Execution of the KYB checks can help business corporations to filter any fraudster activity induced by a company before the task of onboarding is preceded.
Establishing business-to-business (B2B) relationships have been critical in the digital age due to the prevalence of money-laundering activities. Criminals can fake a whole company to providing harm to the businesses, which can affect them financially. With huge amounts of criminal activities ranging in financial institutions and banks, they should properly assess the individual and a business for any risks of fraud before any transactions are made. Registering shell companies into the firm can lead to disrupting the firm’s reputation in the global market. This will not only create a negative impact on customers but also on those who have already formulated business relationships with them. Therefore, identifying an entity or verifying businesses before they are onboarded is mandatory for securing a firm through utilizing the Know Your Business procedure.
Diminishing the Traditional Methods of Business Verification
The old methods of verifying businesses have become a tedious act that can be time-consuming and require labor work. This non-automated process can even create halts in customer onboarding as the long hectic procedure can let the users abandon the whole procedure if they get frustrated at some point. An automated version of business verification services can help in verifying companies in less time. Checking the documents and scrutinizing them to detect any potential risks which can prove to be dangerous for the firm and eliminate them using very few resources. As evident from Shufti Pro fundings, businesses are putting reliance on these digital KYB checks for guarding their organization against any threat.
Understanding the Essential Elements Required for Conducting a KYB Process
The Know Your Business meaning stands for performing the due diligence process for reviewing the business activities of a firm when an organization develops a relationship that is a part of a supply chain, a service provider or a stakeholder, etc. This will help to understand the business’s structure against any money laundering and terrorist fundings risks. The steps required for verifying businesses are as follows:
- Pulling out the information from the business
For initially verifying companies, basic information regarding the name, address, number, and date of its incorporation and certificate of registration are analyzed. The more amount of information a firm acquires, the more detailed investigation can be carried out by an organization before onboarding an entity.
- Detecting any links with blacklist people around the world
Many countries have sanction lists that consist of information regarding the people who are indulged in wrongful illegal acts. Cross-referencing the company’s name under the sanction lists worldwide, determining any alliance through going through piles of information is required to uncover a shell company. Apparent from the Shufti Pro News, regulatory bodies need to ensure proper anti-money laundering measures for verifying businesses with foreign companies.
- Scrutinizing details about any adverse media coverage
Businesses need to be checked by scanning their reports for the detection of any criminal activity being covered by the media in the past. This act is essential for protecting businesses from any high-risk or unsuitable company owners or associates.
- Verifying any indulgence by the PEPs
Being vulnerable to corruption, fraud, and money-laundering risks, the PEPs (referred to as politically-exposed persons) needs special assistance. Any individual or an owner of a company who has links with a PEP needs to be evaluated under strict guidelines for detecting any acts of blackmail or bribery.
The Ultimate Difference Between KYB and KYC
The know your customer refers to a procedure in which the identities are analyzed to check any risks of fraud before the customer can proceed with any transactional activity. While know your business deals with investigating the real businesses in the global market for detection of any shell companies. KYC process looks into the details of a client in the official documents who are photo-based such as driving license, ID card, etc. On the other hand, KYB checks configure company verification by acquiring the certificate of incorporation, the company name, the location, and any professional bank account document, etc.
Wrapping it Up
Comprehending a company before formulating any business relationships with them is critical. Any suspicious information which can put the company in danger, in the long run, needs to be detected beforehand. Know your business checks also require the investigation of the entities who pose as acting owners of the company under legal customs. It manages to reveal the authenticity of a firm by checking it against AML measures. The automated process of KYB checks allows the detection of a business corporation in a fast effective manner. It has restricted the criminals from reaching the businesses more reliably.