The law-making authorities globally have made it mandatory for the banking sector and other financial corporations to comply with knowing your customer and know your business checks in order to eliminate the digital scams and identity fraud in the virtual space. Digital businesses around the globe are struggling to improve their security and verification systems, which is why companies are adopting KYB solutions at large. This automated solution allows corporations to identify the true identities of business entities before establishing the B2B relationship.
Such corporate dealing could be a supply chain or partnership with other businesses. Therefore, Digital KYB solutions are significantly important for business protection as well as the prevention of unfortunate happenings that they could experience while collaborating with an illegitimate company.
Insights on KYB Verification Solution
Know your business verification is a procedure of identifying the corporate entities before developing any kind of business deals or relations. As KYC’s importance is pretty much noticeable regarding fraud elimination, KYB also holds the same significance.
Know your business has the same motive that is verifying the stakeholders and partners and filtering out the entities related to any kind of criminal activities. Primarily, anti-money laundering and counter-terrorist finance regulations are established just to determine the businesses as well as the corporate entities which are deliberately involved in money laundering and terrorist financing. In short, knowing your business compliance ensures that the firm is authenticated and doesn’t possess any potential risk.
KYB verification solution mainly focuses on the verification of the ultimate beneficial owners (UBOs) of the businesses. By complying with this effective solution the risk of establishing relationships with illegitimate or shell companies is reduced to none. Whereas, the digital businesses situated in developing countries have insufficient AML/KYB laws and regulations due to which corporate frauds are on the rise. KYB on another hand is also a source of securing offshore B2B relations.
KYB Checks- Verification Protocols
Know your business is a detailed procedure of identifying the businesses entities with the help of corporate documents they have provided with. Companies can instantly be validated through government-authorized business documents such as registration papers. Thus, the KYB verification process provides complete insight into the partnering business and helps out to develop trustworthy relations.
Steps that are included in the KYB verification solution are listed below:
Business Identification
In this step, the information associated with the business such as their registration number, registered trademark, address, the country in which they are located, and the name is retrieved for verification.
Business Statements
Such business documents hold business goals and objectives. In addition, these documents speak out their purpose and expectation of what they actually need from their partner company. Company statements also briefs regarding the changes in the business administration which may require follow-ups.
Business Filings
Such documents provide a complete insight into the company’s transaction history. Such documents spotlight whether the company has indulged in criminal activities like money laundering in history. This is referred to as a significant part of KYB verification.
Business Networks
This is a viable part of the business verification which allows determining the type of businesses they are intended to build a partnership with. Likewise, the businesses can get to know that the other firm prefers to work with legitimate entities or doesn’t care much to collaborate with shell businesses.
Moreover, the subsidiaries of the businesses like child and sister firms. By complying with KYB checks the information of such networks is also verified.
Components of Digital KYB
Due Diligence Process
Likewise, if the customers possess potential risk or have any history of carrying out any fraud, under diligence procedures, companies must also practice due diligence. Such processes are carried out on the business entities, UBOs, and management. This provides brief details of their activities and involvement in any fraud.
Watchlist/Sanction Screening
The company’s entities including the stakeholders, management, and third-party vendors tend to undergo AML screening against the global watchlist, sanction list, and financial crime databases. Complete background history is gathered which provides insight into the activities.
The politically exposed people and potential risk possessors always carry the risk of being indulged in criminal activities as they are flagged as abusers in various crimes. Thus such entities are further investigated.
The Potency of Technology-Driven KYB Solution
Knowing your business verification is truly based on the key concepts of artificial intelligence. Businesses were struggling to secure their interest as well as improving their verification systems. Furthermore, companies were using the old-school methods of identifying the business identities. Due to which the businesses were most likely to become victims of criminals.
But artificial intelligence has changed the game. Those manual ways are now fully automated incorporated with AML/CTF compliance. This perfect combination uplifts the security measures and enables businesses to know about their partner companies before setting any deals. Due to this, financial crimes can be abolished.
Final Thoughts
No doubt digital businesses are being challenged by criminals. So, KYB verification solutions are developed by SaaS providers which fulfill the business needs. Now the companies are quite able to determine the business legitimacy before establishing professional relationships.
