As online identity theft increased during COVID-19, digital data breaches followed in its footsteps. Businesses that get caught up in criminal advances have to face serious dilemmas. They incur monetary losses from the ID theft and fraud as it is and also they have to face punitive measures like fines and sanctions, etc. from the regulatory bodies. If you own a business then this should seem like a nightmare. If yes, then it is very necessary to go through this article and find how you can safeguard your business from these unfortunate events.
What is KYB?
Know Your Business or KYB is a term used for the due diligence analysis of the businesses against money laundering, terrorist financing, human trafficking, smuggling, etc. It helps businesses to identify illegitimate vendors or suppliers. Moreover, a major use case of KYB is that it keeps your business far away from shell companies.
Stages of Business Verification
Right now, top-of-the-line KYB solutions in the market are offering advanced services to businesses to keep them safe from any criminal wrongdoing. After integrating their API, businesses all over the world are checked for legitimacy. It is done by running a background check and analyzing their official registration data. The walkthrough of the KYB verification process is outlined below:
Identification of Businesses
The first stage in this comprehensive company verification process includes a background check. This check checks current status, business type, area of jurisdiction, Ultimate Beneficial Owners (UBOs), company’s address, and registered trademark. If the business was previously registered against a different name, then it also comes under consideration.
Business Filings Review
In this stage, the business shares different types of documents with the KYB service provider. These documents include information about the business that can be instantly verified. These documents are known as business filings.
Accessing Business Partners
At this stage, the KYB service providers verify the company’s linked entities. This may include a parent company or subsidiary of that business. This stage helps to identify important details like the country of registration etc.
Analyzing Business Statements
When a business goes through multiple changes in management, the KYB service assists them to keep this process transparent and not raise any red flags. The ownership structure says a lot about businesses and that is why legitimate businesses spend millions of dollars on KYB processes to stay on top of everything.
How Digital KYB Services Assist Businesses?
The world is driving towards digitization quickly and so are the company verification services. With their state-of-the-art AI-assisted technology, businesses can authenticate all their partners and subsidiaries. But, the main question is why does the business world need KYB services anyway? Well, we have outlined some of the fundamental reasons why.
Curbing Fraud
The corporate world deals with crimes like digital data breaches, identity theft, ransom fraud, money laundering, and terrorist financing on a daily basis. Whether they are financial institutions like banks and insurance firms or online businesses, vendor and supplier onboarding can become a daunting task.
Without your knowledge, you could be linked with a shell company. Well, if that happens, then it is only downhill from there. Within a period of a few months, you would be facing major financial losses and a potential boycott from your customers. Therefore, you should verify your business by employing a digital KYB provider.
Up To Date Databases
Updated company records are pertinent to the efficacy of your business operations. Efficient execution of business checks by verifying services correlates closely with updated databases. The most advanced KYB service providers in the market have their reach over 140 global jurisdictions and registers. They leave no stone unturned while verifying a company.
Avoiding KYC/AML Non-Compliance Penalties
Regulations enforced by regulatory bodies are becoming stringent by the day owing to a major hike in criminal wrongdoings. Authorities like FATF and FinCEN are a couple of global regulatory watchdogs tasked with KYC and AML compliance procedures. Moreover, it is not possible for businesses to keep track of all these factors and also focus on growing their business. For this very reason, digital Know Your Business (KYB) solutions perform robust and swift company verification.
