A Step-by-Step Guide to Adverse Media Screening

Adverse media screening is a part of the name screening process. It provides the additional information necessary to establish a customer’s identity. Through this information, businesses can assess and manage financial crime risks posed by their clients and avoid onboarding clients that may be linked to Money Laundering (ML), Terrorism Financing (TF), and Proliferation Financing (PF) activities. Adverse media screening is, therefore, an indispensable component of a business’s Anti-Money Laundering (AML), Counter Terrorist Financing (CTF), and Counter-Proliferation Financing (CPF) program. In this infographic, we have discussed the step-by-step adverse media screening process. These steps are explained below:

Step 1: Collect KYC Documents

As a part of the Know Your Customer (KYC) process, businesses need to collect various documents to identify their customers and verify their identities. These documents provide information about the customer, such as their name, age, residence, etc. This information should be used for the next step, i.e. to run the adverse media screening check.

Step 2: Conduct Screening across Public Domains, News, Social Media, etc.

Adverse media screening can be conducted either through name screening software or manually. Name screening software provides an added advantage by automating adverse media checks, reducing the time taken to conduct the same and minimising human errors.

Adverse media screening should be conducted across sources such as:

Public domains such as bankruptcy filings, government databases, judgments, etc
News
Social media platforms such as LinkedIn, Facebook, etc
Magazines
Articles and blogs
Online forums

Manually, adverse media checks can be conducted by conducting thorough research on multiple search engines and social media platforms using the key identifiers of the customer.

The main purpose of running an adverse media check is to analyse if the customer is associated with any negative news or media that indicates that the customer is involved in financial crimes. Therefore, businesses need to look out for the following:

Any involvement in financial crimes or associated predicate offences
Past investigations for financial crimes
Any regulatory penalties received for non-compliance with AML/CTF/CPF laws
Nature and type of business of the customer
Information on the customer’s Beneficial Owners and other associated persons

Step 3: Analyse Screening Results

After conducting the adverse media checks, any matches found need to be disambiguated.

These results may be of three types:

No match: This is when no adverse media match has been found.
False match: This is when a match is initially found, but upon further investigation, it is found that the match is not related to the customer due to a mismatch of information.
Match found: This is when it is conclusively found that the customer is involved in financial crimes or its associated predicate offences.

Step 4: Make Informed Decision Regarding Customer Onboarding

Adverse media screening results help businesses make informed decisions regarding their business relationship with the customer. In case an adverse media match has been found, the business can take the following course of action:

Businesses can take a risk-based approach by assessing the ML/TF/PF risks posed by the customer on account of the adverse media match and perform Enhanced Due Diligence in case the customer is categorised as high-risk
If the ML/TF/PF risks posed by the customer are beyond the risk appetite of the business, it can deboard the customer to derisk itself
If the customer is involved in financial crimes, then the business should file a Suspicious Transaction Report (STR) with the Financial Intelligence Unit of India

If no match or a false match is found, the business can establish a business relationship with the customer after conducting a Customer Risk Assessment by considering other factors that affect the customer risk profile.

Adverse Media Screening Process: Final Thoughts

Adverse media screening is an effective tool that protects businesses from engaging with customers involved in financial crimes. It provides various benefits such as assistance in forming accurate customer risk profiles, which allows appropriate ML/TF/PF risk control measures to be taken, protection from risks of AML/CTF/CPF non-compliance, loss of reputation from associating with financial criminals, etc. Therefore, adopting and implementing a structured approach to adverse media screening is an indispensable part of a business’s AML/CTF/CPF program.

We are committed to assisting proper enforcement of AML and CFT regulations to regulated entities in India by designing a personalised AML framework – policies, internal controls, and procedures – and ensuring effective implementation of the same.

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A Step-by-Step Guide to Adverse Media Screening