On 11 May 2022, the Wolfsberg Group published FAQs on how undertaking screening for negative news and other forms of adverse information can enhance a financial institution’s awareness of potential financial-crime risk posed by both existing and prospective customers.
The Wolfsberg Group recognises that there is no universally agreed and accepted definition of negative news. For the purpose of the FAQs, it has been broadly defined as ‘information available in the public domain which financial institutions would consider relevant to the management of financial crime risk’. Negative news is also referred to as adverse media, negative media or adverse news.
The FAQs focus on financial institutions that apply negative news screening to their customers in order to assess the customer’s risk profile. Whilst the FAQs focus mainly on the use of an automated screening tool, financial institutions that conduct manual searches may still find them relevant.
The FAQs seek to set out relevant considerations which financial institutions may find useful in setting out standards with consideration to:
- Applying negative news screening as part of a risk-based approach to anti-money laundering and counter-terrorist financing.
- Documenting a risk-based approach to negative news screening, taking into account the legal and regulatory requirements in the jurisdiction(s) in which the financial institution operates.
- Ensuring that negative news screening processes are both effective and efficient.
- Providing guidance on assessing the reliability of negative news screening sources and the materiality of negative news screening results as well as the configuration of screening systems, alert management, and associated governance.
The FAQs emphasise that it is important to acknowledge that negative news screening should not be a zero-tolerance process and that financial institutions may conclude that negative news screening is not necessary in all circumstances. Also, the FAQs do not suggest that all financial institutions should apply all negative news screening elements to the same level, rather, it attempts to guide users through the process of establishing an effective risk-based approach to the screening of customer names against adverse information
