Your Background on Adverse Media Screening

Financial services professional reading business section of newspaper

The consequences of engaging with individuals or entities associated with financial crime, fraud, or unethical online behaviour can be dire. To safeguard your business interests and brand reputation, comprehensive background screening is essential. One crucial tool in background screening for financial services is adverse media screening.

The hiring managers we work with in financial services consider adverse media screening to be a core part of their recruitment process. In this blog post, we cover why adverse media screening is beneficial alongside criminal record checks, education verification, and reference checks.

Understanding Adverse Media Screening

Adverse media screening, also known as negative news screening, media checks, or public records searches, is a critical component of comprehensive background checks. Adverse media screening involves scouring publicly available sources such as news articles, regulatory alerts, sanctions lists, and legal databases to identify any unfavourable or concerning information about customers, business partners, or third-party vendors. 

This proactive approach helps mitigate risks, including:

  1. Reputation Risk: Negative media coverage can tarnish the reputation of financial institutions, leading to loss of customer trust and credibility in the market.
  1. Regulatory Risk: Failing to identify and address adverse information may result in regulatory fines and penalties for non-compliance with anti-money laundering (AML) and know-your-customer (KYC) regulations.
  1. Financial Risk: Entities with ties to criminal activities or sanctioned individuals may pose financial risks, including money laundering, fraud, and terrorist financing. In recent years, several financial institutions have faced hefty fines for violating sanctions laws by conducting transactions with sanctioned individuals or entities. Adverse media screening can help you identify parties with ties to sanctioned regimes or politically exposed persons (PEPs), enabling you to take appropriate action to mitigate risk. We cover more on this in the blog post PEP Check: Politically Exposed Persons Screening Explained.
Employer conducting adverse media screening on laptop

Why Adverse Media Screening Matters

The financial services landscape is intricate and diverse, attracting global business transactions. However, this complexity also presents risks, as it can be challenging to identify potential red flags in the vast amount of information available. 

Adverse media screening provides a crucial layer of protection by enabling you to detect any potential association with financial irregularities, fraud, corruption, or other illicit activities. In fact, the Financial Action Task Force (FATF) and the Office of Foreign Assets Control (OFAC) regulations require that financial institutions conduct adverse media searches as part of their due diligence obligations. 

Key Benefits of Adverse Media Screening

Regulatory guidelines emphasize the importance of adopting a risk-based approach to AML compliance, where organizations assess the risk level of customers, transactions, and business relationships and allocate resources accordingly. Adverse media screening enables organizations to identify red flags and indicators of heightened risk, allowing them to focus their compliance efforts on high-risk areas. By prioritizing resources based on risk, organizations can effectively manage compliance obligations while maximizing the effectiveness of their AML programs.

Other benefits include:

Regulatory Compliance

As we mentioned above, adverse media screening helps your business meet the stringent anti-money laundering (AML) and counter-terrorist financing (CTF) regulations enforced by local and federal regulatory bodies such as the Financial Crimes Enforcement Network (FinCEN) in the United States and the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC). 

These regulations mandate that financial institutions and other regulated entities implement effective measures to prevent money laundering and terrorist financing activities. Adverse media screening helps identify individuals or entities associated with adverse events or suspicious activities, enabling you to report them to the authorities as required by law.

Reputation Protection

Adverse media screening is a crucial tool for protecting your business’s reputation by identifying and mitigating risks associated with potential exposure to financial crime, corruption, fraud, or other adverse events. 

In 2019, Danske Bank, Denmark’s largest financial institution, found itself embroiled in one of the most significant money laundering scandals in history. The scandal involved approximately €200 billion of suspicious transactions flowing through its Estonian branch between 2007 and 2015. These transactions were linked to illicit activities, including money laundering for individuals and entities from Russia and other former Soviet states.

One of the key failures that led to this scandal was the inadequate adverse media screening conducted by Danske Bank. Despite numerous red flags and warnings from internal and external sources, including media reports and whistleblower alerts, the bank failed to effectively monitor and investigate suspicious transactions.

