Adverse media checks as a part-time solution to mitigate AML risks are not sufficient, given that customer’s risk ratings fluctuate over time. When it comes to high-risk customers, it is necessary to adopt adverse media ongoing monitoring in order to mitigate potential risks to the institution’s reputation.
What is Adverse media?
By definition, adverse media is any negative news about a customer or business partner, especially in connection to financial crimes. Most adverse media sources include the internet, traditional media, and certain databases.
General requirements for AML ongoing monitoring
For adverse information monitoring to be effective it has to be constant and thorough, compliant with laws and sanctions that are constantly changing. Losing track of compliance laws can easily backfire: companies miss out on clients that became available to the market via the shift of regulations or still have business relationships with newly sanctioned entities. The last leading to million dollar fines or even prison sentences depending on a case.
Here is why businesses fail to comply:
- Businesses have to be up-to-date with basic EDD terms with customers monitored on a continuous basis. Rare occasions by which people are checked are just insufficient to stay relevant.
- Some companies still use internet searches to perform negative information ongoing monitoring of each risky client, one by one. After that, compliance officers are asked to review these potential matches and conclude whether the individual in media stories is the one they are after. This type of research is incredibly resourceful, slow and labor-intensive. Businesses that support these types of checks have huge compliance costs.
- Manual monitoring is often limited and inconsistent which can mean that some important media sources may be missed or even skipped. These searches provide only a snippet of risk levels while media updates quadruple every second.
This huge bulk of information searches cannot compete with automated approaches for negative news ongoing monitoring that notify institutions when there is something of interest. Companies need to monitor transactions in real-time, or as close to real-time as possible.
Ongoing adverse media monitoring is an essential part of AML checks giving businesses the advantage of checking clients against global databases in various languages, international PEPs and sanctions lists.