Other parts of this series:
Adverse media screening involves searching for negative news about a person or business. It can be a key part of Know Your Customer (KYC) and Anti-Money Laundering (AML) processes for banks—but is it an effective part? Consider, for example, an adverse media search for a customer transacting under the name “Andrew Russell.” Would an investigator be able to determine, based on search results, whether any “Andrew Russell” found is—or is not—the same Andrew Russell convicted of money laundering in Essex in 2016?
This begs the broader question: How should compliance professionals filter through data available in open news sources to make risk-based decisions? With estimates showing 2.5 exabytes of data are created a day, the amount of information that can be checked is being outpaced by what should be checked. But sifting through at least some of this data may be worthwhile: A defined adverse media screening policy can help banks better mitigate risk and make more informed decisions about customers, while also reducing the more than £1 billion spent annually by international banks on KYC and AML compliance.
Adverse media screening, also known as negative news screening, is the interrogation of public data sources and third-party data sources for negative news or broadcasts associated with an individual or company. Adverse media screening can occur throughout the AML/KYC customer lifecycle, including during onboarding, refresh, AML investigations and on an ongoing basis. The industry has not yet adopted a standard approach to adverse media screening or to decisioning results across lines of business.
This fragmented approach has caused banks to implement siloed screening processes which, in turn, lead to duplicate screenings, increased cost and reduced focus on areas of higher risk. In an era of ever-increasing data, and even “fake news,” it has become more difficult to maintain effective adverse media screening processes and accurate customer information. But with clearly defined teams, processes and technologies in place, banks can turn adverse media searches from a step in a process into value-added, proactive customer risk management.
Defining the problem
The key components to adverse media screening include:
- Identifying who should be screened, and how often
- Screening and detecting, manually or via automated tools/vendors
- Reviewing to evaluate results and confirm matches
- Deciding on actions around identified matches and updating KYC systems
Problems happen across each of these components. Some of these are people challenges: For example, without a defined screening strategy, an understanding of who should be searched and how often can vary across screening teams.
Silos, lack of coordination and lack of defined strategies across the adverse media screening process can lead to either under-screening or over-screening, either of which are high risk and inefficient. To address these issues, the industry should focus on making adverse media screening more effective, focused and standardized.
How can standards and processes be created to drive effective adverse media screening? In our second post, we’ll talk about turning a reactive activity into a proactive strategy.
Contributors: Heather Adams, Archit Chamaria
- “Couple jailed for laundering £50m,” The Guardian, October 28, 2016. Access at: https://www.theguardian.com/uk-news/2016/oct/28/couple-jailed-for-laundering-over-50m.
- “How Much Data is Produced Every Day?” Level Blog, M. Khoso, Northeastern University, May 13, 2016. Access at: http://www.northeastern.edu/levelblog/2016/05/13/how-much-data-produced-every-day/. “Big Data: 20 Mind-Boggling Facts Everyone Must Read,” Bernard Marr, Contributor, Forbes, September 30, 2015. Access at: https://www.forbes.com/sites/bernardmarr/2015/09/30/big-data-20-mind-boggling-facts-everyone-must-read/#5fbde92a17b1.
- “Future Financial Crime Risks – Considering the financial crime challenges faced by UK banks,” British Bankers’ Association and LexisNexis® Risk Solutions, November 2015. Access at: https://www.bba.org.uk/wp-content/uploads/2015/12/Future-Financial-Crime-Risks-DIGITAL-final.pdf