How KYB (Know Your Business) Solutions Are Helping Global Companies To Deter Financial Crimes

Global regulators have made it mandatory for financial institutions to verify the identity of their clients, which ensures that the customers are who they say they are. Through identity verification, financial institutions can prevent money laundering, corruption, tax evasion, terrorist financing, and other related online crimes. Similarly, in 2016 the term ‘know your business’ or KYB was coined for the B2B industry – Verifying business entities before concluding businesses with them. Business due diligence mandated financial institutions to verify companies and their beneficial owners to ensure the physical and legal presence of the business itself and also to ensure that the owners are not involved in alleged money laundering.

What are KYB Services and Why It’s Important?

KYB or Know Your Business is obligatory for organizations to perform in order to deter fraud. It is a process of thoroughly screening the company and the people associated with it. KYB is a comprehensive process of verifying a company’s registrations documents, running background checks, and AML checks on ultimate beneficial owners and businesses against government sanction lists, PEPs, and blacklists.

KYB can be performed using KYB solutions. There are many KYB solutions available in the market that screen businesses. Some manual processes are also available. But manual due diligence processes for screening are not thorough, cost-efficient, time-efficient, or even error-free. But automated KYB services, on the other hand, are proactive and provide useful company insights and proper risk assessment. Nowadays due to the advancements in technology and economy, people are concluding businesses across the border, so manual Know your business procedures are limited to geographics whereas automated KYB checks can be performed from wherever.

KYB(Know Your Business) Solutions For Deterring Financial Crimes

Additionally, money laundering is quite prevalent in this day and age. When one is doing potential partnerships across the border, the chances of being caught up with fraudulent business owners is inevitable which can cause million-dollar losses. Thus manual processes do not fill the gaps which can then be abused by fraudulent entities to their gain. So the best way to protect businesses from undocumented fraud and to ensure transparency and security is to deploy an automatic know your business solution.

Steps in standard KYC checks

The first step in KYB checks is to collect all the standard information relevant to the company such as company name, the date it was incorporated, registrations number, fax number, address, legality, and other information that deems fit.

The second step is to perform Online KYC verification and AML checks on ultimate beneficial owners or UBOs. This may include and are not limited to key stakeholders such as shareholders, the board of directors, and any other person directly and indirectly associated with the company.

The third and final stage is to ensure that the data gathered is accurate. In some cases enhanced due diligence is performed to make certain that there are no ambiguities left in the process. The individuals and businesses in question are checked again against government-issued and FATF sanction lists through adverse media and more.

To Sum It All Up

Automated KYB compliance is helping global industries to ensure that companies and individuals go through a comprehensive vetting process before onboarding. The manual processes of verifying ultimate beneficial owners and business, all in all, are very time consuming and prone to error. Sometimes identifying beneficial owners is daunting as it includes a number of parties to go through before one reaches the actual individual so it makes it difficult to gather the identities. Compliance practices are becoming more intense and complex, that’s why automating KYB solutions can do work rather quickly and securely. Not only the access to information becomes easy, but businesses can save themselves from hefty non-compliance fines.

KYB or Know your business is obligatory for organizations to perform in order to deter payment fraud.