The Growing Role of Adverse Media Monitoring in KYC for Banks

Introduction

Monitoring adverse media is a must-have for banks during the entire life-cycle of onboarding, maintaining, and offboarding business relationships. It enables these institutions to identify risks that traditional credit checks or financial assessments may miss, such as reputational issues, regulatory non-compliance, or criminal associations.

By tapping into an extensive range of online sources, adverse media monitoring fills these critical gaps and acts as an early warning system, flagging potential threats before they can have a material impact. Therefore, adverse media monitoring has become indispensable to the Know Your Business (KYB), Third Party Risk Management (TPRM), and Know Your Customer (KYC) processes, meeting the growing demands from regulators¹.

Question: What is Adverse Media Monitoring?

Answer: At Owlin, adverse media monitoring means continuously scanning over three million online sources (e.g., news articles, regulatory documents, consumer reviews) for any negative risk signals related to third parties and other business relationships. This proactive approach identifies potential risks to our clients and their business partners early on, 24/7.

For banks, the challenge is clear: staying ahead of emerging risks while meeting rising regulatory expectations. This blog explores how adverse media monitoring strengthens risk management strategies by providing timely insights into potential threats during the onboarding phase and throughout the business relationship.

Case Example: The Cost of Inadequate Monitoring—TD Bank

In 2024, TD Bank made headlines for all the wrong reasons when it was hit with a staggering $1.3 billion fine from the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN). The penalty resulted from significant failures in the bank’s anti-money laundering (AML) program. Lapses in their monitoring systems allowed more than $670 million in suspicious transactions—linked to money laundering by drug cartels—to go undetected.This is a powerful reminder of the heavy consequences that can follow poor due diligence. It also underscores the increasing regulatory focus on financial institutions’ responsibilities to continuously detect and prevent illicit activity. In response, TD Bank has made significant efforts to overhaul its AML practices, investing in more comprehensive monitoring solutions designed to mitigate future risks and ensure compliance².

Visual: Regulatory Perspectives on Adverse Media Monitoring and Screening

In October 2024, the U.S. Securities and Exchange Commission (SEC) published its 2025 Examination Priorities (the “Priorities”), in which vendor monitoring is a crucial focus area³.

Why it is Crucial to Automate Adverse Media Monitoring

Automated adverse media monitoring makes it possible to stay on top of potential risks tied to clients, vendors, and other third parties without the limitations of a basic Google search. Google searches can be inconsistent and affected by SEO strategies, language barriers, and even your previous search history, often resulting in an incomplete picture of potential risk.

Automated monitoring tools, on the other hand, offer a comprehensive, unbiased look at emerging risks. They continuously scan reliable sources across languages and regions, bringing crucial details directly to users. With AI and natural language processing (NLP), these tools interpret and contextualize risk signals in real-time, helping to see the full scope of potential threats. This means users can detect early warning signs and act before issues escalate, protecting their business without needing manual, time-intensive searches.

Adverse Media Monitoring During Onboarding

Effective (automated) adverse media monitoring offers unique, actionable insights that significantly enhance risk assessments and add depth to the onboarding process.

Providing Context for Internal Alerts

Traditionally, many teams—legal, operations, credit, and risk—are involved in the onboarding process at banks to build comprehensive customer profiles collaboratively. Alerts generated by internal systems often flag suspicious activities without offering much context about the underlying risks. Adverse media monitoring bridges this gap by providing a complete picture of an entity’s reputation and risk profile.

For example, if an alert is triggered due to discrepancies in documentation, such as mismatched addresses or conflicting financial statements, adverse media monitoring can provide valuable context. Analyzing news and reports can reveal whether the discrepancies are linked to deeper issues like fraudulent activity, regulatory violations, or reputational damage. This information allows compliance teams to assess the severity of the situation and prioritize their efforts more effectively, ensuring that potential risks are addressed proactively and efficiently.

Enhancing Static Data with Real-Time Insights

Traditional customer due diligence often relies on static data (such as rating agency data) and depends on the timing of the screening. By continuously scanning news articles, banks can stay informed about emerging potential risks, enabling quicker and more informed decision-making when alerts are triggered.

For example, if the KYC or compliance team triggers an alert due to a history of ongoing regulatory violations, adverse media insights can further reveal whether these violations are part of a larger pattern of non-compliance or if any ongoing investigations could pose a future risk.

Streamlining Processes with Automation

When banks onboard a new client, many alert investigations remain manual, leading to delays and inefficiencies. Integrating automated adverse media monitoring into existing systems can transform this process. Continuously monitoring for adverse media during the screening phase helps flag high-risk clients in real-time, reducing the workload on compliance teams and allowing them to focus on the most critical cases. This not only accelerates investigations but also sharpens the accuracy of risk assessments.

Consider a scenario where a client’s name triggers an alert about a controversial acquisition. Adverse media insights provide a detailed view of recent negative news of the parties involved, such as allegations of unethical practices, enabling compliance teams to assess whether this alert requires immediate escalation. With this enriched information, banks can prioritize their response and sharpen the accuracy of their risk assessments, leading to faster and more impactful decisions.

