Know Your Business: What you Need to Know?

The difference between KYC and KYB verification is simple. In KYC, the person of interest is a single entity. Verification focalizes on this person. For instance, when onboarding a customer, banks ask for details like name, address, DOB, source of income, etc.

On the other hand, KYB verification services focus on business as ‘an entity of interest’. The identification of the company is done through a slightly different procedure. Although it includes steps that are necessary for KYC but added to it are various other verification checks.

Global KYB regulations

Regulatory Authorities both national and International, are focusing on KYB compliance. One of the major authorities that demands businesses to perform Enhanced Due Diligence is FATF. FATF’s main focus is to eliminate money laundering and terror financing globally. To stay in compliance, associated countries are required to ensure that all the businesses in their jurisdiction comply with AML and CFT regulations.

Other than this European Commission, FinCEN, and FINMA are some major global regulatory authorities that impose stringent AML and CFT rules on the businesses to prevent frauds, ML, and TF. Europen Commission’s AMLD5 requires businesses all across Europe to declare Ultimate Beneficial Ownership (UBO). UBOs are defined as any entity, which holds more than a 10% share in the company. 

This directive further includes a mandatory clause for countries to maintain a central register of companies’ data and give access to all regulatory authorities. This will make it easy for the authorities to easily verify and screen business across Europe.

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However, it is difficult to maintain and access these central registers manually. To comprehensively operate businesses need real-time automated online KYB verification checks. This will not assist companies in performing reliable verification. It will also reduce the cost and time taken to manually perform due diligence.

Let us look at how the online KYB verification solution works.

How do online KYB verification Solutions work?

KYB verification process starts by asking for Company registration Number and Jurisdiction code in which the company operates. That is all you need, while the remaining process is done by an automated system. Screening this information against the data of millions of companies globally and extracting the information against specified data categories. 

The following company information is extracted.

  1. Company Name
  2. Jurisdiction
  3. Company Type
  4. Current Status
  5. Date of Incorporation
  6. Dissolution Date
  7. Registered Address
  8. Trademark
  9. Home Company
  10. Previous name (if any)
  11. Officer
  12. Industry code
  13. Business Filings
  14. Business networks
  15. Business Statements
  16. Branch Status
  17. Post Code
  18. UBO
  19. Industry Code

What issues can KYB verification solve?

  • By Implementing global KYB verification solutions, you can avoid the costs of fraud and other serious risks.
  • Regulatory authorities are making stringent changes in rules and regulations and staying in compliance is important or your business could face hefty fines.
  • For those businesses whose operations are mostly online, chances of fraud and money laundering increase, and the best way to avoid associating yourself with any criminal activities are to verify both the individual customers and businesses when onboarding.
  • After the Panama Papers scandal, the shell companies became the center of focus for both businesses and regulatory authorities. Online KYB verification services can help firms to identify companies, that are helping criminals to launder money and carry out illicit financial crimes.
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Ben Smith

Mashhap is Innovation about Trends, Technology, Health, Business, Digital Marketing, Reviews, Sports, Life-Style and many more.

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