Adverse media screening, also known as negative news screening, is the process of monitoring and analyzing publicly available media sources for information, including criminal activity, sanctions or regulatory actions, that may signal a third party’s involvement in financial crime.
What Is Adverse Media?
Adverse media encompasses news from traditional and digital sources—such as newspapers, blogs, government watchlists, and court records—that may point to financial misconduct, fraud, corruption, money laundering or terrorism financing.
Financial services firms should have adequate negative news screening mechanisms in place to identify and assess adverse media as part of their customer due diligence obligations.
Effective Adverse Media Screening Starts with Trusted Data
The quality of adverse media screening depends heavily on the quality of the data sources. Verified data—information from reputable news outlets that adhere to editorial standards and employ fact-checking processes—provides a credible foundation for risk assessments. In contrast, unverified sources, including blogs, social media, and anonymous forums, can introduce noise, bias, or misinformation that can undermine screening accuracy.
Unverified sources can lead to incorrect conclusions if taken at face value. For example, a social media post about fraud might not be true. Verified sources help ensure that negative news is accurately attributed to the correct individual or entity, reducing name-matching and other contextual errors.
Regulators expect firms to rely on trusted and verifiable sources when making decisions about third-party risk. According to the European Banking Authority (EBA) ML/TF Risk Factor Guidelines, “Firms should determine the credibility of allegations on the basis of the quality and independence of the source of the data and the persistence of reporting of these allegations, among other considerations.”
Why Managing Adverse Media Matters in AML Compliance
Adverse media, including allegations of criminal activity or involvement in money laundering or terrorist financing, may be a key risk indicator of potential customer risk, particularly when corroborated by other risk factors as part of a robust AML compliance program.
Adverse media screening and surveillance plays a central role in:
- Customer Due Diligence (CDD) and Enhanced Due Diligence (EDD) processes
- Ongoing third-party risk assessment
- Supporting regulatory compliance with KYC/AML obligations
- Protecting firms from reputational harm and regulatory penalties
Failing to identify third party negative news and adverse media can expose a firm to significant risks. Regulatory bodies have increasingly penalized firms that did not adequately screen or act on known negative information. Read about AML Compliance and Regulatory Enforcement Across the European Union.
Challenges in Managing Adverse Media
- Data Volume and Noise: The sheer quantity of global media content—much of it low-quality or irrelevant— can make it challenging to extract meaningful signals.
- Language and Global Reach: Negative news may be published in different languages or local outlets, requiring scouring a wide range of sources to be effective.
- False Positives: Without advanced filtering, firms risk overwhelming analysts with irrelevant alerts, reducing investigative efficiency.
How Adverse Media Screening Works
Handling Adverse Media News requires a systematic approach to identify, assess and disposition potential risks effectively. Given the diversity of news sources around the globe, verified and updated reference data from commercial providers for relevant target markets provides the essential basis for identifying potential risks.
Screening rules should be configured by setting risk profiles that provide clear criteria for rejecting or approving business relationships in low, medium, and high-risk scenarios. Automated alerts combined with precise search criteria facilitate the timely identification of negative reports. A critical assessment of the sources and attention to date, name and source are essential to ensure the importance and relevance of the news and to minimize the impact of false positive and false negative results.
Best Practices for Managing Adverse Media
To manage adverse media effectively and meet regulatory expectations, financial institutions should adopt the following best practices:
Integrate Adverse Media into Risk-Based Frameworks
Media screening should be aligned with the institution’s risk appetite and customer profiles. High-risk customers should be subject to more frequent and in-depth monitoring.
Automate Adverse Media Screening to Highlight Red Flags
Compliance technology can enable firms to process large volumes of data, filter out noise and surface the highest areas of concern.
Leverage Multilingual and Global Sources
Ensure screening tools can capture media in local languages and from non-traditional sources to avoid geographic blind spots.
Conduct Ongoing Monitoring
Monitor adverse media and negative news not only during onboarding, but also continuously throughout the customer lifecycle. Set up alerts for updates or newly published reports.
Validate and Escalate
Not all adverse media warrants the same response. Firms should verify the credibility and relevance of a source before taking action and have clear procedures for escalation and review.
Document and Audit
Maintain detailed records of adverse media findings, decisions made, and the rationale behind them to provide a defensible audit trail for regulatory inquiries.
Stay on Top of Adverse Media Risk with MCO
Part of MCO’s Know Your Third Party suite, our Third-Party Screening solution enables firms to check clients and related parties, including UBOs, Directors, Subsidiaries, and Intermediaries for Adverse Media, Politically Exposed Persons (PEPs) status and Sanctions using data from providers including Factiva and World Check.
To meet with our team of experts to learn more, set up some time for a demo right here.
