What is Adverse Media?

The term ‘adverse media ' refers to any kind of unfavourable information about an individual or an organisation that has been reported in a variety of news sources. Adverse media screening is a major part of business AML (anti-money laundering) compliance checks. Examples of relevant news sources include:

• 'Traditional' news outlets (such as newspapers),

• Online news sites,

• Social media pages,

• Press releases,

• Unstructured sources.

Working with individuals or businesses with an adverse media profile can be extremely risky, so conducting negative news screening (as adverse media checks are sometimes termed) will help to ensure you do not become unwittingly involved in criminal financial activity.

Essentially, the adverse media meaning refers to any form of negative information about an individual or organisation that is publicly available, typically through news outlets, blogs or other news/media sources. This type of negative information could include things like:

• Reports of criminal activity, 

• Regulatory breaches, 

• Financial misconduct, 

• Reputational risks.

Each of these factors may affect a person's or entity’s suitability for business relationships, showing why adverse media screening is so important for modern businesses and organisations.

What is adverse media in the context of compliance?

Adopting a robust adverse media strategy is essential for organisations aiming to meet their compliance expectations and protect their business from hidden threats. This makes adverse media screening checks essential for fraud prevention in the modern business world.

Adverse media screening is a major part of customer due diligence, particularly for institutions that need to comply with the UK’s Money Laundering Regulations (MLRs), including:

• Financial service institutions,

• Estate agents and property services,

• Accountants,

• Solicitors.

Negative news or media about a person/business entity can reveal potential involvement in unlawful behaviour, long before any legal action has been taken or official legal sanctions have been imposed.

This type of information is particularly crucial if you need to identify risk early, supplementing more formal watchlists, such as Politically Exposed Persons (PEPs) lists or sanctions lists. In essence, this data offers a much broader picture of an individual’s or organisation’s potential for criminal involvement, even if they haven’t been flagged up during other compliance checks.

The main types of adverse media

Adverse media can span a wide variety of topics and sources. Common types include (but are not limited to):

• Financial crime reports: News articles or media reports may indicate involvement in money laundering, tax evasion, bribery or fraud.
• Potential criminal activity: Evidence of participation in organised crime activities, such as terrorism financing, human trafficking or drug-related offences.
• Regulatory breaches: Adverse media can also include aspects of disciplinary actions or penalties imposed by regulators such as the FCA or HMRC.
• Civil litigation: Court proceedings or judgements involving the party in question could be suspicious, especially those relating to financial misconduct.
• Corporate malpractice: Allegations of corporate malpractice, including corporate governance failures, environmental damage or unethical labour practices.
• Whistleblower reports and leaks: Information leaked to the press or made public via watchdogs, whistleblowers or activists.
• Reputational damage: Scandals or controversies that may indicate high reputational risk, even if criminal activities have not taken place.

Conducting ongoing monitoring of both traditional and online media sources is imperative to any adverse media strategy. Other adverse media screening best practices include using automated tools powered by natural language processing (NLP) and implementing risk-based approaches tailored to the specific size, structure and risk profile of the business.

Companies should also ensure that any screening tools used are updated regularly and any red flags are documented and escalated in line with their internal compliance policies.

Work with SmartSearch for your adverse media checks

Adverse media screening is a powerful tool in the AML compliance arsenal, offering savvy business owners the opportunity to ensure their organisation is AML compliant. By monitoring publicly available adverse news media and reports, businesses can spot any potential warning signs before entering into what could be a risky business relationship. 

Adverse media checks may not always be legally mandated in every situation, but this type of screening is increasingly seen as a core part of a risk-based approach to AML compliance.

When implemented correctly in your organisation, adverse media screening can strengthen your enhanced due diligence and protect your company from regulatory penalties. However, if you want your adverse media checks to be truly effective, they must be automated and integrated into your broader compliance workflows.

At SmartSearch, we’re experts in the world of compliance, able to help you carry out your adverse media checks with ease, enabling your team to focus on other, more pressing business matters.

Please contact an AML and compliance expert today if you'd like to see how we can help your business stay compliant with the law.