Imagine a company comes to know that the organization it has to work with is involved in money laundering and part of financial terrorism. A company would never become a partner with an organization that has a high-risk profile or is involved in any such activity, which can make it a victim of legal penalties and reputational damage.
Financial actors or other businesses involved in money laundering or financial terrorism can undergo various legal and financial complications. Therefore, it is very important to employ significant measures that help in security from money laundering attacks. Companies require up-to-date verification protocols to identify high-risk entities and secure organizations from getting into business relations with those who are part of any illicit activity. Know Your Business (KYB) is a legal compliance service and verification solution that can identify high-risk entities and protect organizations from legal and financial complications.
Know Your Business (KYB): An Overview
Know Your Business (KYB) is not only a service but a complete solution for understanding other entities before onboarding them. This service offers a complete process to evaluate company owners, shareholders, and suppliers before allowing them access to the board. Additionally, KYB is a legal compliance and regulatory requirement that ensures business security from hefty fines and reputational damages. Nowadays, companies can avail of this service at a long distance from various outsourcing companies. This service is now automated with the help of pre-trained artificial intelligence models, which enable businesses to streamline the verification process and thoroughly screen entities to identify their risk potential.
Is KYB a Legal Compliance?
KYB has been part of legal compliance under various acts since 1970. Bank Secrecy Act (BSA) regarding AML compliance declares corporate verification as an important step regarding Anti Money Laundering (AML). In 2001, after the 9/11 incident, it became significant to employ appropriate up-to-date security protocols through screening and verification of entries for various business operations and security from fraudsters.
Afterward, the Panama Papers scandal made it necessary to utilize effective protocols for through screening and evaluation. Know Your Business (KYB) service offers a complete process that has different steps to evaluate enterprises thoroughly. It is part of corporate due diligence and necessary compliance service, which secures businesses from legal penalties and reputational damages.
Information Required in KYB Checks
The KYB compliance process includes various kinds of company information for thorough screening and evaluation. It mainly includes the following kinds of data and information that help in screening entities before onboarding.
Company Name
Various kinds of registration details are collected in the KYB process to identify the company name to use for the screening process. Nowadays, through pre-trained artificial intelligence checks, KYB service offers a quick cross-checking of company names.
Business / Company Address
Company address details are necessary to collect and verify as they help to find the authenticity of an organization. Many shell corporations reach out to businesses in the form of partnerships or for other purposes. Without address verification, businesses cannot identify and determine the nature of authenticity and legitimacy.
Registration Details
Company registration details are helpful in regarding a company’s legal standing and enable firms to identify whether the organization is authorized or not to conduct business activities. It can be in the form of partnerships, investments, and as service providers or beneficiaries
License
It is necessary to evaluate and verify the company license and permit to identify and evaluate the company’s legal status. The verification of licenses and permits is necessary for organizations as it is a major part of evaluation.
UBO Details
Ultimate beneficial owners are very important people or entities that have direct or indirect control over various business decisions and operations. Without verifying UBOs, companies can undergo heavy financial and legal complications as, most of the time, hidden UBOs are part of various illicit activities.
Different Verification Steps in KYB Service
Know Your Business verification process is not one step but includes multiple stages for the thorough screening of entities. This process includes document collection and verification stages along with digital means. Most of the companies provide KYb service where OCR technology is integrated to convert images into text format for autometd cross-checking and evaluation.
KYB process also involves a step to verify and evaluate business ownership structure and help organizations to identify hidden and high-risk Ultimate Beneficial Owners. Additionally, the Know Your Business (KYB) service offers ongoing monitoring to detect changing behaviors of organizations.
Final Words
Know Your Business (KYB) is a regulatory compliance process and utmost security providing service which involves various autometd checks to through screen entities and evaluation. This service involves various steps to provide a complete screening method and offers enhanced security from criminal attacks and fraudsters. Companies can identify high risk entities and uncover shell firms with the help of automated KYB solutions in a short time.
