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Know Your Business Checks – For a Quick Business-to-Business Onboarding

As identification and ongoing monitoring are applied to an individual account, business accounts also need to verify their identities using know your customer (KYC) compliance. Know Your Business (KYB) is the process of verification of a company’s legal standing and its compliance with Anti-Money Laundering (AML) and other relevant regulations. Verifying businesses is a process regulated by organizations, i.e. banks and other financial sectors, to prevent their stakes and ascertain whether they are working with legal and protected businesses.

Know Your Business (KYB) allows you to ensure the legality and protective measures against illicit activities, and what an organization is working with behind the business.

It also helps to prevent FinCrimes, such as terror-supporting activities and money laundering. 

What is meant by KYB?

Company verification is a due diligence review process, in which organizations are identified against illicit monetary activities and sanctions information. The process makes your business eligible for policy creation and analysis of alarming activities and financial transactions. 

Difference Between KYC and KYB

Although both of the terms have similarities to each other, KYC (Know Your Customer) must not be perplexed by KYB (Know Your Business). In the financial and other regulated industries, KYC is a verification standard to verify the identity of customers, and ongoing monitoring is processed on their profiles. 

The point which makes a difference between KYC and KYB is who they are dealing with. Both have checkpoints for verification. Know Your Customer applies to an individual account, whereas Know Your Business is for organizations or companies.

Businesses – Should Perform KYB

According to the European Union’s 5th AML directive, verifying companies is not only limited to banks but also to the listed businesses and individuals as well;

 

  • Taxation Advisor
  • Institutions of Finance and Credit
  • Financial Technology (Crypto, NFTs, etc)
  • Real Estate
  • Online Payments (Online Banking) 
  • Legal Institutions
  • Gambling Services 
  • Others

There is no type of legal compulsion, but businesses in unregulated sectors also undergo KYB checks. The only reason for regulatory checks on a business is to secure an organization’s reputation and protect it from fraudsters and asset misappropriation. 

KYB Checks – An Efficient Way of Business Verification

Know Your Business checks are closely bound by the regulations and laws of a specific country, and jurisdictions are an important factor. Here are the checks for efficient KYB:

 

  • Registration Information: Here is the basic information that is required:
    • Business Name
    • Code of Registration
    • Value-added Tax Code
    • Legal Address
    • Legal Status of Business 
    • Share Capital
    • Contact Number
    • Internet Address
  • Capital Share: Capital information must be provided whether it is complete or not. It must be authorized capital, including its status and date of start. 
  • Official Partners: Provide information about the partners straight from business registries.
  • Holding Shares: Information about the directors and other partners who are shareholders in any other company.
  • Shareholders: Provide information about the shareholders, whether it is complete or not. This may include:
    • Name
    • Date of Birth (DOB)
    • Residential Address
    • Percentage of shares 
    • Registration code
  • Employees (Managers): provide information related to the employee that is likely to be ranked as a manager. Information may include:
    • Role in the company
    • Name
    • Residential Address
    • Date of Birth (DOB)
    • Start Date
    • Registration Code 
  • Employees’ Records: The company’s employees’ records for the last ten years (If it is old enough).
  • Assets: A company’s assets information (i.e. moveable, non-moveable, tangible, or intangible) details.
  • Affiliates/Branches: Information about the subsidiaries:
    • Name of the Branch
    • Registration code
    • Address
    • Percentage of shares 
    • Start date
  • Debt to third parties: This may include the; 
    • Amount of debt
    • Claimant
    • Start date
  • Tax Debt: it includes!
    • Debt amount
    • Payment status
    • Start date

Financial organizations and other regulated sectors approach the record holders and the government registries to get this type of data. You are dealing with the right and the legal company is ensured by the successful KYB checks.

Conclusion

Essentially, KYB makes it harder for fraudsters and criminals to hide illicitly obtained funds as their income. If companies fail to fulfill KYB checks, it is likely possible to face damage to brand value, and standings, a decrease in profit, and might be some legal penalties by the government. 

In last, company verification allows businesses to sign contracts with other businesses with confidence.  By automating and continuously retrieving data within existing collaborations, the process minimizes risk. You need an adequate business verification service to protect your business relationships, comply with AML requirements, increase the business-to-business rate of conversions, and lower operational costs. They can offer enhanced onboarding experiences and reduce fraud risks with an automated KYB solution.

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