An important part of the Know-Your-Customer (KYC) processes is the screening and monitoring of negative media (bad press). Given the large number of sources that need to be filtered through to identify negative media, it can be a tiring and difficult process. We spoke to Manouk Fles (Legal & Compliance) and Pieter Reitsma (Customer Success) to learn more about the importance of negative media screenings and how Blanco uses advanced technology to make it an effortless process.
What does ‘adverse media’ mean?
Manouk: “In short, ‘adverse media’ (bad press) is any form of negative information about a specific organisation or person. Knowledge of and access to this negative information can help companies recognize potential risks such as fraud, money laundering, organized crime, drug smuggling or bribery. Because a company has access to relevant information both when entering into a relationship and during the course of the relationship with a client, damage such as financial loss or damage to reputation can be prevented”.
How can adverse media be obtained?
Manouk: “Information can be found in a wide range of sources – for example, news broadcasts, newspaper articles, government and regulatory press releases, trustworthy blogs and other websites. You can imagine that the volume, speed and dynamic nature of the information makes it very difficult to process and assess all the information generated on a daily basis. By using the very latest machine learning technology, all information can be processed reliably and effectively”.
Why is adverse media so important?
Manouk: “Pursuant to the Money Laundering and Terrorist Financing (Prevention) Act (Wwft), financial companies must conduct thorough customer due diligence when entering into a relationship with a customer, and must continue to monitor that customer throughout the relationship. Although the law does not prescribe exactly how this client screening should be carried out, in practice the screening of harmful media is often regarded as a crucial part of the client screening process. Adverse media is therefore an important part of the fight against financial crime and reputational risk”.
Which lists are screened?
Pieter: “Blanco uses ComplyAdvantage for the ‘adverse media’ functionality. No lists are screened, but a wide range of sources are screened such as traditional media, niche media, government and regulatory press releases and reliable blogs and websites. These sources are scanned, as it were, to determine whether there is negative media (bad press) about the person or organisation in question. This screening is so advanced, it really only filters the negative media. To give an example: when a person appears in a message in combination with the theme ‘Panama Papers’, this is not automatically considered negative. Only when the message shows that the way in which the person in question appears in the message is negative, will a notification be given”.
How can a professional user make use of the adverse media functionality at Blanco?
Pieter: “Our KYC suite already screened PEP and sanction lists. Adverse media information was also provided if there was a ‘hit’ on a PEP or sanction list. With the new functionality, all prospects and clients are now screened for adverse media; an extension to receive even more information about the client in order to be able to make the best possible judgement about the acceptance and risk classification of the client.
With regard to the adverse media functionality, a distinction can be made between the initial screening during onboarding and the continuous monitoring in the Client File Module. The initial screening is done on a reference date, with continuous monitoring doing the screening of different sources on a daily basis. As soon as there is a ‘flag’, this is immediately shown in the system. In the case of continuous monitoring, it is also possible to receive notifications of changes. A ‘flag’ can then be assigned a ‘match status’ and a risk score. If this results in an adjusted risk rating of the client itself, this can be adjusted in the client’s file with a few clicks – and with comments”.