10th October 2019
Adverse Media Categorization
WhyIs Important to Reduce False Positives
i) Financial Crime
x) Sexual Crimes
Adverse media categorization is a valuable KYC tool, especially since the FATF recommendations state that financial institutions must “understand their client’s reputation”, including previous criminal liabilities like involvement in money laundering investigations. Compliance with that direction requires adverse media screening – which traditionally involves time-consuming manual checks of vast, unsorted amounts of news reports, blog articles, and social media.
It’s important to make sure that any adverse media monitoring tool used is capable of identifying media by specific categories. This cuts down on noise and keeps alerts focused on what’s relevant by avoiding false positives. Depending on the risk-based approach businesses are taking it may also be prudent to receive different alerts based on different categories to make it easier for compliance officers to discover what’s relevant.
Categorizing adverse media allows firms to prioritize that workload, and gauge the level of risk associated with each client more efficiently. Negative news categorization may also better facilitate automated screening, in which searches can be further tailored to client profiles and regulatory environments. Automation allows firms to identify and assess adverse media, reduce false positives, and maintain the level of compliance performance that regulators expect.