Adverse media is any negative information or information about a customer or business. With adverse media, it can be revealed whether a person or institution has been involved in a crime. Adverse media or negative news can be accessed through many mass media such as newspapers, magazines, TV, radio or web articles, blogs, and social media platforms.
What is Adverse Media Screening?
Adverse Media Screening is one of the key factors for businesses to access all kinds of information about their customers and to carry out the customer due diligence process in the most accurate way. It ensures that the institution takes a risk-based approach and takes the necessary measures against any money laundering and terrorist financing crimes.
In 2020, many financial crimes were in the news. Unexpectedly, this will be different in 2021. Practically every day, we hear news of another financial crime. This means that adverse media has an extensive and crowded network.
Drug trafficking, illegal gambling, fraud, corruption, and many more money laundering crimes keep the adverse media busy. Businesses need to follow some steps to enforce adverse media controls regularly.
Why is Adverse Media Screening Important?
The value of adverse media in the financial sector has been better understood after many years. With breaking news, you can be aware of the stock's collapse or learn about intercompany relationships. Adverse media can also create indicators that warn of leading crimes, such as allegations of bribery and corruption, drug or human trafficking, and fraud.
Therefore, financial regulators and the anti-money laundering community have a strong consensus that leveraging adverse media news data is a significant step in assessing risk.
However, given the difficulties of reaching negative news in the past, a search box for adverse media has become sufficient today. Banks and other financial institutions can speed up customer due diligence processes by reaching negative news within seconds through adverse media screening. It can also reduce the risk of crime by taking early measures against potential money laundering activities.
Adverse Media Scandals
The FinCEN leak scandal emphasized the importance of adverse media screening in combating money laundering in banking. According to the corporate transparency law within the new NDAA law's scope, the identities of the usufruct right holders of the companies established in the USA should be disclosed, and joint-stock shell companies should be effectively banned.
The BBC suggests that banks can monitor by payer and payee names rather than transactions. Some of the associated money laundering issues can be identified earlier, and banks can block transactions, reject and close the business.
Another factor in which adverse media played a role was the 2020 approval order with Deutsche Bank. According to US regulators, the bank ignored the late Jeffrey Epstein's criminal history and allowed millions of dollars worth of suspicious transactions to pass.
FinCEN announced that a guidance plan would be prepared for banks to improve their AML activities in the past months. Thus, he encouraged banks to seek ways to find more useful intelligence for regulators and law enforcement. It can be crucial for banks to heed this call to solve long-standing problems.
What Risks Can Be Detected with Adverse Media Screening?
Adverse Media Screening is one of the ways that companies can detect and prevent risks that could harm their reputation or financial stability. It can help businesses identify and mitigate a range of risks, including:
- Financial Crime: Adverse Media Screening can help identify individuals or companies with a history of financial crime, such as money laundering, fraud, or corruption. This information can help businesses avoid conducting business with these individuals or companies and prevent financial loss or reputational damage.
- Sanctions Violations: It can help businesses identify individuals or companies that are subject to economic sanctions. This information can help companies comply with regulatory requirements and avoid potential legal and financial penalties.
- Regulatory Compliance: It can help businesses identify potential violations of regulatory requirements or laws. This information can help companies take corrective action to avoid potential legal and financial penalties.
- Reputation Risk: It can help businesses identify potential risks to their reputation, such as negative news coverage, social media posts, or customer complaints. This information can help companies take steps to address these risks and protect their reputation.
- Cybersecurity Risks: It can help businesses identify potential cybersecurity risks, such as data breaches or cyberattacks. This information can help companies take steps to prevent these risks and protect their data and systems.
- Political Risks: It can help businesses identify potential political risks, such as changes in government policies or political instability. This information can help companies make informed decisions about their investments or business operations in a particular country or region.
How Can Risk Management Be Enhanced with Adverse Media Screening?
Risk management is an essential function for businesses operating in today's complex and ever-changing environment. In order to effectively manage risk, organizations need to have access to comprehensive and timely information about potential threats. Here are some ways in which adverse media screening can enhance risk management:
- Early detection of potential risks: Adverse media screening can help organizations detect potential risks early on. By monitoring news articles and other publicly available information, organizations can identify potential issues and take action before they become larger problems.
- Improved due diligence: It can improve due diligence efforts by providing additional information about an entity or individual. This can help organizations make more informed decisions when entering into business relationships or partnerships.
- Compliance with regulations: It can help organizations comply with regulations and avoid potential legal and financial penalties. By identifying potential risks, organizations can take action to ensure that they are operating in accordance with all applicable laws and regulations.
- Enhanced reputation management: It can help organizations protect their reputation by identifying potential risks to their brand. By taking proactive measures to mitigate these risks, organizations can maintain a positive reputation and avoid negative publicity.
- Improved risk assessment: It can improve risk assessment by providing additional information about potential risks. This can help organizations develop more accurate risk profiles and better understand the potential impact of different risks.
In conclusion, adverse media screening is an important tool that can enhance risk management for organizations. By using this tool, organizations can detect potential risks early on, improve due diligence efforts, comply with regulations, enhance reputation management, and improve risk assessment. As such, adverse media screening should be a key component of any comprehensive risk management strategy.
About Sanction Scanner Adverse Media Screening
Sanction Scanner's Adverse Media Screening tool is a powerful solution that helps businesses identify and mitigate risks in their customer account opening processes. With Sanction Scanner's globally-owned adverse media data, businesses can easily meet their customer due diligence and advanced due diligence needs, reducing their workload and increasing efficiency. The tool automatically checks comprehensive global sanction, PEP, and adverse media data according to customer risk levels, allowing businesses to perform ongoing monitoring processes with more comprehensive data and speed up their customer risk assessment processes. In addition, Sanction Scanner's Adverse Media Screening Tool offers multiple search options, including API, batch files, and web searches, providing businesses with greater control over their adverse media screening processes. Overall, Sanction Scanner's Adverse Media Screening Tool is a reliable and effective solution for businesses seeking to enhance their risk management processes.