Digital KYB Services to the Rescue of Financial Institutions

04-23-2021

Digital KYB Services to the Rescue of Financial Institutions

Online data breaches rose in tandem with the increase in online identity fraud during COVID-19. Businesses that get involved in illegal activities face severe challenges. They lose money as a result of Identity theft and bribery, and they also have to deal with administrative penalties such as fines and bans, among other things. To get to know these facts in detail, it is important that you read this article and learn the actual meaning of Know Your Business and how to protect your company from these unfortunate incidents.

What is KYB?

Know Your Business, or KYB is a framework for customer due diligence on companies to prevent money laundering, terrorism finance, drug trafficking, and smuggling, among other things. It aids companies in identifying shady sellers and manufacturers. Furthermore, one of KYB's most important applications is that it keeps the company safe from shell corporations.

4 Levels of Business Verification 

Advanced KYB services in the industry are now providing specialized tools to businesses in order to protect them from illegal activities. Corporations all over the globe are tested for authenticity after integrating their API. It is accomplished by conducting a background investigation and reviewing their official registration information. The following is a detailed account of the verification process carried out by a KYB service:

Identification

A background record check is a primary step in this detailed analysis of a company. This verification check examines the company's current status, business type, geographical location, extent of authority, and official trademark. If the company was formerly licensed under a different name, that is also taken into account.

Company Filings Review

The company exchanges various types of files with the KYB service provider at this level. These records provide facts about the company that can be checked immediately. Company filings is the term used for these papers.

Assessing Corporate Partners

The KYB service checks the company's related entities at this level. This may be a parent corporation or a division of that organization. The verification checks in this stage aids in the identification of essential information such as the country of origin etc.

Analyzing Financial Statements

When a company undergoes several management transitions, the KYB service helps them in keeping the business operations consistent and avoiding any potential problems. The ownership framework of a company tells a lot about it, which is why legal companies invest a lot of resources in Know Your Business processes.

The Utility of Digital KYB Services

The world is rapidly digitizing, and AI-powered KYB services are following suit. Companies can validate any of their suppliers and branches using their cutting-edge tools. But, most importantly, why does the corporate world need business verification services in the first place? We've highlighted some of the most important explanations for this.

Retarding Fraud

On a regular basis, the business community struggles with crimes such as automated data hacks, data stealing, ransom abuse, money laundering, and terrorism funding. In this scenario, vendor and distributor onboarding can be a difficult challenge for any company, whether it's a finance company like a bank or an online shop.

Your business could be tied to a shell corporation without your consent or knowledge. When that occurs, it's just going to get worse from there. You'd be facing big economic losses and a possible boycott from your clients in a matter of weeks. Therefore, you can use a digital KYB service to validate the records of your organization.

Ensuring Regulatory Compliance 

Due to a significant increase in illegal financial activities, governing authorities are enforcing stricter regulations every day. FATF and FinCEN are two international regulators in charge of KYB, KYC, and AML regulations. Furthermore, it is impossible for companies to keep track of any of these rules while still focusing on company growth.

Accessing Global Databases

The efficiency of your corporate processes depends on having up-to-date business records. The market's most advanced KYB service providers have a worldwide presence of over 140 jurisdictions. These solutions work closely with global databases. When it comes to investigating an organization, they don't leave any stone unturned. 






 

Tags: Technology

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