
The Wolfsberg Group, an association of thirteen global banks which develops frameworks and guidance for the management of financial crime risks, particularly with respect to KYC, AML, and CFT policies, recently released a set of frequently asked questions on negative news screening and other forms of adverse information searches.
Negative news screening can assist financial institutions in performing customer due diligence, as well as evaluating transactions or activities that are unusual or potentially suspicious. The Financial Action Task Force (FATF), an inter-governmental money laundering and terrorist financing watchdog, recommends that banks, as part of a risk-based approach, include verifiable adverse media searches as part of enhanced due diligence measures.[1] Similarly, while the Bank Secrecy Act does not require negative news screening, U.S. regulators have encouraged banks, as appropriate, to consider negative news.[2] The FFIEC BSA/AML Manual, for example, notes that banks should “establish policies and procedures for determining whether and/or when, on the basis of risk, obtaining and reviewing additional customer information, for example through negative media search programs, would be appropriate.” The Manual continues that the results of negative news screening can help a bank determine when it is appropriate to review a customer relationship.
Recognizing that there is no single, universally agreed approach to negative news screening, the Wolfsberg Group developed its recent guidance to help financial institutions manage their financial crime risks. The guidance is separate from politically exposed persons or sanctions screening, both of which are traditionally list-based. For the purposes of the guidance, the Wolfsberg Group defined “negative news” as “‘information available in the public domain which FIs [financial institutions] would consider relevant to the management of Financial Crime risk.”