A Guide to Anti-Money Laundering for Crypto Firms

Scaling Adverse Media Monitoring Alongside Your Growing Enterprise

Adverse Media Knowledge & Training

Technological advancements have improved the ability of firms to detect, prevent, and report nefarious activities. However, the scale and sophistication of financial crime have risen alongside it, leading to a growth in financial crime typologies and predicate offenses

Adverse media monitoring is a critical part of any firm’s fight against financial crime. Anti-Money Laundering (AML) regulators—including the UK’s Financial Conduct Authority (UK), European Commission (EU), and Financial Crimes Enforcement Network (USA)—are beginning to enforce strict requirements concerning it. 

Why should financial institutions conduct adverse media monitoring?

The 6th Anti-Money Laundering Directive (AMLD), introduced by the EU in December 2020, has introduced new requirements for obligated firms to carry out significant anti-money laundering (AML) and other customer due diligence checks (CDD) on entities that they do business with. 6AMLD places a particular focus on ‘predicate offenses’, introducing new offenses, such as cybercrime and environmental crime, that financial institutions need to monitor entities against, and gauge the degree to which the adverse media changes a client’s risk profile. 

Adverse media monitoring traditionally involves time-consuming manual checks of vast, unsorted amounts of media. While this is somewhat manageable for firms with a small number of clients, financial institutions need to be more strategic in their approach to adverse media monitoring and categorization as they grow. AI-driven monitoring tools are available to help. 

Managing risk with ongoing monitoring

While it’s important to focus on screening new customers during the onboarding process, risks can arise within your client base and evolve into threats, and this necessitates continuous ongoing monitoring. Failure to do so could lead to relevant negative news slipping through the net and opening up financial institutions to liability for their clients’ crimes. However, using a manual approach to monitoring can be tedious, challenging, and costly. It also uses up significant manpower that could be better spent elsewhere in your business. 

Why categorization is important

On a larger scale like this where a firm has operations transcending different jurisdictions with a large client pool, adverse media monitoring can become a very complex undertaking. 

Depending on their jurisdiction and product line, firms need to precisely search and only see customer profiles that contain categories relevant to their business.

Therefore categorizing adverse media allows firms to prioritize their workload, and gauge the level of risk associated with each client more efficiently. 

Categorization also better facilitates automated screening and monitoring, in which searches can be further tailored to client profiles and regulatory environments, to cut through excess noise and keep any alerts focused on relevant things. 

This is particularly effective when using a profile-based adverse media tool which ensures that media is accurately grouped according to individuals and organizations, and enriched with identifiers like the year of birth and country. It allows efficient monitoring by quickly filtering out irrelevant alerts – which is in stark contrast to the frustrating experience of being alerted multiple times when adverse media is detected in a similar article written by a different media source. This can occur when organizations choose to adopt an article-based approach to adverse media. 

Tools that use a keyword-based approach to adverse media monitoring present multiple issues, including missing important articles that may not have the explicit keywords like “fraud” in them, and including too much irrelevant content due to the low predictive value of words like “shoot”, often used in other contexts.

Monitor at scale with the right tool

ComplyAdvantage’s Adverse Media Monitoring solution automatically alerts you to changes in client risk status and will show you only relevant finds for your team to review. 

Furthermore, ComplyAdvantage’s proprietary REST API is configurable, which allows obligated firms to change thresholds, search strings, and other relevant information, giving firms the agility required to adapt their approach at a moment’s notice. 

When adverse information is found, a single alert is delivered, and everything from investigating to escalating and remediating can be done from a single window. 

ComplyAdvantage’s machine learning-backed tool helps take adverse media monitoring to the next level by providing a full coverage of entity risk. 

Originally published July 26, 2021, updated November 18, 2021

Disclaimer: This is for general information only. The information presented does not constitute legal advice. ComplyAdvantage accepts no responsibility for any information contained herein and disclaims and excludes any liability in respect of the contents or for action taken based on this information.

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