Just as Know Your Customer (KYC) compliance is mandatory for banks and financial institutions to reduce crime, Know Your Business (KYB) is also crucial for companies. This helps maintain a legitimate system that verifies each customer against their identity information. Whether it’s a third-party service provider or a business entity with which you do business, authentication is required to comply with regulations and protect companies from involvement in criminal activity.
Bad actors in the financial system are always looking for vulnerabilities in the system to get free monetary benefits. Likewise, some serious financial crimes are committed including money laundering and terrorist financing.
There has been a major change in the regulatory framework in line with the requirements of global and local regulatory changes in different regions of the world. Based on the seriousness of financial crimes, major changes are observed in AMLD4, AMLD5, PSD2, and GDPR. This regulation obliges companies not only to consider customer verification but also to verify the ultimate beneficial owners (UBO). For this, a verification of the business entities is performed to verify them against the public records to make sure it is not a front company and is not involved in any criminal activity.
Consequences of non-compliance
Failure to comply with legal requirements creates the risk of exposure to financial crime. Due diligence requirements require companies to thoroughly do the customer identity verification, not only against their government-issued ID cards but also through global watchlists, watchlists, sanctions, and political records. prominent persons (PEP). Failure to comply with legal obligations results in companies facing brand integrity disruptions and penalties that not only include fines, but also years of imprisonment and company abandonment.
Most cases of data breaches, large-scale cyber-attacks, and financial crimes are caused by unauthorized third parties. They are basically shell companies that confide in others and use them for money laundering to hide their ill-gotten gains. To mitigate the risks of such fraudulent activity, it is necessary to consider KYB compliance, which not only protects your business from fraudulent entities but also contributes to the brand’s reputation.
Automated KYB Compliance
Manual verification of ultimate beneficial owners (UBO) is a tedious process. The automated KYB solution searches corporate records and ownership structure to ensure it is not a shell company involved in money laundering activities. Any deviation can lead to disastrous conditions for business entities. Automated KYB verification works on advanced settings in which a business entity is electronically verified against updated lists of UBOs and their details.
The complex regulatory environment around the world requires an advanced method that automates the Due Diligence process (DDA) without any problems. Real-time identity verification, data checks, and business search take seconds to verify the business entity. The data comes from various sources available to the public and from sources published by law enforcement agencies. Here are some other resources:
- Government registrations
- Public records
- Global business registers
- Worldwide PEP registrations
- Sanction lists and databases
Continuous verification and activity monitoring ensure all online businesses remain compliant and verify their business entities with an automated KYB control system. The process is transparent and the system is easy to integrate with the system that quickly retrieves information and delivers results.
Verify your business entities to mitigate fraud
In this digital world, regulations are becoming increasingly complex due to an increasing number of illegal activities. Under such difficult circumstances, there are a number of threats that must be considered in order to survive seamlessly in the digital space. According to the UNDOC report, a financial crime, money laundering affects global GDP by 2-5%, which equates to more than $ 2 trillion. The growing number of cyberattacks, such as digital identity theft, large-scale data breaches, and major financial crimes, require rigorous action and verification processes in the form of a Know Your Business (KYB) process.).
To counter these attacks, banks and financial institutions are spending a large sum of more than approximately $ 48 million on due diligence procedures. In addition, to Know Your Customer (KYC), KYB processes also receive the same attention due to the legal requirements for business verification that you are dealing with. As the world moves towards digitization and advancements push into the digital environment, regulations are getting stronger, as well as innovative technologies that are well aligned with these legal requirements.
Innovative identity verification tools help business entities verify transactions and activities to ensure that no fraudulent entity is part of the legitimate financial system. The regulatory framework of the KYB regulations is increasingly helping to combat criminal activities such as money laundering and terrorist financing.
KYB online process
Just the way the KYC verification process is carried out takes into consideration the Know Your Business process (KYB) that verifies the identity of business entities to help them authenticate outside companies among themselves and reduce the risk of fraud that companies can remove. shrink. with. KYB’s online verification systems require companies to provide a company registration number and jurisdiction code, and by simply providing these two details, the company details are provided.
KYB Services then collects this information and presents details about that company that allows the company to verify it. KYB services have access to automated and up-to-date business registries for law enforcement and data-driven business verification services. Filtering against these lists helps ensure the due diligence process.
Find a company
When searching for companies, the company can be searched using the background registers. As a result, details such as a registered address, company type, current status, previous name, UBOs, etc. will be provided. A financial summary of the company’s operational accounts is also provided by the authentication service to better validate its authenticity.
Business records are also part of business audits involving company financial information, access to all financial stents, links and sources of reports, etc. All this information is collected and verified for commercial verification purposes.
Business filings in the KYB process help businesses stay on top of any changes in management and in the organization of the business entities that join. This data also gives the name of the beneficial owners and directors about the business environment.
Business networks integrate business information about business structures, as well as network and communication information from business entities. The country in which the company is registered is also part of this section, as well as the nature of the company, all transaction values are provided.