Know Your Business verification
Know Your Business verification is the anti-money laundering compliance of a company. According to the Know Your Business standard, a firm must protect its interests while doing business with other companies. An organization must know that its income is not being misused for money laundering, human and drug trafficking, and smuggling. For this purpose, Know Your Business ensures whether a firm is working with an authentic or shell organization.
Difference between KYC and KYB checks
Although both verifying business standards are similar, the main difference between KYB and KYC is in the data required to validate the identity. In KYC verification, only the identity of an individual is verified. So, there is a need to access the details like address, full name, and date of birth.
On the other hand, KYB verification verifies the existence of a company. In KYB, there is a need to confirm that the company is legally registered and identify the owner and beneficial partner of the company. There is also a need to examine the annual statements and returns of a firm.
Procedures of KYB
Different organizations are applying the procedures of Know Your Customer to establish relationships with Anti-Money laundering, and other regulatory authorities. The Know your business procedures implement to cope with the risk of money laundering and other terrorist activities. Following are the procedures that the KYB requires for identifying and verifying other companies:
- The company’s legal name
- Company registration number
- Personnel in positions of power
- Date of incorporation
- Operational Status
Impact of KYB on business
Ignoring KYB compliance with the regulatory authorities could increase the potential for terror funding and money laundering. A company’s profit baseline and brand integrity could damage at any point if Know Your Business due diligence is not implemented. Consequently, KYB has a deep impact on the success of the business.
How to adopt KYB checks
Businesses must implement AML programs based on risk in order to adopt KYB rules. It means that firms should assess the risk level and adopt the AML response accordingly. Following are the involved controls:
Companies should apply due diligence in order to verify and establish ultimate beneficial ownership. If there is a high level of AML risk, firms should apply enhanced due diligence.
Unusual transactions point out that the company involves in terrorist funding and money laundering. So, monitoring of transactions is necessary for the prevention of that type of crime.
Companies should screen their other business partners and employees against international sanction lists like the UN, EU, and OFAC sanctions lists.
Screening for PEPs (Politically Exposed Persons):
Companies involved in political corruption could expose to a high risk of money laundering. So, firms should screen the other firms before establishing political exposed person status.
Companies should monitor other companies’ media reputations before doing business with them.Negative news about them might indicate their involvement in terrorist funding and money laundering. The process of monitoring should be strict and include all types of media, like social, print, or digital.
Automated KYB verification
The typical strategies consume a lot of time in verifying the identity of the company’s owner and analyzing the documents of ownership. So there is a need for them to use electronic identity verification to comply with the AML. Firms can give easy access to Know Your Business compliance with automated authentication.
The data of sanctions database, global corporate records, state analyses, and PEP utilize to examine the final shareholders. Additionally, automatic controls and continuous monitoring ensure that firms remain compatible. In automated Know Your Business processes, organizations validate and obtain official data for commercial registration by employing APIs. The automated KYB procedure can gather essential data for the company verification, such as the company authorization code.
Know Your Business checks ensure that their clients not involve in any criminal activity like money laundering, terrorist funding, etc. KYC and KYB are both similar. The difference is that KYC needs the whole data of an individual client to verify. On the other hand, KYB needs to authenticate the whole business or firm. For business verification, KYB needs to validate the legal name, registration, address, the main person of the company, etc. There is a deep impact of KYB checks on businesses. Ignoring it could harm the brand’s integrity and profit baseline. The traditional methods of verification take a lot of time and resources. But, the automated KYB is more convenient, accurate, and time-saving.