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Adverse Media Screening – Key for Customer Verification

Verifying your next customer or a business partner to navigate the risk associated with their engagement and partnership is the cornerstone of your business success and compliance measures. Preventing the financial ecosystem of your business from deteriorating, adverse or negative news screening allows institutions to effectively implement due diligence and AML controls. From protecting the reputation of your organization to evaluating the financial crime risk, adverse media screening offers a consolidated screening source your business can rely on. Staying true to the fact that ‘prevention is better than cure’ 67% of financial institutions in the Association of Certified Financial Specialist body implement adverse media monitoring to manage their anti-money laundering (AML) risks and perform a verification check on their customers, published by Reuters.

The so-called sophisticated and layered ways of carrying predicate crimes by crime actors have seen an alarming rise, convincing financial institutions and businesses to implement robust and quick screening methods which not only keep them compliant but also preserve time consumed in lengthy and confusing monitoring processes. Let’s delve into the realm of financial crimes and how a rigorous adverse media check also referred as negative news screening can enable your business to verify who you are getting in chair with.

Why Does Your Business Need Negative News Screening

Failing to implement a strong AML, risk management, and customer screening program, one of the largest banks of Denmark hid its weakness and aided in laundering millions of dollars to the U.S financial system, creating an alarm for the integrity of institutions. The Danske Bank paid a settlement amount of $2 billion as a result of breaching compliance requirements.

Neglecting the threat posed by high-risk customers and inefficient compliance measures caused the institution legal penalties and an integral loss of reputation.

Similarly, without verifying the account holders, one of the world’s most renown banks, HSBC Holdings indifferently facilitated fraudulent transactions of drug cartels from Mexico and forfeited with a fine of $1.9 billion. These monetary and reputational damages could have been avoided if adverse media checks coupled with efficient AML control was implemented within their risk management program.

Anti Money Laundering Compliance amp Control

Unveiling the connection between your potential business partners or clients and any negative news rotating around the media and investigative reports, adverse news search prevents the businesses and institutions from breaching the compliance regulations by getting in business with money launderers and terror financiers.

To cease the flow of laundered money facilitated through sophisticatedly illicit ways, the Financial Crime Enforcement Network (FinCEN) in its final rule, emphasizes the businesses and financial institutions to robustly implement customer due diligence (CDD), risk based crime mitigation approach, and ongoing monitoring protocols before onboarding a new client and for periodic reviews.

Facilitating the risk management program against financial crimes, adverse media solutions contain latest regulatory changes, cyber security related news, fraud risks associated with industries and monitor the target entry from credible media sources including domestic and international news, regulatory updates and reports, and financial news.

A comprehensive and effective AML process for compliance and risk management includes customer verification, beneficial owner confirmation, customer relationship understanding, and ongoing monitoring.

Reinforcing the AML measures and controls, it is mandatory for businesses to adopt adverse media monitoring empowering the in-practice enhanced due diligence (EDD) and calculating the risk magnitude for clients who can fall in the category of politically exposed persons (PEPs) and regions carrying higher criminal abilities, endorsed by the European Union’s 4th Anti-Money Laundering Directive (4AMLD).

Uncover the Risk by Following the News

Commenting on the Deutsche Bank scandal, U.S Regulators criticized the absence of adverse monitoring and overlooking of Jeffrey Epstein’s criminal record; the financial institution could have avoided the illicit flow of millions of dollars through its financial system.

Giving a kick start to the trail of investigations, in 2020, a major setback in a Germany based fintech company Wirecard happened when they declared solvency and were not able to pay their due debts. Linking back to investigations initiated in 2016 when the stocks of Wirecard touched the sky, reports revealed the missing funds of around 2 billion euros from the company’s records which in fact never existed in the first place. Unraveling the effects of anti-financial crime measures that happened in the golden age of corruption, the Wirecard scandal shows the cruciality of adverse media screening to prevent established offenses which could be trailed back to 2016 when the first investigation started. Other than highlighting the need for a robust and resilient online adverse media screening, the Wirecard left the regulatory bodies pondering on the effectiveness of AML compliance and procedures to protect the integrity of the global financial system.

