Adverse Media

Adverse media can show results about a person’s involvement in any sort of criminal activity. For example, this could be financial crimes, fraud, money laundering, human trafficking, drug or arms trafficking, sanctions evasion, war crimes, and other illegal activities. 

Regulatory bodies like the Financial Action Task Force (FATF) require financial companies to perform adverse media screening as part of their due diligence process. Failing to comply with such requirements can result in legal consequences of reputational damage. Beyond compliance regulations, adverse media checks help identify risks and help ensure that the company that’s conducting this process isn’t involved in illegal or unethical activities. 

In the context of anti-money laundering (AML), adverse media is the legal requirement that mandates the screening of reports, articles, or any publicly available information from reputable news sources and government agencies. However, this also includes conducting customer due diligence (CDD) and continuously monitoring customer activities. 

So, to comply with AML, organizations need to screen not only adverse media, but also perform PEPs and sanctions screening and screen customers against global watchlists as a measure to reduce risk and comply with AML/KYC regulations. 

A Politically Exposed Person (PEP) is someone who holds a prominent public position. For example, a government official, military officer, or high-ranking executive of a state-owned enterprise. PEPs are considered higher risk because their influential positions increase their likelihood of involvement in criminal activities, including money laundering, terrorist financing, bribery, or corruption. As a result, AML compliance requires identifying them and screening them throughout the whole business relationship to ensure there aren’t any associated risks. 

Here are some popular ways that companies can use for their adverse media checks:

• Data aggregation. Collecting data from various adverse media sources (news articles, social media, government agencies, and court records).
• Keyword research. Using search engines to identify negative news through targeted keywords linked to crime and various criminal activities.
• AI-powered software. As AI can analyze large amounts of data, it’s now widely used for adverse media screening software to identify risks more efficiently and conduct more accurate risk assessments.

It depends on the country. However, adverse media screening is a unified practice for a standard AML program, which is defined by laws like the Bank Secrecy Act (BSA) in the USA, which focuses on screening and reporting suspicious activity through filing Suspicious Activity Reports (SARs). In Europe, for example, the 6th Anti-Money Laundering Directive (6AMLD) requires banks to perform enhanced due diligence for high-risk customers, who should be screened for adverse media.