructured data in multiple languages and cultural contexts that include global news sources in local languages. This is especially important for businesses in ensuring comprehensive checks and reducing false positives. Furthermore, there are also ones that offer fuzzy name matching as well, which is an advanced matching logic used to detect misspellings, aliases, and transliteration issues, thus preventing missed risks due to name variations and language differences.
3.Screen Against Comprehensive and Credible Data Sources
When news from even the most credible sources can be misleading from time to time, it is crucial to pick media sources very carefully. Databases should be composed of credible and comprehensive sources in order to investigate adverse media cases and save resources. If less credible results appear, they should be assigned lower levels of risk.
4.Integrate into AML/KYC Frameworks
Fragmented systems are one of the most common culprits of compliance failures. Just like every useful tool, adverse media screening should not be treated as a separate tool. Businesses must implement it in their broader KYC and AML frameworks, and ensure that it functions seamlessly in order to create an efficient workflow.
5.Adopt a Risk-Based Approach
Since not all negative news carry the same weight and may not be pertinent, businesses should prioritize high-risk categories such as financial crime, corruption, terrorism, sanctions, and fraud. Obviously, these categories may change depending on the business model and regulatory exposure. The risk-based filtering will allow organizations to allocate their resources more efficiently.
6.Combine AI + Manual Review
The role of AI in AML and CFT efforts becomes more and more indispensable each day due to its capabilities in identifying patterns, reducing false positives, and improving efficiency. This rising trend can also be seen in the regulatory recommendations and projected growth rates. However, it is still not advanced enough to delegate all responsibilities. Therefore, optimal results can only be achieved with a balanced workflow that includes human analysts.
7.Have Clear Policies and Escalation Procedures
Spotting a high-risk person or business is only halfway to a successful operation. Organizations must check the reporting obligations under both local regulators and global authorities such as the FATF. Then they must escalate accordingly. Additionally, organizations must ensure regular audits by an independent team, their staff receive regular training on implementing effective AML/CFT procedures, and keep clear and easily accessible documentation.
Regulatory Requirements
- FATF: While the FATF doesn’t explicitly list “adverse media screening” among its requirements, its recommendations include gathering publicly available information about customers to assign their risk levels.
- EU AMLD: Using open source and public information, especially for high-risk customers, is one of the important requirements set by European Union’s Anti-Money Laundering Directives.
- FinCEN: According to FinCEN Guidance issued in 2020, FinCEN requires organizations to use all available information to assess risk, including media searches or screening for news articles on all customers and related parties on an ongoing or periodic basis.
- FFIEC: Federal Financial Institutions Examination Council, a formal US government interagency body, explicitly states that banks should have policies to determine when adverse media checks are appropriate based on risk.
- FCA: The UK’s Financial Conduct Authority, underlines the importance of integrating adverse media sources in KYC and ongoing monitoring processes. In May 2021, the FCA even referenced the importance of adverse media screening in the UK through a letter sent to banks.
Key Sectors Using Adverse Media Checks
- Financial Institutions (Banks, Credit Institutions, Payment Processors)
- Insurance
- Fintech & Digital Financial Platforms
- Corporate Compliance and Third-Party Risk Management (Energy, Manufacturing, Retail)
- Legal and Professional Services (Law Firms, Audit, Accounting Firms, Consultants)
- Regulatory and Government Entities
- Asset Management and Investment Firms
- Real Estate and Trust Services
- Gaming and Online Platforms
Top Features in Adverse Media Tools
Real-Time and Continuous Monitoring: Relying on periodic batches of data rather than tools that continuously scan for a risk is a sure way to detect risks late or even miss them altogether. Therefore, it is recommended to remain vigilant throughout the business relationship.
Comprehensive Multilingual Coverage and Fuzzy Matching: Most successful media solutions pull data from thousands of global sources that include local language outlets, government and regulator press releases, and historical archives. Furthermore, having a sophisticated matching logic at your disposal is crucial for detecting spelling differences, transliterations, aliases, and variations.
AI and Machine Learning: Today, the most preferred AML/CFT solution providers predominantly leverage artificial intelligence and machine learning for addressing threats. These tools allow to interpret unstructured text at scale, extract meaning and relevance, reduce false positives, and improve accuracy over time through learning.
Advanced Filtering and Categorization: It is easy to get lost among the results that include false positives and false negatives. This is where tools that allow fine-tuned filtering come into play. These help narrow down the results for analysts depending on the risk type through custom keywords or risk type such as bribery, fraud, sanctions, or human rights violations.
Integrated Workflow and API Support: It is not always easy to integrate cutting-edge tools to the existing systems, especially to the legacy systems of traditional institutions. This is why APIs and native connectors play an important role in integrating with broader AML/CFT systems.
Audit Trails and Documentation: An ideal system should keep logs of alerts, decisions, timestamps, and escalation paths. These are often needed for future audits and investigations. If organizations fail to provide these, they are likely to face severe penalties.
How Sanction Scanner Helps
Comprehensive and up-to-date Coverage: First of all, Sanction Scanner allows you to screen against more than 3000 global lists (adverse media databases, sanctions lists, PEP lists, and more) across more than 200 countries and jurisdictions. These lists get updated every 15 minutes in order to remain compliant with regulators, such as the FATF. Furthermore, we continuously enhance this data by cleaning, normalizing, enriching, profiling and transforming with AI.
Performance and Real-Time Updates: In addition to our database updated every 15 minutes, we also offer ultra-fast response time (150ms) in order to to make your screening processes more efficient. Also, the feedback we receive shows that false positives are also reduced up to 96.99%. This way, your compliance teams can solely focus on genuine risks.
Screening and Monitoring Capabilities: Sanction Scanner also offers automated customer screening and ongoing monitoring. Our tools not only screen your client, but also the counterparties as well. In addition to the lists that we have mentioned, you can easily add your own blacklists and whitelists as well as customized match-rate thresholds to your organization’s needs.
API-based Simple Integration and Developer-Friendly: As mentioned in the previous sections, integrating new solutions to your existing systems can be a complex and long process. However, your team will have an easy time thanks to Sanction Scanner’s developer-friendly portal. We aim to help developers quickly and easily integrate our API and AML solution into their projects by providing comprehensive documentation, sample code, Swagger docs, postman collection and SDKs. Also, your developers can access our sandbox environment to test their integration.
Flexibility Based on Your Business’ Needs: You may go for the Batch approach, which allows you to scan a myriad of names and transaction parties with Excel lists or CSV files. Or you may use it manually by using web UI anytime and anywhere without any integration process as well.
User Experience and Operations: We designed our case management display with the aim of making it as user-friendly as possible. Through the interface, you can check their scanning history, reach previous activities and examine scan details. Also, we allow your compliance managers to assign tasks to different users and manage the results effectively. We should also add that there is no limit for internal users, so all of your compliance team can use the system.
Practical Dashboards and Reporting: In addition to Sanction Scanner’s case management system, your business will gain access to practical dashboards and reporting. Furthermore, Sanction Scanner allows you to analyze your compliance history with different widgets, see employee workload and manage their efficiency. You may also adjust the charts and tables depending on your preferences. Moreover, you will be able to export these dashboard and examine them further with a structured format. These logs will be helpful in the future audits and investigations.
These are only a part of what we offer, do not hesitate to get in touch with Sanction Scanner to find out more.
