Screening for any adverse media appearances is an important part of identifying financial crime risks for regulated businesses. It also forms part of businesses being able to assess customer relationships, and to strengthen their anti-money laundering (AML) compliance. With information becoming much more readily available across traditional and digital media outlets, compliance teams need to be able to access all relevant alerts without unnecessary notifications causing them to become overwhelmed.
Adverse media screening best practices are about more than searching for negative information; businesses need to be sure they have data they can trust that will provide accurate matches, risk-based assessments and ongoing monitoring.
For those organisations within regulated sectors, effective adverse media checks can have the added benefit of being able to support customer due diligence, enhanced due diligence, sanctions and PEP screening, as well as allowing for wider financial crime prevention.
If the reliable data is there and consistent processes are followed, businesses will therefore be able to improve screening accuracy, as well as reduce any manual administration. This all leads to making better-informed decisions about potential customer risks.
Adverse media screening, also known as negative news screening, is the act of reviewing publicly available information to flag any potential risks associated with individuals, companies or other linked organisations.
These checks can highlight information about any suspected or confirmed connections or involvement in financial crime. This includes money laundering, fraud, corruption, bribery or any other activities that could affect a customer's risk profile.
Identity verification can confirm who a customer is, but adverse media checks help to provide the context surrounding their background, their activities and any potential exposure to financial crime.
These checks can be particularly valuable when dealing with higher-risk customers or when conducting due diligence when looking into circumstances in more detail. They help businesses to see the early warning signs which can help to reduce reputational damage, and to provide a clearer understanding of customer risk.
However, it needs remembering that negative news does not automatically indicate or prove any wrongdoing. Any findings that surface from screenings will still need to be assessed carefully to determine how accurate, relevant, and significant they are.
A strong adverse media screening process needs to be a combination of reliable information, consistent risk assessment, and effective review procedures.
The following seven best practices can help compliance teams have a better overview of their customer relationships, while maintaining accuracy and efficiency at all times.
The quality of adverse media screening depends heavily on how reliable and trustworthy the information is, so it’s essential for businesses to use sources that are relevant and comprehensive to fully understand if any customers have been involved with financial crime.
If businesses rely solely on basic internet searches, gaps in the screening can start to appear, especially when flagged information appears in international publications, specialist news sources, or historical records.
The following sources of information are a good place to start in order to have an efficient and effective adverse media screening process:
Businesses need to consider the credibility of a source, the publication date, and the geographic relevance of the information being viewed. It’s important that an unverified online allegation doesn’t hold as much weight as a confirmed regulatory enforcement action.
Specialist adverse media screening tools help compliance teams gain access to a broader range of legitimate sources and can process information more efficiently.
SmartSearch supports businesses with their adverse media screening through specialist data sources, including Dow Jones Factiva, helping them gain access to financial crime risk information to form part of their wider AML processes.
Not all customers will present the same level of financial crime risk, meaning a risk-based approach is essential when implementing effective adverse media screening.
At the start of the process, businesses should consider a range of factors, including:
All of the above points help to determine what the most appropriate level of screening should be.
For customers who operate within a high-risk industry, more detailed checks may be required. Similarly, if allegations of serious financial crime are spotted as part of adverse media screening, then these should be taken more seriously than any unrelated or minor reputational concerns that have shown up.
By having a risk-based approach in place, compliance teams should be able to determine:
With clear internal policies in place, screening decisions can be applied consistently across the organisation’s teams and customer relationships.
Adverse media findings can be integrated into the company’s wider customer due diligence processes in order to develop a more complete understanding of any financial crime risk.
Ensuring accurate customer matching is an incredibly important element of effective adverse media checks.
Adverse media screening may find information about an individual or organisation with a similar name to the customer being screened, and without sufficient verification, this can lead to errors and unnecessary investigations.
Basic name matching shouldn’t be all that’s considered; other relevant information may include:
Advanced screening tools can implement techniques such as fuzzy matching, which identifies potential matches that may involve alternative spellings, abbreviations, or variations. The best system is one which has the appropriate verification and review stages, with the support of trustworthy technology to back it up.
SmartSearch's Know Your Customer (KYC) solution helps businesses verify customer identities, while its Know Your Business (KYB) checks offer visibility into a company’s details, its ownership structures, and any associated individuals.
Bringing together identity and business verification with adverse media screening significantly helps compliance teams to more accurately assess potential matches.
False positives do present a challenge when dealing with adverse media screening. They can occur when an alert appears to be connected to a customer but is found to be an irrelevant match.
If a business has high volumes of customers, this can also result in a large number of false positives, which can create additional administrative work, thereby delaying onboarding.
In order for compliance teams to be able to spot genuine risks quickly and easily, businesses need to establish consistent review procedures that help decipher whether a screening result is accurate or a false positive.
