Know Your Business Helps Financial Institutes
Verification of business entities is as necessary as the verification of customers. Fraudsters have become wise in their tricks. They do not rely on older ways to commit spoof attacks. Criminals’ new way of deceiving businesses in making the shell companies. They design legitimate-looking documents that can make anyone believe in them. However, Know Your Business (KYB) can verify business entities authentically.
Most of the companies, especially the ones that do businesses on a large scale require collaboration with other entities. The workflow becomes streamlined and gives businesses a chance and a lot of other benefits as well. Know your business process verifies individuals based on the official information and their network connections.
KYB customer service is the attempt of businesses to combat money laundering. Companies must protect their interest by partnering up with other entities. They need to know how other companies operate their business. If they are involved in any kind of illegal activities or have they ever been a victim of criminal acts. KYB verifies all the official information of the business they are going to collaborate with and the personal information of the higher management that manages the company’s operations.
Apart from legal considerations, companies are liable to get information of the ultimate beneficial owner of the company. The episode of UBOs can never be neglected while talking about business verification services. The ultimate beneficial owner is the beneficiary of the company. Shell companies conceal millions of dollars from tax legal liability that put a burden on individuals. Therefore, doing business with such people can undermine the reputation of businesses. This is why KYB reviews the ultimate beneficial owner structure with customer due diligence.
Businesses’ KYB checks are an effort to comply with anti-money laundering (AML) and counter-terrorist financing (CFT) regulations. AML/KYC laws ensure that the company is not involved in any kind of money laundering activities and if they are a potential threat to the company’s reputation.
KYB verifies the company on several levels. The Includes inspection of the company’s name, their registered address, trademarks, affiliates and verifying identities of top tier management of the firm. UBOs structure is also verified along the process. After that, the networks your partner interacts with are also investigated. Know your business also deep dive to get information on the sister companies if companies have one or several.
Business statements also give an insight into the regular culture of the company’s environment. Official statements present the company’s line of work. The business verification process investigates all of this.
Think of the workload, when businesses have to verify a company’s identity, their beneficial owner, and all the other official information manually. It is a time-consuming process. Along with taking the time, it also demands human resources and operational costs.
Manual checks also do not confirm the authenticity of results. Nobody can guarantee the process accomplished by humans. Therefore, businesses adopted digital means of verifying their potential partners.
Global corporate records, PEPs, and sanction lists are used when analyzing final beneficiaries and shareholders. Also, the continuous monitoring of a transaction is also significant while verifying the customers digitally.
KYC and KYB both used to stay compliant to regulations. Customers’ due diligence is performed to verify their identity. Know your business cannot alone verify a business, instead, KYC is required to verify the identity of ultimate beneficial owners of the company.
Automated KYB checks have helped businesses to identify their potential clients and through automated checks. In the pre-digital era, where there was no concept of verifying business digitally, shell companies used to make legitimate businesses fool from their tricks.
Financial institutes use know your business processes to verify the identity of their customers. KYC is also employed during the process to verify the personal information of the ultimate beneficial owner of the company. Money laundering and terrorist financing can be eliminated if banks incorporate business verification services to make their workflow fraud-free.