Beyond Headlines: A Strategic Exploration of Adverse Media Screening

Leaving the year 2023 with elevated financial compliance and global economical pressure, will the year 2024 be any different for growing unlawful and unethical financial activities? Let’s try to find the answer together. Continuing to be a global threat, the financial crimes enabling money laundering and economic integrity meltdown, are the pain points of anti-financial crime actors and regulators. According to INTERPOL Global Crime Trend Report 2022 (IGCTR), Americas and the Carribeans financial crime trends highlight the importance of strict scrutiny measures as the financial institutions in the analyzed region have played a pivotal role in facilitating flow of illicit money empowering the organized crimes.

In a constant tug war between technologically empowered screening tools against potential financial crimes and ever-growing criminal acts, adverse media screening is a key to unlocking the compliance and screening gaps. In response to customer due diligence (CDD) and compliance requirements, adverse media monitoring filters the negative news through an ocean of databases available on digital platforms. While allowing the institutions and businesses to manage and evaluate the risks associated with a client before onboarding, this digital paper will explore the multidimensions of negative news or adverse media checks beyond the typical navigation of screening.

A Strategic Compass: Why Negative News Screening is Crucial?

While the current news headlines are flushed with financial frauds, the cruciality of online adverse media screening encourages us to take a look at the infamous financial crime cases that happened in the past. Published by the U.S News, founder of FTX, Sam Bankman-Fried witnessed the fall of its enterprise in late 2022 when he was convicted of steering investor’s money to Alameda resulting in bankruptcy of both FTX and Alameda. SBF faced various other legal penalties and trials against five other heinous criminal activities.

Damaging the institution’s name and alienating the client base, the Wells Fargo and Co. (WFC) was forfeited with a fine of $100 million for opening millions of fake accounts on exploiting customers’ names. The trail of financial compliance breach extended to March 2023 when Wells Frago agreed to pay a settlement amount of $1 billion for misleading its investors and defrauding with the claim on rectifying its illicit activities as resurfaced in 2016 scandal.

Often disclosed in terms of news articles and press releases, journalists and crime watchdogs expose the criminal activities of individuals and crime actors after rigorous investigations. A robust screening of your new client or partner through online adverse news screening allows your business to not only meet the growing financial compliance requirements but protect your ship from sinking in terms of losing customer’s trust and business opportunities. A technically reinforced scan of your client to determine their potential involvement in terror and proliferation financing, money laundering and other cyber crimes, is crucial because the weakest flank of your business fortifies your strength.

Dynamics of Adverse News Screening: How does it work?

In 2022, a staggering amount of fine worth €6.4 billion was issued by the global enforcer of anti-financial crimes, the United States while 10.2% of the total was contributed by the UK which shows a massive increase in its fine stocks after €289 million fine from NatWest’s money laundering scandal.

To combat the intricate yet sophisticated ways of crime actors and stay ahead of the AML compliance in monetary and legal terms, the institutions and businesses employ adverse media screening in a systematic manner which includes,

• Collecting both structured and unstructured data available from public and private databases including press releases, news articles, social media trends and reviews, last but not least legal records.
• Orchestration of brief and targeted datasets by leveraging the tech-embedded algorithms.
• Ensuring precision and accuracy, the collected data is rigorously optimized based on the set standards. An efficient analysis against negative news checks is ensured through eradicating duplicates, standardization of input and processing language, and lastly formats normalization.
• AI enabled cross checking of the target entity against the developed datasets is the stage where AMS facilitates the compliance measures with risk scoring based on various parameters such as politically exposed persons (PEPs) risks, sanctions risks, and other criminal activities record.
• Facilitation of internal and external audits through comprehensive documentation and report generation outlining the flagged risks and entities automated by online adverse media checks.
• Empowerment of existing negative news screening protocols through ongoing monitoring and complementary upgradation of screening processes incorporating artificial intelligence (AI) and machine learning (ML).

