Adverse media screening verifies clients who are involved in illicit activities. This assists companies in unveiling hidden news about the company and its owners before starting a partnership with them. The onboarding companies can access the pre-news, press releases, and pre-and post-conviction of the business before onboarding them. So, onboarding companies should be aware from the start and know the potential risks associated with clients.
Overview
Adverse media or negative news is information unfavorable to the company found in various sources. Generally, this is news about the company’s involvement in financial crimes such as money laundering, corruption, terrorist funding, or other unlawful activities. Before the onboarding, the company must ensure the business they are starting a partnership with is not involved in this scam. The adverse media screening gives the business confidence to move forward, guaranteeing they are doing business with a legal identity.
Why is Adverse Media Screening Essential?
Cross-checking business information from the negative news ensures the companies are out of the sanctions worldwide. For example, a bank onboarding a business that was previously involved in various financial crimes, and different news resources cover negative stories about them, but now the owner of the same company is using a new business identity to use the financial services in another country.
The relationship with that bogus company damaged the reputation of the bank and enforced fines. Therefore, financial institutes and other business onboarding organizations must uphold adverse media screening to safeguard from penalties. With the adverse media, companies also confirm the ultimate beneficial owners or gather information about them from different negative news portals.
Importance of the Adverse Media Monitoring
- The adverse media is full of various sources confirming whether the business’s identity is legal. It also ensures the companies and the owners are not involved in anything outside the law.
- Businesses screening against adverse media will protect companies from law enforcement penalties due to AML compliance.
- Adverse media also reveals the disguised identity of the company owners, which prevents companies from money laundering, terrorist financing, human trafficking, and many more.
- Collaborating with various businesses carries risks, which can be reduced by adverse media screening.
- Adverse media screening also allows companies to identify illegal businesses and protects customers from unlawful scammers.
- This also safeguards the company’s reputation and enhances the customer’s loyalty to the brand.
Sources of Adverse Media
As discussed earlier in the article, various authentic sources are available for companies to ensure that partner businesses are not involved in scams. All news channels should be scanned for efficient results. The adverse media scanning company should know all news resources, including money laundering, terrorist financing, and financial smuggling, to reduce the risk. Below are some adverse media resources:
National Newspapers
The classical source of adverse media is reading about business information from various news platforms, such as the BBC, the Guardian, The Financial Times, the Sun, or the Daily Mail. Gathering information about the owners and the company profile on this platform is old and inadequate, leading us toward our next source.
Social Media
Today, as a business onboarding company, you can not only rely on old newspaper techniques. Various digital platforms are authentic and credible and can be used in business verification. Social media platforms like LinkedIn, Facebook, and Twitter are a great source of information about the company profile and the owners. They provide up-to-date and reliable information about the company and its owners, helping you make an informed decision.
Sanction list
Government and third-party sanctions databases can also be used as adverse media sources. These databases store data on criminals and their companies, so you will get all the details about the company if it conducts any financial crime. Through databases, companies can also cross-check owners to ensure they are not using bogus businesses to launder money. The main sanction lists are OFAC sanction lists, FATF sanction lists, AML sanctions, HMT Financial Sanction Lists, UN consolidated lists, and EU consolidated lists.
Media Leaks
News channels and investigative reporters gather information from various companies and then leak data that breaks the law. Most of this data comes from tax havens, companies, and owners using these countries to conduct money laundering. This ensures that the business you start working with is not a tax compliance failure. For example, the Panama leaks, offshore leaks, and Pandora Papers contain over 300 million companies’ data, which does not comply with rigid regulations.
Smart Adverse Media Checks to Avoid Errors
Compliance with the AML regulations through adverse media screening is not simple. Cross-checking information about the company from various sources takes time and is costly. However, with all of this, the manual screening does not provide adequate results. Smart adverse media compliance is needed in companies for business onboarding. The KYB is covering that gap for the companies through the 250+ databases with over 300M registered companies’ information. We provide various adverse media sources, including media leaks, sanction lists, national or international newspapers, and social media platforms.