This process can involve considering the identity in question, if the source is trustworthy, and what the circumstances are surrounding the reported activity.
An effective solution to false positive management should include:
Automation can help businesses to filter any irrelevant results, instead, prioritising alerts that need attention. This allows compliance teams to allocate their time to more complex cases that require their experience and attention.
Having a combination of accurate screening technology and informed human review is the best way to reduce unnecessary administrative tasks and to divert qualified teams to the alerts that need their review.
SmartSearch's sanctions and PEP screening solution offers support for potential match review, as well as for false positive management, as part of the adverse media screening capabilities.
As with most review tasks concerning AML, adverse media screening isn’t a one-off activity completed during customer onboarding.
A customer can present as a low risk during onboarding but then go on to become associated with new financial crime allegations, perhaps regulatory investigations, or other adverse information.
This can happen after the relationship has become established, so without ongoing monitoring, businesses could miss these changes until a future scheduled customer review may be planned.
With automated adverse media monitoring in place, compliance teams will have much-needed backup in identifying any new information coming through, enabling them to reassess customer relationships whenever additional risks emerge.
To have an effective monitoring process, this should be able to support:
How often and how in-depth the monitoring should be will be reflective of the organisation's own risk assessment, their internal policies and any relevant regulatory requirements.
SmartSearch's ongoing monitoring solution helps businesses with identifying changes that may arise from customer screening information, including sanctions, PEP exposure, and wider risk indicators.
Having a combination of automated monitoring with regular customer reviews helps to support a more proactive approach to preventing financial crime.
With adverse media screening, being able to identify any negative news results is simply the first part of the process; businesses will also need to have in place clear procedures for further investigation of potential matches and a process for determining what any follow-up actions should be.
Without a consistent approach in place and a clear internal process, compliance teams may interpret similar findings differently, which will cause gaps in risk assessment and decision-making to appear.
Once a potentially relevant adverse media match has been identified, businesses should evaluate the nature of the information, determining the reliability of the source and whether or not it’s relevant to the customer relationship. An example of this is the difference between an ongoing regulatory investigation versus a historical allegation that has been disproven.
An effective investigation process as part of adverse media screening should involve:
If a higher level of risk is identified, businesses may need to gather additional evidence about the customer, their activities, or the source of their funds.
Enhanced due diligence (EDD) can help with this by allowing organisations to investigate further and make more informed decisions.
In the event of having knowledge or suspicion of money laundering, companies should follow the internal reporting procedures they have in place and assess whether a Suspicious Activity Report is needed.
Finding a negative news finding doesn’t automatically confirm criminal activity or justify ending a business relationship, so further checks should be made.
SmartSearch supports enhanced due diligence as part of its wider AML platform. This support means compliance teams can investigate higher-risk customers and maintain clearer records of their decisions.
Keeping clear and accurate documentation is essential for demonstrating how adverse media findings have been identified, investigated and resolved.
Businesses may need to explain their findings and decisions during future reviews or as part of regulatory requirements, so an effective adverse media screening process should record:
Maintaining these records will help businesses to demonstrate they’ve followed consistent, risk-based procedures. This not only supports any internal or regulatory enquiries, it also helps with ensuring all information is kept following the relevant requirements and data protection obligations.
Adverse media screening can offer more by being a part of a wider AML process rather than being managed as a separate activity. This is due to the fact that any findings can have an effect on customer risk ratings and could trigger enhanced due diligence. Adverse media screening results can also help to provide additional context to any sanctions and politically exposed person checks carried out.
Combining checks and allowing them to work together helps to reduce duplicated work and gives compliance teams a clear understanding of any customer or corporate risks.
SmartSearch's anti-money laundering solution combines the following to offer you a full view of potential risks:
All of these capabilities work together within a connected compliance workflow, which helps businesses identify risk and maintain accurate and accessible compliance records.
Implementing the seven best practices discussed can help businesses make the move from reactive, manual checks to a more consistent approach to financial crime risk management.
It is worth remembering, however, that the effectiveness of adverse media screening will heavily depend on more than the technology selected. Businesses will still need to conduct regular reviews of their procedures, assess the quality of any alerts they’re receiving, and maintain training for their teams so they can find, investigate, and escalate any potential risks.
An effective approach combines reliable and accurate data, automated screening, the right level of human oversight at the right time, and clearly documented decisions.
By conducting regular reviews of these areas, companies will be able to spot opportunities to improve efficiency while still maintaining full and effective financial crime control.
SmartSearch helps regulated businesses strengthen their adverse media screening processes through a range of capabilities, all working as part of a connected AML workflow:
By doing this, organisations can reduce their manual administration, freeing up their teams for high-risk cases and improving risk visibility with clear audit trails.
Discover how SmartSearch's sanctions, PEP and adverse media screening capabilities can support compliance processes at your organisation, or explore our AML solutions which help strengthen your financial crime prevention strategy.