Real examples of when adverse media checks was crucial

Adverse media checks are a crucial part of AML due diligence. Even for organisations outside regulatory frameworks, such as charities and universities, checking for negative media about donors is just as important. No matter your industry, your organisation’s reputation depends on truly knowing who you’re working with. There’s so much contextualised information in the public domain that screening tools can’t provide. This is especially true for organisations working with high-net-worth clients. Whether you’re onboarding a wealthy client or accepting a major gift, you just can’t risk not knowing this information. It risks reputational harm if damaging details surface later, making it harder to attract clients, partners, donors, and other key stakeholders. These four cases highlight the important role of adverse media screening.

What is adverse media screening?

Adverse media screening (AMS), also known as negative news screening, is looking for damaging information online about a person or a company. It ensures that decision-makers are well-informed when deciding the next steps on high-risk entities, politically exposed persons (PEPs), or subjects of interest in financial crime investigations.

AMS uncovers potential links to activities related to money laundering, terrorist financing, organised crime, fraud, and more. When risks are surfaced, it signals the need for a more in-depth investigation to determine whether suspicious activity is indeed occurring.

In today’s complex regulatory landscape, the importance of AMS cannot be overstated. Whether you’re a financial institution, a law firm, or a non-profit, you need to understand the negative news associated with your clients, partners, or donors. The consequences of missing this insight can be severe, ranging from reputational damage to regulatory fines. In fact, global executives attribute 63% of their company’s market value to its reputation, according to media communications specialist Weber Shandwick.

1. Legal client with undisclosed criminal ties

A global law firm was nearing the final stages of onboarding a new client when an AML analyst conducted a web search to check for any negative media. The search revealed recent investigative reports connecting the client to a money laundering operation. Although the client had no official convictions, his ties to criminal enterprises presented a reputational risk for the firm.

2. A high-risk HNW individual covering their tracks  

A wealth management firm was set to onboard a high-net-worth (HNW) individual who appeared to be an ideal client. However, a web search flagged past allegations of insider trading and regulatory violations in an offshore jurisdiction. Further investigation revealed that the individual had settled multiple cases out of court. The firm decided against managing the client’s assets, protecting itself from possible reputational entanglement.

3. A close call with an international supplier.

A multinational corporation was negotiating a partnership with a supplier in Southeast Asia. The supplier had an impressive track record and appeared to be a reliable business partner. However, a web search on page 10 revealed that the company was under investigation for labour rights violations. Had the analyst not checked that far, the company could have faced severe public backlash.

4. A major donor with hidden red flags

A university was on the verge of accepting a substantial endowment from a philanthropist whose contributions would have funded an expansion of its medical research department. Just before finalising the donation, a quick web search revealed that the donor had a history of fraudulent business dealings and had previously been sued for embezzling funds. 

How do you identify who’s high-risk?

Conducting in-depth screening on every client, supplier, partner, and donor is the ideal approach. But for many organisations, this is impractical—if not impossible. The traditional approach relies on manually searching and reviewing numerous news articles. However, this is time-consuming and prone to human error, making it challenging to sift through online information and find relevant data while avoiding false positives. Compliance teams can only apply accurate risk-based measures when they have a comprehensive understanding of a client from the start and this needs to be done quickly and automatically. This broader view ensures that potential risks are identified early, allowing for appropriate actions such as monitoring, reporting, or escalating issues for further investigation.

Meet Xapien

Xapien streamlines and simplifies the adverse media screening process. By harnessing the power of AI and Natural Language Processing (NLP), Xapien can swiftly gather, analyse, and present comprehensive adverse media information in minutes, not days. Here are a few examples of when Xapien’s AMS capabilities played a pivotal role in risk assessment and decision-making. 

RNLI

The Royal National Lifeboat Institution (RNLI) was considering working with an extreme sports safety equipment provider. Xapien helped them avoid potential reputational fallout by uncovering a class action lawsuit in the US and Canada. Despite UK-only manual searches showing no issues, the same faulty equipment was still being sold in the UK.

The Museum of London

A small team manages The Museum of London’s entire advancement practice with limited resources. Within just 12 minutes, Xapien revealed that a prospect’s organisation had ties to a foreign entity with investments in industries misaligned with the museum’s values. This crucial insight informed fundraisers to pause engagement with this prospect. 

Griffin

Griffin, a Banking as a Service (BaaS) provider, operates in a highly regulated environment where compliance is crucial. With Xapien, its AMS process underwent a transformation. When identifying a prospective company or supplier, they run its name through Xapien and the results are available in just 12 minutes. Xapien only analyses and summarises risks found in online content it’s confident about, making sure there are no false positives.

Want to see it in action?

Let Xapien do the heavy lifting: it can research, analyse, and it’ll turn those findings into a human-like written report in minutes. Fill in the form below to chat with our team.