Danske Bank’s lax controls and insufficient due diligence allowed the illicit funds to flow through its systems undetected, tarnishing its reputation and triggering a significant public outcry. The scandal led to a wave of regulatory investigations, shareholder lawsuits, and massive fines. Additionally, it severely damaged Danske Bank’s reputation as a trusted financial institution, resulting in the resignation of its CEO and several top executives.

Enhanced Due Diligence

This screening goes beyond conventional criminal record checks, providing a deeper understanding of your potential partners, clients, or associates.

The real-life example cited above underscores the vital role that adverse media screening plays in safeguarding businesses against reputation harm and ensuring compliance with regulatory requirements. By prioritizing thorough due diligence and proactive risk mitigation measures, you can protect their reputation and maintain the trust and confidence of stakeholders in an increasingly complex and interconnected business environment.

Adverse media screening search of different public media platforms

Implementing Adverse Media Screening

By using adverse media screening to identify adverse mentions, you can assess potential risks and make more informed decisions before entering into business relationships. 

To benefit of adverse media screening, consider these steps:

  1. Partner with a Trusted Vendor: Choose a background screening partner with extensive experience in media screening and a comprehensive understanding of the regulatory landscape.
  1. Define Screening Criteria: Collaborate with your background screening vendor to establish specific screening criteria that align with your business’s risk tolerance and industry requirements.
  1. Thorough Coverage: Ensure that your screening covers a wide range of sources, including international and local news outlets, regulatory databases, litigation records, and more.
  1. Regular Updates and Continuous Monitoring: The risk landscape is constantly evolving. Regularly scheduled screenings are crucial to maintaining up-to-date information on your business relationships.
  1. Human Expertise: While technology plays a pivotal role, the involvement of skilled analysts helps to contextualize adverse media findings and minimize false positives. At Certn, our screening analysts will double-check information flagged for review to ensure accuracy.

Adverse Media Screening FAQs

What is adverse media screening?

Adverse media screening, also known as negative news screening or media monitoring, is a process used by organizations to identify and analyze negative or suspicious information about individuals, businesses, or entities from various sources such as news articles, regulatory alerts, legal databases, and social media platforms.

The goal of adverse media screening is to uncover potential risks associated with clients, business partners, suppliers, or other parties with whom an organization may engage in transactions or relationships. This proactive approach helps organizations mitigate various risks, including reputational damage, regulatory non-compliance, financial fraud, and exposure to illicit activities such as money laundering, corruption, and terrorism financing.

What is an example of adverse media?

An example of adverse media would be news articles reporting on individuals or organizations involved in illegal activities, financial fraud, corruption, sanctions violations, or other unethical behaviour. 

What is AML adverse media?

Anti-money laundering (AML) adverse media refers to negative information found in publicly available sources that could indicate a heightened risk of money laundering or other financial crimes. Adverse media screening is a crucial component of AML compliance programs, helping financial institutions and other regulated entities identify and mitigate potential risks associated with their customers, clients, and counterparties.

Examples of AML adverse media include news articles, regulatory notices, sanctions lists, legal filings, and other publicly available information that indicate involvement in financial crimes, corruption, fraud, or other illicit activities.

Compliant Adverse Media Screening

Staying ahead of potential risks is a business imperative. 

Adverse media screening is an essential component of any robust risk anti-money laundering (AML), know your client (KYC) and due diligence framework, helping you identify and mitigate potential threats before they escalate into crises. Adverse media screening also empowers you to make more confident hiring decisions, safeguard your reputation, and navigate the complex financial services regulatory environment.

By leveraging advanced technologies such as Certn’s artificial intelligence (AI), adverse media screening tools can scan and analyze vast amounts of unstructured data quickly and efficiently, identifying relevant information and flagging potential red flags or suspicious activities.

By partnering with a reliable background screening vendor Certn, you can unlock the power of AI-powered adverse media screening with the confidence of knowing we’re committed to transparent and accurate information. See for yourself. We can tailor screening to look for anything to do with drugs, racism, extreme political views, violence, excessive use of bad language, sexism, and also specific searches pertaining to the financial services industry.

Request a quote to discuss customized background screening with one of our experts.