The COVID-19 process brings individuals and institutions face to face with its negative effects in many social areas. It is now more critical for companies to manage risk correctly. Failure to identify potential money laundering and terrorist financing risks that may be encountered could cause you and your company significant disasters. Adverse media is an essential part of the anti-money laundering and KYC processes dealing with companies.
What is Adverse Media?
Adverse media means dirty information obtained from blogs and website content, corporate database, and social media posts. Organizations need adverse media checks to detect crimes such as money laundering, terrorist financing, and fraud. Financial crime history is the most sought-after adverse media news. Because businesses maintain or end customer relationships based on this financial crime history. People who have previously engaged in financial crime activities are at greater risk of money laundering and terrorist financing. Businesses must detect fraud, embezzlement, and criminal bribery activities to minimize these risks.
What is Adverse Media Screening?
One of the most important things for a company at high risk of money laundering and terrorist financing is to know your customer. Knowing your client's past criminal activities will reduce your company's risk of money laundering. Adverse Media Screening is defined as the search for adverse news concerning a person or organization. Therefore it plays an essential role in Anti Money Laundering (AML) and Know Your Customer (KYC). Also, Adverse Media Screening automatically checks PEP data according to the customers' risk levels.
FATF draws attention to the importance of adverse media controls for businesses and states that high-risk customers should enhance Due Diligence and implement adverse media searches for Customer Due Diligence(CDD) purposes.
Why is Adverse Media Screening Important?
Here are some reasons why adverse media screening is so important for effective risk management:
- Identification of potential risks: Adverse media screening can help organizations identify potential risks before they become serious issues. By monitoring news sources and other information channels, companies can identify individuals or entities that may have a history of involvement in criminal or fraudulent activities, allowing them to take appropriate measures to mitigate those risks.
- Compliance with regulations: Many industries, such as financial services and healthcare, are subject to strict regulatory requirements that mandate the screening of clients and vendors for potential risks. Adverse media screening can help companies comply with these regulations, avoiding potential legal and financial penalties.
- Protection of reputation: A negative news story or other damaging information about a company or individual can have significant impacts on reputation and brand image. Adverse media screening can help companies identify and address negative information before it becomes public knowledge, protecting their reputation and brand image.
- Enhanced due diligence: Adverse media screening is an essential component of effective due diligence processes. By identifying potential risks and negative information, companies can conduct more thorough investigations and make better-informed decisions about clients, vendors, and other business partners.
- Competitive advantage: By implementing effective risk management practices, including adverse media screening, companies can gain a competitive advantage in the marketplace. Customers and partners are increasingly concerned about the risks associated with their business dealings, and companies that can demonstrate robust risk management practices are more likely to win their trust and business.
How COVID-19 Affected Adverse Media Screening?
Financial crime activities continue to increase in the covid-19 process. Information changing faster than regularly forces access to up-to-date data. However, the more criminals are discovered, the more adverse media increases. Therefore, It has become more difficult for businesses to check thousands of news written in different languages during the coronavirus. There is a need for Adverse media screening software more than ever.
Due to Covid 19, businesses continuing their activities by working causes particular problems in controlling money laundering and terrorist financing risk activities. And criminals are quick to turn these problems into opportunities. Thus, while the coronavirus has such a significant financial impact, businesses engaged in Anti-Money Laundering activities also have significant effects and obligations to take appropriate security measures and carry out KYC stages correctly.
Advantages of Adverse Media Screening in the COVID-19 Process?
Many banks and financial businesses conduct adverse media screening with manual searches in the public domain. These searches, also known as keyword searches, are error-prone and time-consuming. Adverse Media Screening enables faster and more accurate data acquisition.
Another advantage distinguishing adverse media screening software from such searches is that it can access the targeted customer's compatible information. Manual searches, such as keyword searches, result in erroneous and incompatible search results. They detect all the data a customer refers to, including when a customer is not acting.
Adverse Media Screening provides access to a news broadcast in multiple languages. However, there is a possibility that news published in a local language may not be able to detect keywords entered in another language, so results in keyword searches may be incomplete or incorrect.
How Does Sanction Scanner Check Adverse Media?
Financial institutions that do not take the necessary measures are exposed to these financial crimes committed through economic systems. Regulations for money laundering contain guidelines for controlling your customers during the initial engagement process and then tracking their financial transactions. Companies must ensure AML and KYC compliance in line with these guidelines.
Companies can detect their risks in the customer onboarding process through Sanction Scanner Global's comprehensive media data. PEP and Adverse Media data should be checked continuously according to customer risk levels. With the Sanction Scanner Adverse Media Screening & Monitoring, you automatically carry out your ongoing monitoring process with more comprehensive data.