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Vital Checks of Know Your Business (KYB) to Secure Financial Institutes


Business verification is compulsory for companies such as financial institutes and payment gateways. They must conduct Know Your Business (KYB) checks before starting a new relationship with any business. Business verification involves checking personal information, records, backgrounds, and owners’ data. The KYB is an ideal solution for financial institutes to comply with anti-money laundering (AML) and counter-terrorism financing (CFT) regulations. 

Financial institutes and other businesses must meet all rigorous regulations. They must conduct KYB verification, including the authentication of ultimate beneficial owners (UBOs). It assists companies in gathering in-depth information about the business. 

Know-Your-Business (KYB) Checks During Onboarding 

According to the United Nations Office on Drugs and Crimes, 3-5 percent of global GDP is lost to money laundering, estimated at $800 billion-$2 trillion. Moreover, the Financial Crimes Enforcement Network (FinCEN) reports that banks induced $2 trillion in suspicious payments worldwide. That’s why regulatory sectors take severe steps and make rigid laws. To comply with rigorous regulations, companies divide the verifying business process into various checks to reap accurate results. Modern technology demands financial, government, and other institutes to follow the latest guidelines. Following the given steps for business verification is also one of them.   

Verify Business Documents

The first step of know-your-business (KYB) is to gather the business’s legitimate papers. Checking these papers is essential to verify the company is authentic and prove its existence. The process includes checking the business registration number, legal name, address, operational status, key personnel, and incorporation date. To verify the business, financial institutes attest the paper with various checks. They first manually check these documents by confirming visible features such as holograms, fonts, borders, signatures, and prints of the documents.

They cross-reference these documents against the different government databases. It ensures that the business is not involved in any illicit activities. It makes an authentic business profile for the financial institutes to proceed further with the business verification process.          

Analyze Business Profile 

During profile analysis, KYB solutions access the business activities, including customer data and its products. Companies must collect financial statements and business histories to verify this check. According to the regulations, it will analyze the business’s financial health by reviewing its financial information, such as balance sheets, income statements, and cash flow statements. It assists companies in onboarding the legitimate, and they can eliminate illegal businesses from the first step. 

Conduct Risk Assessments

The risk assessment helps companies determine the level of threat or associated risk when onboarding a new customer. The evaluation focuses on the business’s financial history, market, industry, or the customers they are dealing with. Financial institutes also inspect scams and crimes related to the company. The companies check regulatory compliance, legal disputes, creditworthiness, and any negative news or public records for adequate due diligence. This analysis provides financial institutes with in-depth knowledge about onboarding businesses to reap the accurate risk assessment result.  

Check UBOs Identity 

It is a must for financial institutes to confirm the identity of all ultimate beneficial owners (UOBs) of the business. They collect information about every company owner and then conduct checks to reveal their identity. It ensures that scammers or money launderers are not using the business’s services to disguise their illicit activities. This will protect financial institutes from becoming a victim of money laundering. The KYB identifies every owner who owns and controls the business. It verifies all the business shareholders, directors, and beneficial owners. Verification of the business also includes the screening of the company and the owners against the worldwide financial crimes watchlists and sanctions lists.

Implement Enhanced Due Diligence 

Enhance Due Diligence (EDD) allows businesses to learn in-depth about business owners. EDD raises the bar of the business verification process when onboarding high-risk companies. In onboarding these businesses, financial organizations gather extra detail or conduct a detailed investigation of the company and its shareholders. It depends on the nature of the businesses. According to that, banks and other financial institutes implement enhanced due diligence.    Many companies work in the enhanced risk industries, such as cryptocurrency firms, online payment gateways, real estate, etc. Before onboarding these industries 

Automate Know-Your-Business Verification Process 

Financial institutes can utilize machine learning technology to streamline business verification. Machine learning and AI innovations make the business verification process effective and efficient. Business verification service providers enhance the process by making the whole procedure easily accessible for customers. They can upload required documents from their home to conduct KYB remotely. It accelerates verifying a business through automatic machine-learning algorithms to risk assessments and attest documents’ authenticity. It extracts the data from the papers and cross-checks these against the watchdogs’ lists of government and other public. It eliminates the lengthy procedure and saves the clients and financial organizations time.    

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