Wolfsberg Guidance on “Negative News Screening” (NNS)

Further to Wolfsberg Guidance on Sanctions screening [1a], it has released guidance on Conducting searches for “Negative News Screening” (NNS)

• https://www.wolfsberg-principles.com/sites/default/files/wb/pdfs/Wolfsberg%20Guidance%20on%20Sanctions%20Screening.pdf

Conducting searches for “Negative News Screening” (NNS)

Conducting searches for “Negative News Screening” (NNS) and other forms of adverse information enhances Financial Institutions’ (FIs’) awareness of potential Financial Crime risks posed by both existing and prospective customers.

While there remain some limitations and challenges about broad media searches, NNS can be a valuable mechanism that enables FIs to understand better who they are doing business with and the risks to which an FI is exposed.

Although the Financial Action Task Force (FATF) does not explicitly refer to NNS,

• Conducting “adverse media searches” is in FATFs  Risk-Based Approach Guidance under ‘Enhanced Due Diligence measures’ section [1b]

Crime Risk Management.

NNS should not be confused with other forms of searches such as Sanctions or Politically Exposed Persons (PEP) screening, which are traditionally list-based.

The Group has published separate guidance papers on both topics [2]

This document seeks to articulate relevant considerations which FIs may find useful in setting out NNS standards with consideration to:

1. Applying NNS as part of a risk-based approach to Anti-Money Laundering (AML) and CounterTerrorist Financing (CTF).
2. Documenting a risk-based approach to NNS, taking into account the legal and regulatory requirements in the jurisdiction(s) in which the FI operates.
3. Ensuring that NNS processes are both effective and efficient.

Furthermore,

• The document also provides guidance on assessing the reliability of NNS sources and the materiality of NNS results, as well as the configuration of screening systems, alert management, and associated governance.

This document focuses on

• FIs apply NNS to their customers to assess the customer’s risk profile. While the focus of this paper is mainly on the use of an automated screening tool, FIs that conduct manual searches may still find it relevant. It is important to acknowledge that NNS should not be a zero-tolerance process and that FIs may conclude that NNS is not necessary for all circumstances.
• It is not intended to suggest all FIs should apply all NNS 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.

Risk-Based Approach and Negative News Screening

1. Throughout this document, there are numerous references to the risk-based approach (RBA).
2. Adherence to risk-based standards is paramount to applying a proportionate approach to NNS and effective and efficient risk management. The Group recommends reading this document in
3. Conjunction with its guidance on the Risk-Based Approach3 and, as required, other applicable guidance issued by authorities in the jurisdiction(s) in which a FI operates

Read more

• https://www.wolfsberg-principles.com/sites/default/files/wb/Negative%20News%20Screening%20FAQs%20%282022%29.pdf

References

1a The Wolfsberg Group Sanction screening guidance

• https://www.wolfsberg-principles.com/sites/default/files/wb/pdfs/Wolfsberg%20Guidance%20on%20Sanctions%20Screening.pdf

1b FATF, “Guidance for A Risk-Based Approach.”

• http://www.fatf-gafi.org/media/fatf/documents/reports/Risk-Based-Approach-Banking-Sector.pdf

2 The Wolfsberg Group “PEP Guidance 2017”,

• https://www.wolfsberg-principles.com/sites/default/files/wb/pdfs/wolfsberg-standards/4.%20Wolfsberg-Guidance-on-PEPs-May-2017.pdf

3 Wolfsberg Statement, Guidance on a Risk-Based Approach for Managing Money Laundering Risks –

• https://www.wolfsberg-principles.com/sites/default/files/wb/pdfs/wolfsberg-standards/15.%20Wolfsberg_RBA_Guidance_%282006%29.pdf