64% of fintech compliance professionals say adverse media screening should be a regulatory requirement in report by the FinTech FinCrime Exchange (FFE) and Regulatory DataCorp (RDC).
New York and London – December 4, 2018 – Regulatory Datacorp (RDC) and the FinTech FinCrime Exchange (FFE) revealed the findings of a new report detailing the customer screening practices of FFE members in the UK, US and Netherlands as well as the effectiveness of adverse media in helping them improve screening rigor.
Adverse media is not currently a regulatory requirement for AML compliance in the UK, EU or US, suggesting fintech compliance teams do consider it to be an important tool given current levels of adoption, which was backed up in the survey with an average score of 3.87/5 for importance (with 5 being ‘highly important’). Other findings from the survey include:
- The reported improvement of customer screening results using adverse media was mixed with an average score of 4.43/7 (with 7 being ‘the most improvement’)
- Of those using adverse media, 67% employed it throughout different stages of the customer life cycle
- 64% of senior compliance professionals working at fintech companies agree that regulation should be introduced covering adverse media as part of AML compliance programmes.
- 77% of fintech companies already utilise adverse media for customer screening, yet there has been mixed success according to compliance professionals, with 83% of users reporting false positives as one of the biggest challenges in addition to increased workload. Companies that don’t currently use adverse media reported similar themes as obstacles to implementing a solution.
“Adverse media screening has long been regarded a critical element within global banking institutions as a key element to fighting financial crime and reputational risk. We are not surprised to see the Fintech industry now embracing this same imperative.”, said Tom Walsh, CEO of RDC. “What’s also evident from this report is that compliance teams, often with limited resources, are facing challenges concerning the effective use of adverse media. We are working closely with Fintech companies in helping them realise the full potential of this capability in a way that works for them and their unique industry, so that together we join in the fight against financial crime.”
Gemma Rogers, Director at FINTRAIL and co-chair of the FinTech FinCrime Exchange said, “It’s clear to us that when applied on a risk-based approach, adverse media screening can really help our members. This was especially seen with assistance in investigations, enhanced due diligence and SAR filing where adverse media findings provided useful context to our members’ suspicions. That said, there is still room for adverse media to continue evolving as a tool, particularly with regards to false positives.”
The full report ‘Improving the Impact of Adverse Media Screening for FinTechs’ can be accessed here.
Regulatory DataCorp (RDC), the Smarter ScreeningTM company, delivers powerful, decision-ready intelligence and world-class risk and compliance protection, allowing global organisations to identify banned/suspect entities, strengthen fraud protection, ensure regulatory compliance, manage supply and distribution risk, and protect their brand equity. Founded by 20 of the world’s leading financial institutions, today RDC is a Vista Equity Partners portfolio company. Learn more about RDC by emailing firstname.lastname@example.org or visiting www.rdc.com.
The FFE was established in January 2017 as an intra-industry partnership. It was founded by the Centre for Financial Crime and Security Studies (CFCS) at the Royal United Services Institute (RUSI), a London-based defence and security think tank, and FINTRAIL, a UK financial crime risk management consultancy. The FFE promotes an increased understanding of financial crime by the FinTech industry. It provides a collaborative forum for FinTechs to discuss financial crime typologies, risk management approaches and regulatory challenges. Its objective is to inform, debate and develop knowledge and best practices. Its members meet monthly to discuss these topics. As of December 2018, the FFE includes over 70 participating members from the UK, US and Dutch FinTech industries.
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