Exposing the vulnerabilities of financial systems across the globe, the FinCEN leaks scandal provides evidence that financial institutions can not solely rely on transaction monitoring when it comes to tackling arbitrary ways of crime actors. Preventing the ship from sinking, if implemented, online adverse news screening against the names of payer and receiver could have identified the illicit money flow risks associated with alerted locations for high risk money laundering activities. Leaving a lesson and pathway for the businesses and financial institutions to implement a legitimate approach for ML (Money Laundering) risks and mitigations, FinCEN leaks case highlights the inevitable need for advanced media checks meeting the compliance and screening efficiency gaps.

a brief overview of major financial scandals where adverse media screening could change the course of action.

Is Adverse Media Check the New Sandbox of Screening

Identifying and processing the potential threat from a pool of scattered negative news, adverse news screening keeps the analogy of a sandbox irrespective of the technical aspects. Let’s take a deeper look at why industries are looking forward to implementing a robust screening measure in the form of negative news checks and how it cuts through the noise while allowing businesses to reach what they are meant to find.

Reduced False Positives: Sentiment Analysis is the Player

Upon carrying a search against the keyword Amazon in any search engine would show results for Amazon the ecommerce platform and the rainforest as a result of negative filtration. What can possibly tell the system about the negative sentiment of Amazon against deforestation while bringing positive outcomes for Amazon’s innovation and services, sentiment analysis plays along the way. The negative media screening solutions with the implementation of sentiment analysis remove the ambiguity against your searches and reduce the false positives consuming most of your resources and time. Underpinning the pain point of many businesses across the world, the automation of machine learning (ML) and sentiment analysis to segregate certain from dubious.

Overcoming Language Barriers: Beyond the Borders

The geographical landscape of predicate crimes requires an efficient adverse media screening to cover domestic and international news while compensating the language and transliteration challenges. The media coverage in the most criminally vulnerable regions where money laundering crime rates are higher needs a screening solution against negative media which must cover specific languages. An inclusive screening solution with natural language processing (NLP) empowers the investigators to translate and analyze local and international media in several languages. The tools with extensive databases structured by the guidelines of FATF and other concerned regulatory bodies in the region along with broad coverage of languages strengthen your business compliance and security measures addressing the gaps of manual screening.

Efficient Risk Management & Enhanced Compliance

In a financial war of fighting against illicit money flow and frauds that harm the global financial and economical ecosystem, implementation of risk based approach in your business AML program plays like a cornerstone. In an era when financial crime actors are not playing in vacuum, the use of human and artificial intelligence is more like a lifeboat for a sinking global financial system. The adverse screening tools empowered with AI/ML and NLP accelerate the efficiency of your in-house due diligence and allow your business to build a resilient and timely risk management plan while meeting the regulatory and compliance gaps. With the identification of potential threats to your business integrity and compliance, adverse media monitoring enables you to decide when and who should be put under the radar of scrutiny.

Real Time & Ongoing Monitoring

Once the due diligence has been performed, staying updated with the status and intentions of your clients or prospects is crucial for a healthy business relationship and maintaining compliance control. For instance, your client was not convicted against a proposed allegation but you lost the track of media and court decisions, ended up onboarding a potential threat within your business and financial system. The automated and real-time based adverse screening enables you to keep a check on your client all the time and get alerted whenever the status of the potential risk changes from upbeat to dire. With an ability to prevent a potential crime, ongoing monitoring allows you to respond to a threat quickly and proactively.

A visual representation of adverse media screening being a game changer addressing screening gaps and offering a reliable AML measure. 

How AML Watcher can Help your Business in this Fight

AML Watcher being confident to change the game of AML compliance, offers your business to implement a robust and reliable screening plan to protect its financial and reputational integrity. Overcoming the challenges of manual screening through typical search engines, AML Watcher adverse media check tool implements sentiment analysis and NLP in its extensive sets of data which not only improves itself over the time through advanced machine learning algorithms but saves your time and resources by reducing false positives.

Learn more about our consolidated tool and its unbeatable compliance effectiveness to keep a close eye on the kaleidoscope of crimes and the remedial measures, visit here.

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