Adverse Media, Negative News, Special Interest Persons and Reputationally Exposed Persons are all interrelated terminology concerned with finding the bad news stories about your customers or potential customers and understanding the reputational risk associated with them.
While legislation and guidance is somewhat vague in terms of what exactly is required in relation to Adverse Media, it is clear that it should be assessed and considered by all regulated financial institutions.
There are several key areas where the relevance of Adverse Media information should be considered including:
- Customer onboarding, in particular with regard to ‘Enhanced Due Diligence’, enabling you to understand the reputation and background of your customers and related parties such as beneficial owners.
- Ongoing monitoring, in the context of repeated or ongoing screening of adverse media data.
- Customer reviews, should the customer names be screened against Adverse Media as part of their scheduled customer reviews?
- Correspondent banking relationships, for both the initiation of correspondent banking relationships and ongoing monitoring.
There are plenty of reasons why you may choose to implement Adverse Media screening including:
- To guard and protect against the proceeds of crime being funnelled through your accounts.
- To safeguard your financial institution from reputational damage by avoiding association with those individuals and companies whose reputation does not fit your risk appetite.
- To protect your financial institution from actual crime and potential loss of funds, as the Adverse Media has the ability to identify e.g. those convicted of mortgage fraud.
If the decision is made to include Adverse Media screening as part of your business processes, then a further decision is required to determine how it will be managed and if it should be introduced to your business processes in a more automated fashion. Do your customer volumes justify this, such that an ad-hoc Google search is no longer sustainable, for example, due to lack of audit trails and lack of coverage?
In a follow-up article, we will look in more detail at challenges associated with Adverse Media screening.
For more information on how we can help you in this area, contact us.