Following on from our previous article on adverse media, let’s assume for now that you wish to include adverse media checks as part of your AML controls.
A sensible starting point is to define what you will use as the source of the adverse media information to be reviewed as part of your processes.
A straightforward approach is to use freely available information from the internet. Searching against a customer name on the internet can lead to plenty of data but more focused searching is recommended. For example, searching news feeds and “reputable” websites and discounting less reliable sources, returns data in line with your internal risk appetite. A key point to remember is that anyone can upload information to the internet so defining what constitutes a reputable website site is important.
Depending on the scale of your operations and requirement for adverse media checks, an alternative approach is to purchase the data from the various list providers on the market. There are many list providers who supply sanctions and PEPs list data and now also offer adverse media data.
It is important to understand the data quality available on these lists and how this will impact your processes and procedures and the potential for generating false positives. Here, we have set out some questions to help firms shape their approach to assessing and selecting an adverse media list.
- What specific risks are you looking to mitigate through monitoring of adverse media? For example, are you trying to focus on financial crimes and links to terrorism? Or are you also interested in environmental crimes, regulatory misdemeanours, violence, cybercrime and more? This is an example where a financial crime control can bleed into other risk areas including reputational risk.
- What are the list provider’s criteria for adding names to the adverse media list and is the data categorised in a meaningful way such that you can use the data relevant to you – for example can it be split by geography.
- How complete are the records? For example, what percentage contain country information? We have seen a case where multiple false positive matches were generated against a name on an adverse media list due to lack of country information. The adverse media record did not include any country information despite the address detail including reference to the disputed territory of Kafia Kingi which sits between South Sudan and Sudan. If either Sudan or South Sudan or both had been included in the adverse media record the false positives would not have been generated as the country would not have matched that of the customer.
- How does the list provider manage updates to the lists? How old is the data or how current is it? At what point is a record removed from the list?
- What sources do the list providers include? Some keep to major, recognised news organisations whilst others will dive down as deep as blog posts and forums.
Regardless of the source of the adverse media data, there are a lot of considerations relating to the quality of the data and how to use it. These should be well documented as part of the defined strategy for adverse media.
In our follow-on articles, we will look at the approaches to screening and matching against adverse media lists.
For more information on how we can help you in this area, contact us.