The importance of Adverse Media checks in today’s AML environment

Where Does Adverse Media Come From?

Adverse media can come from a range of sources. This includes traditional news media like newspapers in print or online or broadcast news across radio and TV.

Increasingly however, negative news can also be drawn from blogs, web posts and unstructured sources such as social feeds and unstructured forums.

The Implications of Adverse Information

One of the most common types of adverse information is the past criminal activity of an individual. If it is suspected that a person may be involved in financial crime, and authorities discover that that person has been previously caught for committing another crime, this gives authorities even more reason to suspect that individual to be involved.

In contrast, if a person has no criminal history and is not known for associating with individuals who do, they are then at a much lower risk of being involved in something such as a money laundering scheme.

Another type of relevant adverse information that individuals oftentimes look at is if a person is on a sanctions watch list or not. If he or she is, chances are that it is not for a good reason, and that authorities should be on the lookout for them being involved in any financial crime.

Why Do I Need to Do Adverse Media Checks?

Adverse media checks can reveal involvement with money laundering, financial fraud, drug trafficking, financial threat, organized crime, financial terrorism and more.

These links pose a serious threat to firms’ reputations and can lead to legal repercussions, especially if these firms operate within a regulated sector.

Because of this fact, many financial institutions that are heavily regulated by KYC policies are required to constantly be on the look out for relevant adverse information in order to discover any hints or tip offs that may aid their investigations.

Why is Automating Adverse Media Checks Essential?

Despite the pressing need for efficient, effective adverse media monitoring, legacy and manual solutions carry significant challenges for today’s compliance teams.

Traditional processes usually group customers into “risk buckets” of low-, medium-, and high-risk. This is a problem for a number of reasons:

• To be compliant with basic EDD requirements, high-risk clients must be monitored on an ongoing basis. But the processes by which people are classed as high-risk and subsequently monitored often leave much to be desired.
• Institutions use internet searches , “googling” news articles to perform manual searches for negative news on each individual high-risk client. Then, compliance staff must review these potential matches to determine whether the person named in media stories is actually the individual they are investigating. This type of search is incredibly labor-intensive and means high compliance costs for institutions.
• The limits inherent in manual monitoring also mean that some media sources may be missed. Moreover, these searches provide only a static snapshot of risk levels; in a world where media coverage updates by the second, this is inadequate.

In this fast-paced media landscape, a process reliant on user-initiated searches cannot compete with automated approaches that notify institutions when there is something of interest.

By using next generation technology to easily tailor searches  to your client profiles and regulatory requirements, adverse media can be harnessed to give you a deeper insight into your clients.