Use Cases of Adverse Media Monitoring: An Escalated Scrutiny Measure

Reinforcing the in-practice due diligence and anti-money laundering measures, adverse media checks are required to be employed by both financial and non-financial institutions.

Financial Institutions & AML Compliance

The natural vulnerability of financial businesses such as banks, insurance and investment companies towards the predicate crimes obligates them to implement AMS while meeting,

• Customer due diligence
• Transaction monitoring requirements
• High-risk client verification before onboarding (Know your customer KYC compliance)

Non-Financial Institutions & AML Compliance

Protecting the integrity and maintenance of the regulatory compliance, employment of robust adverse media solutions enable non-financial institutions such as trading companies, law firms, security commissions, IT firms and Tech startups, media companies and non-profit organizations, health and educational institutes, to achieve,

• Corporate due diligence
• Enhanced scrutiny against reputational damages
• Vendor and supplier risk control

Intricate Problems Require Sophisticated Solutions

Navigating through the pool of data to screen what you are looking for is the challenge most institutions face while meeting the ever-growing compliance requirements in a globally varying financial landscape. Highlighted by The Seattle Times, every single person is forecasted to create 1.7Mb data per second while the daily data generation in 2020 was reported to be 2.5 quintillion bytes. Having said that, let’s take a look at the pain points of institutions while conducting an efficient screening against negative news.

False Positives

The inefficacy of adverse media screening with increased false positives is taking a toll on the compliance measures of businesses. Disposal of resources in terms of time and staff while assessing the irrelevant or insignificant alerts generated against the entity raise a big question mark on the screening measures whether manual or automated.

Lost in Translation

Tracing back the occurrence of false positives leads us to the natural intricacy of words and their interpretation in the media. Media in its various forms is flushed with content such as memes, slogans, idiomatic scenarios which can be tricky to process the target keywords, creating an ambiguity of context and resulting in increased false positives.

Finding a Drop in Ocean: Huge Databases

To uncover the tricky ways of crime actors, adverse media check tools are required to have an extensive database covering hidden yet authentic negative news. An inefficient screening solution or manual screening has to deal with huge data sets to look from, making the maintenance of compliance measures a daunting task for the institutions. Whereas, the efficacy of screening tools is determined by their ability to navigate through the enormous volume of data while overcoming the contextual barriers.

Data Protection and Privacy Compliance

A delicate balance between privacy and data access is one of the emerging challenges businesses are concerned with while implementing screening measures against adverse media. Other than exposing the business to legal consequences, data breach and failure to privacy rights can cost your business a fortune in terms of customer and business loss.

Beyond the Headlines: Robust Screening with AML Watcher

With a perfect blend of efficiency and technical expertise, AML Watcher offers businesses a reliable and advanced screening solution with a pace to meet ever-growing compliance  and regulatory intricacies. Strengthening the effectiveness of AML compliance, AML Watcher with its extensive databases, risk analysis automation, and continuous and ongoing monitoring, enables you to meet global compliance and thrive in the business community.

Sentiment Analysis: A Beast for Technical Compliance

AML Watcher automates its adverse media monitoring tool with sentiment analysis which reduces the occurrence of false positives, preserving your business resources. With an effective keyword optimization and data aggregation, the cutting-edge tool facilitates your business with optimum risk management while enabling you to make informed decisions in risk mitigation.

AI & Adverse Media Screening: What Future Beholds?

The endless efforts of crime fighters, AML regulators, journalists, and media groups go hand in hand with the efficient screening empowered by AI and ML. One can not stop from questioning if the AI automated tools will replace human assistance in navigating the contextual complexities. With endless possibilities in an expanding universe, guiding us towards the resilient AML Regulation measures, a calculated balance of AI and human intelligence seems to bring a promising future of AML compliance.

To learn more about AML Watcher and how it enables you to cover the compliance gaps, reach us out.