How to Optimize Adverse Media Screening for Key Compliance Use Cases
Adverse media screening plays a critical role in identifying and mitigating Anti Money Laundering (AML) risk. However, without a solid screening strategy, a large volume of negative news data and outdated screening methods generate high rates of false positive alerts. This complicates the task for compliance teams to quickly assess the reputational risks of customers, vendors and other business partners.
In this article, we’ll cover:
Six core compliance use cases and the operational challenges they pose in adverse media screening
A step-by-step plan to help compliance teams streamline adverse media monitoring
Common challenges across adverse media use cases
Let’s take a closer look at what negative news monitoring means for KYC and KYB onboarding, TPRM and AML compliance and the common issues compliance teams face every day.
Use case 1: Know Your Customer (KYC) onboarding
KYC onboarding requires thorough background checks to ensure individuals and business counterparties do not pose financial or reputational risks. It involves identifying:
Negative news articles about legal issues, regulatory violations or involvement in financial crimes to assess potential risks.
Media reports of public scandals, unethical business practices or controversies to evaluate the counterparty’s integrity.
Discrepancies between the client’s self-reported information and adverse media findings to verify transparency.
Why this is challenging for compliance teams
Name search confusion and high false positives: Common names frequently generate false positive alerts and lead to the wrong person being flagged. For instance: flagging a victim instead of a perpetrator, or the author of an article instead of the subject. Compliance teams struggle with time-consuming manual processes to review these Level 1 alerts and verify if the individual in the media matches the one being screened.
Lack of source credibility: Many news platforms publish unverified content, or even fake news. Articles might also be outdated or misleading which further complicates risk assessment. Traditional screening solutions lack the necessary reliability controls to filter out these low-quality sources.
Data inconsistencies: Information from different media sources may be inconsistent and without a strong editorial oversight, compliance teams spend a lot of time filtering out irrelevant information and find it difficult to ensure completeness, accuracy and timeliness of negative news data.
Use case 2: Know Your Business (KYB) onboarding
At the KYB onboarding stage, the goal of adverse media screening is to identify:
Negative press related to unethical business practices, regulatory breaches or involvement in financial crimes.
Discrepancies in ownership or affiliations, such as undisclosed ownership networks or connections to high-risk individuals or entities highlighted in media coverage.
Media reports on business dealings in high-risk jurisdictions or involvement in high-risk sectors or activities.
Why this is challenging for compliance teams
In addition to challenges similar to KYC onboarding, compliance teams also face additional challenges during KYB onboarding due to:
Lack of sophisticated coverage: Legacy adverse media screening solutions often miss business-specific risks like ESG (Environmental, Social and Governance) violations, forced labor practices and links to high-risk jurisdictions or activities. This exposes financial instituitions to potential regulatory fines, litigation or reputational damage.
Complex ownership structures: Without integrated high-risk ownership screening, compliance teams struggle to identify ultimate beneficial owners and intricate control structures of businesses. This hampers adverse media screening by failing to link negative news to beneficial owners. As a result, critical media reports related to high-risk entities are often missed, leading to incomplete risk assessments and allowing high-risk entities to evade detection.
Regulatory alignment: Aligning business-related risks with regulatory compliance standards is challenging. Criteria for adverse media findings vary by jurisdiction and an institution’s risk-based approach, further complicating consistent screening.
Evolutions in risk: Corrective actions taken in response to regulatory infractions are rarely reported in the media. This means, without robust ongoing adverse media monitoring, businesses that have improved their practices might still appear high-risk, while those with new issues might not be flagged—creating gaps in risk assessments.
Use case 3: Third-party risk management (TPRM) compliance
Adverse media screening in TPRM looks for:
News articles detailing suppliers' involvement in bribery, corruption or financial crimes.
Reports of ESG violations or other reputational risks related to the vendor’s practices.
Media coverage of vendor relationships with sanctioned or Politically Exposed Persons (PEPs).
Why this is challenging for compliance teams
Multifaceted risk factors: Vendors may face multiple risks including ABAC (Anti-Bribery and Corruption) and FCPA (Foreign Corrupt Practices Act) compliance as well as legal violations, financial fraud or environmental damage. Identifying which specific risks are relevant for each business relationship can be difficult and time-intensive. This clutters compliance workflows with unnecessary alerts and hinders the team’s ability to focus on high-priority risks. For example, if an organization’s risk exposure necessitates ESG compliance coverage in its screening, a solution without advanced filtering would make it difficult to zero in relevant risks.
High data volumes: Additionally, the sheer volume of publicly available adverse media data concerning numerous third parties across different jurisdictions can overwhelm compliance teams. This data overload strains resources, slows down the screening process and increases the risk of missing relevant alerts.
Use case 4: Anti Money Laundering (AML) compliance
Media monitoring for AML compliance includes flagging negative news, such as:
Reports linking the individual or entity to money laundering activities, financial fraud or suspicious wealth.
Media coverage suggesting involvement with organized crime, terrorist financing or other illicit financial schemes.
Coverage of regulatory investigations, indictment, conviction or enforcement actions linked to the client.
Why this is challenging for compliance teams
Ongoing or repeated negative news: Adverse media may come in waves or be scattered across various outlets, making it hard to track all relevant instances. It requires screening precision and real-time monitoring to accurately track ongoing risk exposure from illicit activities.
