Adverse media is defined as leveraging traditional and unstructured news sources as an early indicator of unfavorable information related to an individual or a business. Researching negative press is vital to overall risk management strategies and can be used as a financial crime compliance tool.
Unlike background checks, an adverse media search gathers information from various news outlets to help build a risk profile of individuals or businesses that your company may be considering doing business with. In addition, adverse media can help eliminate noise and confusing results by leveraging AI to filter and provide relevant insight into different crimes. For example, the U.S. FinCEN leaks scandal shows that adverse media screening is an effective tool for fighting financial crimes. In the FinCen leak, over 2,100 Suspicious Activity Reports (SARs) were leaked to the news media, which revealed the gaps in how banks were identifying the movement of illegal money. Adverse media also provides indicators into big-ticket items such as drug trafficking, human trafficking, international and domestic terrorism, and terrorist financing.
Tying in investigative steps such as criminal activity research and transaction monitoring with adverse media are important components of a comprehensive risk management strategy. Information from adverse media is also helpful when assessing legal and reputational risks that your business may face and can protect against fines and penalties, the loss of consumer confidence, and other threats to your reputation and brand.
Using adverse media as a critical research function during the onboarding of new clients and constantly monitoring for up-to-date negative information about clients and partners is vital for reducing risks. For financial institutions, conducting an adverse media search is a critical part of a bank’s KYC duties. These duties also require financial institutions to identify and verify the identity of beneficial owners in companies. Doing your due diligence and researching all possible negative information about a client or potential business partners is an important precautionary measure that can help protect your business.