KYB Checks

The epidemic of online fraud infects various business industries. As many organizations move toward digital, they are lacking in the security sector. Due to less transparency and more complicated regulations, companies need to perform the proper KYB checks to verify business and protect them to involved with illegal entities. Online scammers are rising with time, with enhanced hacking technology. Therefore,  it is crucial to verify business as cyber attackers can easily manipulate the security systems. Let’s explore why business verification is important and how KYB checks are conducted to lead to strong B2B relationships.

What is KYB Verification?

Know your business (KYB) is a relatively new and unknown concept in the business world. However, they have served the organization for many years by protecting them from bad or suspicious entities. It is the process used to verify before the business onboarding. KYB verification process ensures the company’s authenticity before entering into new business relationships. This verification raises the bar for criminals who are involved in corruption and launder money through associate companies while running away from anti-money laundering and regulation compliances. In short, KYB determines that the organization working with other company has a standardized methodology and indicate that the entity is genuine.

8 KYB Checks To Verify Business Efficiently

As per the latest KYB compliance demands, businesses need to verify the other company deeply, including their other associate individuals such as UBOs, shareholders, suppliers, customers, business operations, and the overall reputation of the company in the business industry. It ensures that the organization is real and not involved in criminal activities like money laundering and terrorism financing. Some important internationally followed KYB checks are listed below, providing an extra layer of security in business onboarding.

  1. Gathering Information

Business needs to collect all the necessary information of the associate company including address, registration, phone number, ownership structure details, license, or other relevant information. It helps companies to ensure that the company is authentic and active in the real world. Make sure to gather all these official papers and information up-to-date.  

  1. Verification of Information

Once all the necessary information is collected, verify these documents with local authorities to determine their originality and validity. For this purpose, certify and witness the security factors such as signatures, stamps, or other visible security elements depending on the type of document. The procedure does not end here, after this step proceed further rigid measures.

  1. Information Validation

Expert cyber attackers and scammers can easily duplicate anyone’s data and hide their identity. To validate the information properly, businesses should have to convert the written paper into computer-readable text and scan it. Also, cross-match these data with government databases. It indicates that the written data is the same as stored in official records. 

  1. Identify Associate Individuals

Every organization is associated with some important entities such as UBOs, suppliers, shareholders, etc. The verification of these associate individuals is crucial to determine their authenticity and legitimacy and indicate a red signal if they are involved in any suspicious activities like money laundering and terrorism financing. 

  1. UBOs Identification

A person who has a 25% share in the company and has rights in the financial transaction is declared as UBO within the organization. Businesses need to verify these UBOs to detect their identity, including financial statements and source of income. Ultimate Beneficial Owner identification investigates the business and determines its possible risks. This helps to enhance transparency between businesses which can help to protect them against fraud and illegal entities. 

  1. Business Operations Validation

Business verification services are a process of deeply analyzing the company and its business operation. It required them to know where their client comes from, what services they offer, and how the employees perceive the company. This helps you to identify in what sector they are working and know about their reputation in their relevant business industry.

  1. Source of Income

In the KYB check, it is also important to know about the business’s source of income to determine what kind of income they have either black money or white money.

  1. Continuous Monitoring 

Instantaneous monitoring of company statements ensures that nothing illegal is happening in the business. This step confirms whether the organization’s individuals have changed their details. This verification demands the monthly latest profile statements to indicate any suspicious activities.

Final Verdict

Verification of the business is crucial for many business sectors including, medical insurance, digital businesses, e-commerce, and financial institutions to protect their security system from cyber attackers. Business verification also helps in building a strong and healthy relationship between associate companies and provides compliance with laws and regulations.