But what exactly is meant by ‘adverse’? Of course, we could give a definition, but saying that something is harmful or unfavourable towards an individual or company does not capture the scale of a negative news screening.
It is necessary to communicate the categories—and subcategories—of adverse media that need to be properly screened for accurate and relevant results. Oftentimes, these terms are too broad to come under just one umbrella when it comes to screening your clients.
It can be devastating to your business if you miss out on important information on your customers, however it is necessary to ensure that you are not drowning in information that may be deemed adverse, but is not relevant to the typical KYC screening.
By breaking down the various categories within adverse media, we found that there is a way to create a properly defined adverse media screening process for your business, helping you avoid ineffective adverse media screening in your KYC.
Let’s look at some of the most pertinent adverse media categories that businesses need to be wary of when screening their clients.
These financial crime categories and subcategories are based on guidance from 6AMLD and are mandatory for any negative news screening process.
Not surprisingly, money laundering is a huge risk for banks and corporations and is likely one of the top offences that would need to be flagged in adverse media checks. But what happens when predicate offences are added into the equation?
*Some examples shown above.
Predicate offences are extremely important to be aware of and must be paid close attention to in screenings, as these are often the things that necessitate the proceeds of criminal actions to be laundered. However, they do not always carry the same weight as financial crimes, as they are broken into components of a crime.
For example, it would be disingenuous to report that terrorist financing carries the same weight as organised crime and racketeering, but it is logical that these two groups would be treated similarly in an adverse media check.
Although we have left non-financial crime territory, we find that customers are still curious to know if there are any ‘skeletons’ they need to be aware of. In customers’ eyes, the gravity of such offences can differ, which is extremely important in monitoring mode, as smartKYC can be calibrated to prioritise alerts that truly matter.
Reputational risks are not truly criminal acts, but can give insight into potential customers that may have the potential to damage the public’s perception of your company.
For example, bullying can damage your company’s reputation and lead to associations of your business that may be false. It is important to be aware of these narratives for your reputation.
Toxic associations are even further away from being criminal acts, but can lead you to your business being associated with an organisation, a sector or a subject that does not accord with your brand’s values.
In negative news screening, it is important to pick up on these associations and be aware of the adverse impact they could potentially have on your company’s brand, share price and even sales.
And then there’s ESG.
ESG also falls victim to being a large umbrella of definitions that could, in theory, gather millions of unrelated results—but it is important to note that not all of them will be negative.
As consumers are increasingly demanding in areas of social, environmental and governmental commitments from businesses, it is important to have a good sense of what is going on in relation to your business.
In summary, all of these do fall under the qualifications of adverse media screening but they do not all need to be highlighted, depending on the customer.
With automated KYC solutions and the advent of AI taking away the heavy manual lifting humans have been doing, technology has the time and processing power to extrapolate all sorts of information from unstructured data that would have traditionally not been possible with humans.
smartKYC’s adverse media screening software is the world’s most advanced multilingual semantic search engine to machine read all online media content for potential negative news about your clients, improving KYC processes and reducing risks. If you’re interested in learning more about smartKYC’s industry-leading multilingual NLP and how it can transform the efficiency and effectiveness of your KYC operations, book your demo today.