The feature of due diligence in the context of Anti-Money Laundering (AML) compliance goes really well beyond simply confirming financial transactions. It necessitates to determine possible hazards that are associated with people or organizations, such as their reputation in the public eye and much more. Negative news and adverse media screening have emerged as vital tools in the battle against financial crimes that include money laundering and terrorist funding alongside. Companies can steer clear of high risk people or organizations who may be engaged in illegal activity simply by identifying and evaluating bad news or unfavorable media.
What is Negative News Screening?
The process of looking through news sources in order to find any unfavorable material that is directly connected to a person, group, or entity is considered as negative news screening. This screening helps companies and financial institutions to evaluate the reputational risk of their clients or partners which is usually considered essential for anti money laundering compliance. The feature of negative news screening assists in locating unfavorable media coverage, such as that pertaining to financial crimes, corruption, fraud, or other illegal acts that could put companies at danger financially or legally.
This feature usually concentrates on obtaining data from a greater range of sources, such as blogs, social media, news sources, and other online platforms while the objective of adverse media screening is also considered somewhat similar. Information may spread quickly across international networks, online bad news and online adverse media screening have grown in significance in current times.
What is the role of negative news in AML compliance?
When it comes to anti money laundering compliance programs, they must include negative news screening as it has become quite essential in the past few years. Global financial regulators, such as the Financial Action Task Force (FATF) have stressed that companies are obliged to perform comprehensive due diligence that includes looking for unfavorable or unfavorable media coverage at the same time.
A business that uses adverse media screening is searching for indications of any possibly illegal action which is connected to its clients or business associates. This could involve the following in terms of AML compliance:
Corruption and bribery: Unfavorable stories that associate certain people with bribery scandals, corruption or related activities.
Financial crimes and fraud: News reports about financial crimes and fraud such as embezzlement or money laundering.
Terrorism financing: Connections to certain people or groups who are thought to be funding terrorism.
Violations of sanctions: Associating with people or organizations that have been sanctioned in the past because of their connections to illegal behavior.
How Does Negative News Screening Work?
The feature of negative news screening allows users to scan and evaluate a wide variety of internet media sources using both technology of Immediate X2 ProAir and manually as well. These services search through a variety of data sources, such as press releases, news stories, financial reports, and social media posts to find pertinent and authentic information . The following are some of the main steps in the screening process:
Data Collection: Reputable databases, social media platforms, and online news sources are the prominent sources of data used by the screening service to scan data. It examines both domestic and foreign sources in order to guarantee thorough coverage of any potentially unfavorable reports.
Keyword Detection and Analysis: The negative news screening feature looks for particular keywords associated with illegal conduct, such as “money laundering,” “corruption,” “fraud,” “terrorist,” and more with the help of using sophisticated algorithms.
Risk Scoring: negative news screening tends to undergo analysis and is given a risk score after identifying pertinent news items.
Alerting: The feature of the negative news screening notifies the anti money laundering compliance team of any unfavorable or negative news that further enables them to take the necessary steps, such as starting a fresh investigation or severing ties with the high risk organization.
Real-World Case Study: The Case of FBME Bank
The U.S. Department of the Treasury’s FinCEN placed Tanzanian bank FBME Bank on a blacklist for aiding in money laundering and terrorism financing in 2015. Although FBME bank failed to put in place an efficient negative news screening system, media publications and print media like The Financial Times and The Wall Street Journal covered its illegal operations. After the revelation of such misconduct, the US financial system imposed regulatory penalties such as asset freezes and removal on account of inability to keep an eye on negative publicity. The case of FBME Bank shows the significance of proactive adverse media screening for financial institutions to detect risks, guarantee compliance, and guard against regulatory and reputational harm as well.
Stay Ahead of Risks with AML Watcher’s Adverse Media Screening
With AML Watcher’s advanced adverse media screening, you can monitor global news, social media, and reputable databases in real time to spot threats such as fraud, corruption, terrorism financing, and sanction violations. Our solution ensures that your compliance team is always a step ahead with automated alerts, detailed risk scoring, and comprehensive coverage.