Global scope: Adverse media isn't always localized, and compliance teams may struggle to understand the full scope of cross-border financial crimes or high-risk connections. This complicates an organization’s ability to accurately assess global risks and requires extensive resources to monitor multiple media landscapes and reporting standards across regions.
Use case 5: PEP (Politically Exposed Persons) screening
Adverse media monitoring help compliance teams identify:
Media reports of political activities or corruption investigations involving the PEP.
News linking the PEP to major policy decisions, contracts or business relationships that could represent a conflict of interest.
Coverage of Relatives or Close Associates (RCAs) involved in illegal or unethical activities, or engaged in business activities that benefit from their association with a Politically Exposed Person.
Why this is challenging for compliance teams
Dynamic political landscape: Media coverage of PEPs are in a constant state of flux. As political positions and affiliations shift, the definition of a PEP also changes. As a result, tracking risk exposure from PEPs—especially after they leave office or take on a new role—becomes challenging without advanced PEP screening strategy and real-time adverse media monitoring.
Inconsistent PEP screening standards: Different jurisdictions have different PEP screening requirements. For example, in the US, only foreign PEPs are screened, while local PEPs are exempted from scrutiny. Compliance teams must account for differing definitions and thresholds for risk across regions—which requires them to exercise greater caution when selecting adverse media for risk assessment.
Use case 6: Sanctions compliance
To comply with sanctions regulations, organizations need to monitor adverse media to identify:
Reports of individuals or entities conducting dealings with sanctioned individuals, entities or countries.
Articles suggesting attempts to evade sanctions, such as using intermediaries or shell or shelf companies.
Media coverage of ongoing investigations or enforcement actions related to sanctions violations.
Why this is challenging for compliance teams
Ongoing monitoring: Regulatory watchlists are frequently updated which requires continuous monitoring to flag changes in sanctions-related risks. However, keeping track of press releases and media coverage of watchlist updates can be resource-intensive and risk missing key updates.
Jurisdictional discrepancies: Different jurisdictions may have different sanctions regimes. Media reports from different regions may not always align with domestic sanctions laws, complicating the screening process and risk assessment.
In short, adverse media screening often becomes an operational headache for compliance teams primarily due to:
High news data volumes
Lack of news source credibility and data inconsistencies
Name search confusion
High false positive alerts
Reliance on traditional screening tools with manually updated profiles and inadequate filtering options
Best practices of adverse media screening
Due to the lack of clear guidance, each business must develop its own risk-based approach to adverse media screening. Use this step-by-step guide to implement the best practices for better due diligence:
Step 1: Align screening requirements with your risk-based approach
A risk-based approach is necessary in adverse media screening, as the results don’t always provide a simple “risk” or “no-risk” outcome like sanctions screening.
For example, a news article about a company’s data breach doesn’t automatically classify it as high-risk, but requires further analysis to determine its impact.
Clearly define when you will screen adverse media, when periodic reviews will be triggered or when real-time monitoring should be applied to higher-risk counterparties. Tailor this based on the types of risks that matter most, such as corruption or fraud, and consider how different jurisdictions might affect the languages and media categories you need to monitor.
Since not all media findings are equally important, prioritizing them by context—such as account activity, product type, jurisdiction—and potential impact is vital for more focused and efficient screening.
Step 2: Implement adverse media criteria using advanced filters
Once you've established the internal controls for adverse media screening, it's time to implement and validate them.
This involves tuning your screening settings—adjusting relevancy score thresholds, modifying categories and using advanced filters on adverse media coverage types help ensure the results align with your risk-based criteria.
It's a critical process to ensure relevant alerts are surfaced while avoiding false positives.
Step 3: Evaluate timeliness of adverse media
Recent adverse media findings can influence a customer or vendor’s risk rating and trigger the need for continuous monitoring. However, if no new adverse alerts surface over time, the associated risk may decline. It’s important to factor past risk changes in your strategy and adjust the screening processes to reflect updated risk ratings.
Step 4: Ensure alert quality and reliability
To enable informed decision-making, it’s crucial to use reliable, up-to-date data in adverse media screening. Outdated information can result in missed or false alerts. Invest in a screening solution that adds adverse news in real-time from credible sources and provides coverage tailored to your risk exposure across jurisdictions, languages and media categories for accurate results.
Step 5: Employ ongoing and real-time monitoring
A one-time screening at onboarding only captures risks based on past activities. However, since news sources are constantly updated and the risk status of Reputationally Exposed Persons (REPs) can change quickly, real-time monitoring is important. Ongoing monitoring should factor in new identifiers as well as recent news updates to uncover risks that might have been missed earlier.
Step 6: Balance automated reviews with human oversight
Reviewing millions of media records manually is a massive task, but even the best automated systems can’t fully replace human judgment in compliance. Therefore, a balanced approach—combining automation with human oversight—is essential for accurate screening. Automation can serve as the first layer of protection to help filter out low-quality alerts, but human analysts remain crucial for ensuring relevant risks are properly identified and assessed.
Wrapping Up
Negative news screening requires a reliable tool that reduces false positives and manual workload for compliance teams. Castellum.AI provides a highly customizable, scalable and real-time adverse media screening solution designed for unmatched accuracy and efficiency. It cuts through the noise and delivers reliable, structured insights from global media to help organizations prioritize risks by match likelihood and severity.