Costs savings

Adverse media monitoring can save significant time and reduce operational costs by automating processes that would otherwise be manual and time-consuming. One key benefit of automation is the reduction of human involvement, particularly in the time-intensive tasks of searching, reviewing, and interpreting news articles or other public records. Automated tools can scan a broad range of news sources in real-time, flagging any relevant information on clients with minimal manual effort.

This automation directly translates into significant cost savings for banks, especially medium-sized institutions. PwC estimates that Know Your Customer (KYC) expenses can account for up to 3% of a bank’s operational costs, and by reducing manual review processes, this can be lowered by as much as 60% to 80%⁴. Reducing human involvement cuts labor costs and improves efficiency and response times. For example, according to PWC, a medium-sized bank could save up to USD 14.4 million annually for corporate customers and around USD 13.2 million for retail customers by reducing human interventions.

Adverse Media Monitoring During the Customer Lifecycle

The continuous nature of adverse media monitoring also allows banks to take a proactive approach to risk management after a client has been onboarded. Instead of waiting for scheduled reviews of customer data, institutions can receive real-time alerts about emerging risks as they arise.

This approach, known as pKYC (perpetual Know Your Customer), represents a proactive shift, continuously evaluating risk in real-time. Unlike periodic reviews, pKYC relies on event-driven alerts to trigger Enhanced Due Diligence (EDD) and further investigation whenever necessary. According to PricewaterhouseCoopers (PwC), pKYC offers significant advantages, particularly in cost reduction and improved accuracy and quality.

Not Being Proactive Might be Costly

Proactively monitoring and detecting risks early can be far more cost-effective for banks than relying on reactive measures. When risks are discovered too late, it often leads to expensive and time-consuming investigations. These reactive measures typically involve legal counsel, compliance teams, and other resources to manage the fallout, which can escalate costs significantly.

For example, suppose a bank only detects negative media about a client during a periodic review or after a triggering event (such as a financial scandal). In that case, a comprehensive investigation may need to be initiated to assess the extent of the risk. This can involve costly manual processes, compliance audits, and potential legal consequences like fines or sanctions. Conversely, continuous monitoring through adverse media allows banks to identify red flags early in the customer lifecycle, enabling them to act swiftly and efficiently—whether it’s increasing oversight, adjusting credit terms, or terminating the relationship—before the risk escalates. This approach helps avoid the substantial financial burden of reactive interventions.

The costs of not being proactive can be staggering. For example, regulatory fines and penalties for non-compliance can reach millions of dollars, and reputational damage can lead to loss of business and client trust. Proactive, continuous monitoring through pKYC helps banks stay compliant and prevent these expensive risks, leading to long-term savings and improved operational efficiency.

Real-Time Data for Faster and More Accurate Alert Investigations

While banks invest in automation, many processes, especially alert investigations, remain manual. Continuous monitoring adds value by providing real-time insights into these alerts and speeding up the investigation phase.

For example, imagine a scenario where a bank’s internal systems flag a suspicious transaction throughout the customer relationship, such as a large wire transfer from a client’s account to a high-risk jurisdiction. Suppose the bank is not continuously monitoring adverse media. In that case, they may miss that the client is now under investigation for fraud or has been implicated in recent legal issues. By integrating real-time adverse media monitoring, the bank can detect these emerging risks early, ensuring that the potential problems are investigated before they escalate into legal consequences or reputational damage.

Enhancing KYC with Adverse Media Monitoring

Adverse media monitoring is a powerful tool for banks when evaluating client risk, but it’s essential to recognize that it is not a perfect solution. While it significantly enhances KYC processes by providing real-time insights into a client’s reputation and potential risks, it can still produce false positives or misnuanced information. No system is flawless, and adverse media monitoring should be used as part of a comprehensive risk management framework, not as the sole source of truth.

Owlin for KYC: Strengthening Your pKYC Framework

“Given today’s challenges, would I onboard or retain this company as a client?” This is the critical question Owlin helps banks answer. Our robust screening and monitoring solution empowers KYC and compliance teams with the foundation for building effective pKYC frameworks, supporting efficient customer management from onboarding and ongoing monitoring to offboarding. Key advantages include:

Comprehensive news screening at onboarding, delivering thorough due diligence from the start, and reducing time to identify potential risks.
Continuous, real-time monitoring of all adverse media of the business relationships provides instant insights that help prioritize risks, save time, and quickly surface emerging threats.
Streamlined offboarding processes, retaining essential case information to ensure workflow continuity and support compliance.

By integrating these insights directly into existing systems, Owlin enhances the data environment to provide a complete, actionable view of potential risks. This enables banks to make informed, timely decisions that reduce overall risk, shorten response time, and improve risk identification across the customer lifecycle.

Questions?

If you’re ready to take pKYC processes to the next level, Owlin is here to help. Contact us today (info@owlin.com) to discuss your needs and see how Owlin can empower your institution’s KYC framework.

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Sources

Thomson Reuters, 2024, Regulatory compliance on adverse media screening
CNN, 2024, TD Bank hit with record $3 billion fine over drug cartel money laundering
Harvard Law School Forum on Corporate Governance, 2024, 2025 SEC Division of Examinations Priorities
PWC, ND, Perpetual KYC: a new approach to periodic reviews