Maintaining Your Reputation

Adverse media screening helps you maintain a positive image in the public eye by alerting you to any potential threats to your business. This includes anything from criminal records or financial scandals to unethical behavior or false advertising claims.

By staying informed about any potential threats that could damage your reputation, you can take proactive steps to mitigate the risks associated with them.

Protecting Your Business

Adverse media screening can also help protect your company against legal action by alerting you to any potentially damaging information that could be used against you in court. For example, if a customer sues your company for false advertising, having access to documents outlining the accuracy of your claims can help defend your case in court.

Additionally, adverse media screening can also provide valuable insights into what competitors may be doing wrong so that you can avoid making similar mistakes.                                                                                                                                                           

Staying Compliant with Regulations

Finally, adverse media screening can help ensure that your business remains compliant with applicable laws and regulations. If a law changes or new regulations are introduced, having access to up-to-date information can help ensure that your business stays within the boundaries of the law.

Additionally, adverse media screening can alert you to any potential compliance violations committed by employees or partners so that they can be addressed swiftly and appropriately.

Adverse media screening has become increasingly important for businesses looking to protect their reputation and remain compliant with applicable laws and regulations.

Having access to accurate and up-to-date adverse media information allows businesses to stay informed about potential threats while taking proactive steps to mitigate those risks before they become too severe.

How does KYC2020 undertake Adverse Media Screening?

While screening for customers associated with financial crime, traditional systems can often lead to a slow customer onboarding which hampers operational efficiency.

KYC2020 changes that with Adverse Media Check ®, our AI-based service that continuously monitors thousands of relevant global news sources to create a persona database of individuals, companies, and politically exposed persons (PEPs) with relevant negative news per FATF financial crime categories.

We use Natural Language Processing, sophisticated AI-based algorithms, and ongoing learning to identify names and entities. We make sure that you have the most advanced and highly precise adverse media screening and monitoring solution, so that you can speed up your customer onboarding with confidence.

Adverse media screening, also known as negative news screening, is an integral part of your KYC and AML regime. In its most basic form, AMS is the process by which a current or prospective customer is screened for negative news mentions and other unfavorable information. AMS allows your organization to flag a person or business as a potential risk and thus avoid future reputational and compliance damages.

Getting AMS right, however, comes with many challenges, including:

• AML compliance teams are often already bogged down by time consuming, manual processes. Manually searching news sources via search engines just adds to the complexity.
• The sheer volume and complexity of the news data that must be scanned and sorted is staggering.
• Dealing with news feeds versus public watchlists is exponentially more complex. It goes beyond filtering false positives and identifying the correct person or business. One has to resolve the news article for sentiment, context, and other aspects of relevancy to determine if it is truly adverse media.
• AML compliance reporting requirements are becoming more stringent among smaller financial institutions and MSBs. Credit unions in particular are currently facing many changes to their AML compliance requirements. This leads to either under-reporting or over-engineering, either of which can lead to costly mistakes.

Institutions need to develop AML compliance systems that can successfully and efficiently identify high-risk customers. In particular they should define:

• When to perform adverse media scans?
• What types of data to search for and from which sources?
• What type of systems and procedures to use in order to balance manual and automated interventions?

Adverse Media Screening: Finding the Right Balance

Luckily, AMS is not rocket science. However, developing an effective and efficient AMS does require a structured approach as well as the integration and implementation of some core technologies. It also requires striking a balance between taking a risk-based approach to AMS while maintaining high-level of customer service and flexibility to scale operations for future growth. Done right, and done with the right technologies, such as AI and NLP, AMS should not result in a slow down of your customer onboarding and ongoing monitoring.

That said, here are four best practices that your organization can use to get your AMS off to the right start:

1. Determine Your Risk Tolerance and Perform a Risk Assessment

Setting the parameters for what constitutes an acceptable level risk when deciding whether or not to work with a particular customer, is a critical first step. This process involves answering a number of questions, such as:

• Which high-risk groups of individuals or businesses is your institution comfortable servicing?
• Which offenses would bar a potential customer from being accepted? What offenses would not?
• How much weight do charges and allegations get versus an actual conviction by a court or an admission of guilt?
• Which types of adverse media could be considered lower-risk over time?
• What systems and processes will be in place to take action and perform Enhanced Due Diligence (EDD) when the results of adverse media screening return matches?

Every financial institution and MSB has its own unique exposure to potential financial crime based on the kinds of customers it serves, the locations it operates in, it’s product and service mix, and the channels it uses to service customers. Every financial institution and MSB also has its own unique risk tolerance.

Before you can even begin to design an effective AMS, it is crucial that you set clear risk categorization thresholds and outline the relevant actions and details required for each.

To help with you with that, try our FREE AML Risk Assessment Tool!

2. Decide When is the Right Time to Screen

Though most financial institutions and MSBs engage in customer screening during the onboarding process, many do not have a clear and consistent screening strategy, particularly when it comes to ongoing monitoring for adverse media. When standardized procedures and decisioning are lacking, both routine monitoring as well as monitoring triggered by an event, such as a news item, can result in discrepant responses.

Adding fuel to the fire are increases in regulatory expectations, expanding sanctions data bases and watchlists, and an increasing number of categories that must be screened against. For example, in recent years AML transaction monitoring has grown to include crimes dealing with human trafficking and smuggling, as well as new business customer types that fall in ‘High Risk’ category, such as cannabis-based businesses and a wide range of innovative fintechs, such as crypto-currency.

Some of the best practices to help ensure that your organization screens customers at the right time without increasing the rate of false positives includes:

• Decide which events and activities warrant further examination
• Include AMS in the standard onboarding procedures for all new customers and for any new accounts from current customers
• Establish automated AMS for all customers on a routine basis
• Screen current higher-risk customers based on your organization’s risk-based approach.

3. Use Credible and Current News Sources

These days, anyone with internet access can become a publisher of “news.” Although this helps to ensure that critical information becomes available to the public, at the same time it creates several challenges for your AML compliance system and procedures:

• First, how can you verify the credibility of an original adverse media source?
• How should you handle alternative news sources, such as social media?
• Which of the many tens of thousands of verifiable sources should you choose to monitor for a particular customer– especially since the sources themselves may change?
• How do you ensure that you are working with current news items?
• How far back in time to go for screening adverse media?
• Finally, how can you sift through all of this information in an efficient and effective way?

Given the dynamic nature of sanctions and screening data, you need a smart watchlist database that can actively weed out unnecessary information while focusing in on items of true value. This data can then be coupled with a dynamic, automated system to help you match, sort and analyze the results. You must get this step right before you even venture into the minefield of negative news screening.

That brings us to final best practice in adverse media screening…

4. Use Smart AMS Technologies

Automated AMS technology can help your organization address the deluge of information and alerts by focusing in on the most relevant matches. Sophisticated AMS tools also significantly reduce false positives and help you screen customers according to their risk categories.

Consider our Adverse Media Check ^®. We harness the power of AI, NLP, and machine learning to continuously monitor thousands of quality relevant global news sources. Our sophisticated algorithms get to work identifying sentiment, context, and the prime actors (i.e. personas) in each article. This information is then structured and fed into a persona database of individuals, companies, and politically exposed persons (PEPs) to identify cross-links between news and government and public watchlists. Each Persona is also tagged with FATF supported categorization of risk of financial crime.

Adverse Media Check also feeds into the KYC2020 DecisionIQ decisioning engine to render Pass/Fail/Verify decisions on AMS so that you can speed up your customer onboarding with the help of AI-based decision systems.