What are Adverse Media Checks?

Understanding Adverse Media Screening for Effective Risk Management

Adverse media checks, also known as adverse media screening, help to uncover poor public feelings towards an individual or organisation that might harm any business partner by association. Adverse media checks are an integral part of enhanced due diligence strategies.

Adverse media checks can be used to protect a company’s reputation or as part of an AML check.

In this article, we will look at what adverse media is and the benefits of including them in your business process.

Adverse Media Checks

Adverse media is unfavourable news or information reported across a range of media sources. These can be traditional newspapers and news outlets, but in the modern age it also social media, press releases and blogs. Adverse media checks help uncover suspected links to criminal activity and money laundering. 

What is Adverse Media?

What is adverse media? Adverse media is quite simply unfavourable news or information reported across a range of media sources. This is often found through proper adverse media screening.

These include:

• Television news
• Newspapers
• Online news outlets
• Blogs
• Social media

Adverse media checks help detect news related to:

• Suspected/confirmed money laundering activity
• Suspected/confirmed terrorism financing activity
• Suspected/confirmed terrorism inks
• Suspected/confirmed organised crime links
• Suspected/confirmed fraudulent activity
• Political links
• Poor reputation

Whilst it is true that individuals can be falsely accused of illicit activity by media outlets and social media, the purpose of adverse media checks and adverse media screening is to make you aware of these accusations. It is also true that some individuals may be able to avoid prosecution but be known criminals or operate in a country where their illegal activity is allowed. By using adverse media screening, businesses can stay informed about any accusations in the media, allowing directors to make more informed decisions about whether to pursue a partnership.

In addition to whether an individual is a compliance risk, adverse media checks also tells you if they, or a business they are associated with, has a poor reputation and suffers from a lack of goodwill that might tarnish you and your business by association. This can include stories of poor practice, regulatory breaches or even a general dislike by the public.Conducting thorough adverse media screening can prevent this.

Whilst some news coverage in any given country will contain many international stories, the majority of news will be domestic and appeal to the national interest. In this way, a huge amount of information not available elsewhere is held in each country’s journalistic archives. The benefit of adverse media checks is that they give you access to an international knowledge base.

What are Adverse Media Checks?

Adverse media checks are part of the due diligence process. These checks can also be called adverse media screening. Whilst it is possible to perform a cursory adverse media check manually, this is inadvisable as the amount of articles and media sources an individual can check is limited and they will almost certainly miss some information.

Digital adverse media checks, such as the ones available through Red Flag Alert, are advanced, AI-driven processes; where millions of media stories are checked for references to the subject of the search. Any that are found and classed as adverse are then flagged and a decision can be made as to whether to do business together.

The software uses keywords to identify any relevant media stories and is capable of building, and screening, a network of third parties related to any illicit activities the subject is involved in. These checks are performed in seconds and check media outlets from around the world.

Adverse media checks are seen as one of the most powerful tools to protect against serious organised crime, where individuals are frequently able to avoid prosecution but their involvement is common knowledge.

The ability to connect third parties to the subject of the search and check if they have any adverse media against them adds an extra layer of protection and gives you a better idea of a potential business partner’s network and its risk to your company’s reputation. This is also an effective way to identify the ultimate beneficial owners of shell companies.

When to perform an Adverse Media Check

Adverse media checks usually form part of the enhanced due diligence process. However, companies in the regulated sector must adopt a risk-based approach to due diligence and AML processes. This involves looking at the inherent risks facing each individual company and adopting appropriate and proportional processes. Should a company frequently deal with clients unknown to them, from overseas or involved in sectors at risk of exploitation for money laundering it may be appropriate to perform adverse media checks as part of day to day AML process.

Enhanced due diligence is performed when a potential client or business partner is deemed to be a high risk of money laundering or illicit activity. The purpose of it is to provide an additional layer of defence against criminals hiding the source of funds by running more detailed checks.

These circumstances include:

• Individuals or companies from a high-risk country
• Individuals seeking undue secrecy or not freely advising the source of their funds
• Large transactions
• Individuals from outside the usual customer base

Outside of enhanced due diligence, adverse media checks are an effective way to protect the reputation of your company should you be partnering with another business. In these cases it is likely that you would know if there were any adverse media stories affecting the goodwill towards this business; but, by reviewing social media and blogs, adverse media is an incredibly effective tool for gauging public sentiment. Should a company hold a poor public opinion, partnering with them may tarnish your company’s reputation.

Adverse Media monitoring

As well as including adverse media checks in the pre-onboarding due diligence process it is also possible to monitor an individual or organisation for adverse media stories. The Red Flag Alert adverse media monitoring function continuously scans the internet and reports if adverse media arises.

This is especially useful when dealing with foreign parties or interests as it gives you access to breaking news in most countries, that would not necessarily be reported in the UK. It also lets you know of social media chatter, which often precedes traditional new reporting, to give you forewarning of any adverse news story that might be impending.

Adverse Media Checks and Red Flag Alert

Adverse media checks and adverse media monitoring are available through Red Flag Alert’s complete compliance solution. It offers unbeatable media coverage through a fully digital platform that saves time and money by allowing you to combine adverse media with all your AML and KYC compliance checks; meaning that staff can set up and conduct all required checks with a click of a button.

The Red Flag Alert system offers:

• Unbeatable match rates
• Advanced due diligence
• A full suite of risk checks
• Real-time PEPs and sanctions checks
• Time and cost-saving automation
• Ongoing support for users

Check, onboard and monitor, all with one comprehensive platform. Remain compliant and reduce AML risk, Try Red Flag Alert today.