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Adverse Media Screening: A Way Forward to Uncover Hidden Business Risks

12 March, 2024

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Businesses and financial institutions face multiple challenges every day. However, money laundering, tax evasion, and fraudulent tactics are the most prominent ones that significantly damage the reputation of enterprises. Conducting business with individuals or companies with negative media profiles may lead a business to face such problems. That’s why a comprehensive risk assessment is more critical than ever before. Out of numerous ways to combat money laundering, adverse media screening is crucial to identify business red flags before initiating any collaboration. Explore this guide to understand a comprehensive framework on adverse media screening, general steps, and best practices.

What is Adverse Media Screening?

As the term shows, adverse media screening, also known as media monitoring, is a due diligence approach that ‘screens’ a business against data sources and negative media. In fact, the process allows companies to identify potential risks or red flags associated with a particular enterprise to save future business-to-business relationships. 

Types of Adverse Media Platforms

Multiple social media platforms exist in today’s IT world. However, the type of content and source may differ from channel to channel. Let’s have a look at the most common type of adverse media platforms:

  • Social Media Network & Platforms

Users of social media platforms and forms often give certain feedback and opinions regarding their experience with a particular business. These responses include everything from positive reviews to negative feedback, criticism, and bad experiences to make an adverse company reputation. Hence, social media platforms are considered to be prominent channels that can help your business with adverse media screening.

  • News Outlets

Physical and digital newspapers fall under the category of news outlets. Moreover, TV channels and online media channels (audio and video shows) are also major sources of information. In short, investigative journalism uncovers proof of illegal or corrupt behavior of businesses and organizations associated with them.

  • Blog Posts

Just like social media platforms, businesses often post long-form content where other individuals or entities could talk negatively or give adverse reviews regarding a company’s reputation. In addition, many blog writers often publish reviews of experiences and even reveal businesses that drive reputational threats, leading to other sorts of risks if the provided details are true.

  • Regulatory Enforcements

Regulatory databases exist worldwide, including sanction lists and watchlists issued by watchdogs such as the Financial Conduct Authority (FCA). These databases expose organizations and entities involved in illicit financial activities or other criminal or unethical actions. Furthermore, these extensive databases can also indicate companies that are not apparently involved in unethical movements but pose certain signs and risks.

Negative Media Information

Challenges of Negative Media Screening

One of the primary challenges the adverse media screening process faces is the authenticity and trustworthiness of the data. Therefore, every business should screen against unbiased and reliable data sources within global news. However, this global coverage leads to a massive amount of structured and unstructured information that needs to be scanned. 

Such vast information contains false negative and false positive information, making it challenging to conduct precise risk assessments. In addition, news and media trends are constantly transforming, which can add more complexity to the screening process.

Many instances are reported where personal details such as date of birth and address are not shared, causing difficulty in determining individuals’ and businesses’ identities. In addition, when media outlets report on a name, they may use techniques, sources, and privacy regulations different from what your organization used when collecting it. This can result in the identity being shown otherwise. It’s important to keep this in mind to avoid confusion.

Significance of Adverse Media Screening

Effective media monitoring is crucial due to the possible negative effects it may have on companies. Keeping an eye on unfavorable media may benefit firms in a number of ways, including:

  • Protecting Your Business Image

Companies can safeguard their image by monitoring negative media coverage, identifying unfavorable material, and taking appropriate action.

  • Recognizing Possible Risks and Dangers

Companies may safeguard their operations by keeping an eye out for possible risks and dangers like fraud, corruption, or cyberattacks through monitoring bad media.

  • Ensuring Industry Regulation Compliance

By monitoring unfavorable media coverage, companies may ensure industry rules are followed and stay out of trouble with the law and regulators.

How does The KYB Conduct Adverse Media Screening?

Now that you understand what is adverse media screening and why it holds significant importance in today’s fraudulent world, let’s have a brief look at how the adverse media screening process actually works:

  • Collect and Authenticate Business Information

A primary step of the Know Your Business verification process is collecting and authenticating business information, including UBO (Ultimate Beneficial Owner) verification from valid and official sources. This helps ensure that your business is collaborating with legitimate companies and clients. Moreover, the more details a business can collect and authenticate about a company (and its associated people), the more precisely it can define whether media coverage refers to a particular entity.

  • Perform Adverse Media Search

There are multiple ways to discover media coverage of a business or its associated individuals. Nevertheless, a standard method is keyword-based quests that filter for distinctive timelines and risk classifications. In addition, the verification service provider comprehensively understands the context of a piece of media and, more precisely, analyzes it. Therefore, assessing the veracity of media coverage is an important step in ensuring that the screening process is objective and accurate.

  • Comprehensive Risk Assessment

If adverse coverage is detected, a group of risk teams must further investigate various aspects. Some of the most prominent elements involved must be verified, such as the credibility of the source of information, the intensity of the adverse behaviors extracted from the given information, whether a business is perpetrator or involved in some other way, and various other factors. 

  • Appropriate Action After Screening

Based on how a company evaluates the hazards shown by any alerts, your business can decide to take various actions. Moreover, companies may choose to perform enhanced due diligence for a company, report an existing customer for suspicious activity, or outright block or end a business relationship.

How Does The KYB Help with Adverse Media Screening?

Extensive adverse media screening processes utilized during business onboarding assist in the discovery of fraudulent organizations and false providers. As a result, real-time corporate screening, enterprise risk assessment, and negative screening are some of the most important procedures that businesses may take to detect fraudulent corporations.

The KYB’s broad verification services assist businesses with compliance audits to prevent identity theft. Our real-time database of 300+ organizations enables us to provide fast verification and rapid detection of fake entities. Ready to guarantee your company is collaborating with safe businesses? Speak with our specialists now to learn more about how our business verification process works!

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