The challenge of onboarding high-risk business profiles is increasing, but diversifying the networks in the market is necessary. These days, the media is proactive in revealing the criminals, blacklisted, and politically exposed persons’ PEPs. Once the media platform exposes suspicious business activities, it is categorized as a red flag. While onboarding the red flags, adverse media screening is the most reliable solution. Media screening about business ensures healthy financial relationships in the long run. All the news related to business partners must be analyzed to identify potential risks.
What is Adverse Media Screening?
Adverse media screening is a critical component of business due diligence while establishing bonds. It is also referred to as negative media screening, in which businesses are screened against negative news and databases. The corporate screening helps to determine the financial status and reputation of the business in question. If there’s any black money or fraud case in the company’s history, it can be detected through media screening. It is less structured than other components of business verification but plays an effective role in financial transparency.
Additionally, the business must comply with anti-money laundering AML, counter-terrorist financing CTF, and other international standard regulations. Negative media screening is a way to identify whether businesses are involved in financial crimes or comply with national and international regulations.
Challenges of Adverse Media Screening
In conducting adverse media screening, a business faces several challenges. Some of them are discussed below:
- High Volume of Data: there are multiple media platforms, including newspapers, televisions, websites, and others. Gathering such a large volume of data from all resources and their analysis all the time is unmanageable. So, adverse media screening is a time-consuming process for business transparency.
- Risk landscape: With the advancement in technology, the risk landscape is wider, so businesses must rely on measures for risk mitigation and management.
- False positives: Most of the time, the news may target businesses that are not culprits. The screening of news against databases identifies false positives that involve no risks.
Adverse Media Screening Solutions
In business due diligence, adverse media screening is a crucial step in determining legal status. It helps to reveal the company’s financial activities and reputation in the market. Let us discover effective solutions for conducting adverse media screening.
- Reliable News Collection
In adverse media screening, the business has to collect news from multiple resources to evaluate the onboarding company’s legal status. The business has to collect news from newspapers, radio, television, websites, and other mediums. While doing so, a business must rely on authentic resources for thorough screening. Only reliable resources provide news on which businesses can trust otherwise relying on inauthentic resources results in severe consequences.
- Perform AML Checks
Adverse media screening involves applying anti-money laundering checks on the company. The company might engage in financial crimes, posing a threat to business partner financing and reputation. The business needs to check if there is any published news about the company’s involvement in money laundering or terrorist financing. Such news should undergo screening against sanctioned, watchlists, blacklists, and other official databases. However, if the company adheres to anti-money laundering (AML) regulations, it can safely onboard. This will reduce the risk of partner businesses facing legal consequences.
- Company Background Checks
The corporation must apply background checks on the company to detect potential risks. Negative media screening involves gathering the company’s background information to detect criminal records, illicit funding, or other fraud cases. The corporate screening alerts the business about the suspicious activities of the partner companies. In the future, the business partner will make a strategy to deal with high-risk profiles and make conscious decisions. Hence, performing company background checks is highly effective in third-party risk mitigation.
- Real-time Screening
One of the best practices for adverse media screening is constant monitoring of business partners. The real-time screening helps to reveal financial crimes or suspicious activities. The business screening helps identify risk factors so the partner company can categorize them depending on the level of risk. So, it becomes easy for the business partner to maintain financial relations with that company.
Concluding Remarks
Adverse media screening is essential in business due diligence to evaluate the partner companies’ financial performance. The whole process of screening, from data collection to reporting, is crucial in third-party risk mitigation. The data screening reveals the business’s legal status and whether it complies with regulations. Additionally, periodic reviews are an important component of adverse media screening. Meanwhile, constant monitoring reporting is required so that the company gets real-time alerts about potential risks. Hence, the business world must rely on adverse media screening while onboarding companies.