Click here to watch the webinar on-demand.
While Adverse Media (AM) regulations and requirements vary significantly across the world, the need to implement adverse media screening as part of a risk management solution is a consistent compliance challenge. To help you meet that challenge, in August 2022, Ripjar Chief Product Officer Gabriel Hopkins and CEO and co-founder Jeremy Annis hosted an AM screening webinar, focusing on the need for businesses to build a balanced AM screening solution tailored to their unique risk concerns.
Catch up on some of the key points from our webinar here.
Defining Adverse Media Screening
Adverse media screening – sometimes called negative news screening – refers to the process of using different types of media to inform a risk-based compliance process. Speaking in the webinar, Jeremey Annis defined the process as “monitoring the media to manage an organisations’ risk posture and exposure, through customers or related parties, to financial crime and reputational risk”.
Jeremy noted that adverse media usually refers to unstructured content, such as newspaper articles, websites, blogs, social media posts, and other online data posts – rather than typical name screening data sources, such as international sanctions lists or politically exposed persons (PEP) lists. Unstructured adverse media tends to be “fast and messy”, with new stories entering the ecosystem and then evolving and changing as new information emerges. By nature, it is inexact and potentially confusing.
With that in mind, adverse media screening solutions must be agile and flexible and capable of combining a range of structured customer data with unstructured sources derived from the global news landscape. Similarly, adverse media screening represents a way for organisations to move towards a system of ongoing compliance – with processes informed by continuous monitoring technology that adds depth and context to structured customer due diligence (CDD) information or suspicious activity alerts.
Regulator Attitudes to Adverse Media
Financial regulators and authorities have begun to mandate some adverse media screening as part of their risk management frameworks. During the webinar, Gabriel and Jeremy stressed the importance of understanding jurisdictional attitudes to adverse media screening and set out several notable regulatory positions:
The EU: The EU’s Sixth Anti-Money Laundering Directive (6AMLD), adopted across the EU and in the United Kingdom, came into effect on 3 June 2021, with a stronger focus on adverse media screening than its previous iterations. Specifically, 6AMLD stipulates that organisations must implement “systematic” adverse media checks: while that direction may include a broad range of search and screening mechanisms, it represents a tightening of regulatory expectations, ensuring EU organisations are contributing meaningfully to the global fight against money laundering.
The United States: While the US has not gone as far as the EU in introducing a mandatory system of checks, the Financial Crimes Enforcement Network (FinCEN) recently emphasised the importance of adverse media screening as a compliance tool. Many US organisations have interpreted that move as an indication that the financial industry needs to be ready for incoming regulations.
Singapore: The Monetary Authority of Singapore (MAS) has generally been ahead of global adverse media trends. As far back as 2018, MAS was coordinating with banks in Singapore on a requirement for quality adverse media checks as part of the city-state’s anti-money laundering and counter-financing of terrorism framework. Implemented in a variety of Singapore banks, those AM screening processes were then exported to those same organisations’ branches in other jurisdictions out of a need to maintain a level regulatory playing field.
International regulators: The Financial Action Task Force (FATF), an inter-governmental AML/CFT regulator, has long advocated for adverse media checks, with guidance set out in its 40 Recommendations. That sentiment was recently amplified by the influential Wolfsberg Group, which published a Negative News Screening FAQ in May 2022. The FAQ took a ‘common sense’ approach to explaining the significance and importance of adverse media screening as part of the effort to combat financial crime.
Establishing an Effective Adverse Media Solution
The webinar panel’s discussion included a range of fundamental considerations for building an adverse media screening solution that balances efficiency with the need for regulatory robustness. The panel’s key adverse media screening considerations included:
- Search scope: Firms should understand what kind of media coverage their adverse media screening solution needs, taking into account factors such as customer risk profiles and areas of operation. That consideration should ultimately determine what kind of adverse media data they include in their searches and whether local outlets should be included. Customers with business interests in South America, for example, should be screened against local South American news sources.
- Customer screening requirements: It is important to understand how much of a given customer population should be screened against adverse media. This consideration is fundamental to the risk-based approach endorsed by the FATF and requires organisations to conduct customer risk assessments. When a customer is determined to present a high risk of financial crime, adverse media screening is a way to ensure their risk profile remains accurate throughout the relationship. The more high risk customers that an organisation has, the more robust and efficient their adverse media screening solution needs to be (and the more value can be provided).
- Public vs commercial media sources: Adverse media screening solutions may draw on commercial or publicly available news stories – both of which offer different advantages. Publicly available adverse media refers to data derived from scrapes of news websites – while that information is free, it is limited in archival scope and often involves copyright concerns which can limit its usefulness. By contrast, commercial adverse media sources offer a greater depth of archival information that allows for searches over longer periods of time.
Source diversity: An adverse media screening solution should take in a diverse range of media sources, including screen and print sources, established news websites and independent sites, blogs, forums, social media platforms, and any other relevant form of media. That diversity should also take into account the geographic relevance of the data collected, and source credibility: an established news organisation, for example, is likely to produce more credible and higher quality media than a personal blog or social media network, and be of more use in any subsequent money laundering compliance decisions.
How Ripjar Can Help With Adverse Media Screening
Given the challenges and demands of 21st century compliance, your organisation needs an adverse media screening solution that delivers meaningful risk data from a crowded and often chaotic landscape of sources. Key to that requirement is a capability to assess large volumes of data efficiently, searching for customer names in a variety of languages, for example, or using fuzzy logic tools to identify inefficient and potentially costly false positives.
With that in mind, Ripjar’s adverse media screening solution, Labyrinth Screening, has been designed to be a powerful screening tool, capable of conducting name searches in 21 languages and of capturing changes to customer risk profiles in real time. Powered by next generation machine learning technology, Labyrinth Screening goes further than conventional KYC tools by balancing the demands of regulatory compliance with adaptive, ongoing screening support. Our platform can be tailored to the compliance needs of an individual business in order to address risk exposure, while reducing costly false positive alert rates, and adapting to emerging criminal risk and incoming regulations.