Banks and financial institutes must meet the rigid regulations of the authorities. Especially when onboarding new customers or starting a new relationship with a client. For customers, financial institutes must conduct the Know Your Customer (KYC) to identify legitimate customers.
Like KYC, companies verify businesses through the Know Your Business (KYB) system. It checks the integrity of the businesses and authenticates their source of funds. KYB solutions ensure the business owners are not involved in illicit activities, and the business is not registered only for financial crimes.
Step-by-Step Guide to KYB Solutions
The business verification solutions authenticate companies through various checks. Financial institutes verify the business background, owner structure, financial statements, and activities for an effective onboarding process.
KYB solutions verify this information through various checks so the financial institutes can comply with the anti-money laundering (AML) and counter-terrorism financing regulations. Given below is the overview of how businesses verify the company:
Collect Information
To verify the business, financial institutes need various information to verify the company is legitimate. They collect the relevant documents to prove the company’s legal existence. These documents include the business registration number, current address, legal number, operational status, and incorporation date. The nature of these documents depends on government policies like high-risk clients must identify the ultimate beneficial owners and provide financial statements.
Attest Documents
After collecting all needed information, companies verify the authenticity of these documents. To check the paper is not counterfeit, onboarding representatives verify the visible security features such as holograms, signatures, fonts, and borders of the documents. It ensures that reports are legal in their original format and scammers do not duplicate or fake other companies’ legal records.
Data Validation
Once the papers are confirmed, the KYB verification agent compares the data on paper against the various databases to attest the information is accurate. The companies send these documents to the relevant authorities to attest the documents.
Data validation ensures companies’ integrity, accuracy, and consistency, and adheres to the rules. The data attestation assists the financial institutes in concluding the risk assessment according to five levels: very low, low, medium, high, and very high.
Verify Owners
Verifying the identity of business owners is essential for all companies. All 25% or more shareholders should verify their identity to comply with AML regulations. Companies verify the company’s Ultimate Beneficial Owners (UBOs) through the Know Your Business KYB.
They collect all the information about the owners and attest these against the various watchdog lists. KYB checks ensure the company’s owners are legitimate and not involved in illicit activities.
How to Streamline the KYB Compliance Process?
KYB compliance is the solution for businesses to comply with rigid regulations from the regulatory authorities. The KYB compliance shows that companies follow the AML regulation and are secure to trade with. Traditional KYB verification solution is time-consuming, costly, and does not provide accurate results to companies.
To overcome these issues, advanced technology offers automation KYB solutions software. These online platforms verify the company’s profile through machine learning and AI framework to reap accurate results. It also accelerates the onboarding process by updating time-consuming checks. Given below are the steps to effectively verify businesses:
Automated Information Collection
The online KYB solution allows businesses to submit identity-proof documents from anywhere. They only have to register on the digital KYB solution platforms. For registration, they only provide the company’s name and official email after that, they can upload AML compliance required documents.
This includes company details, name, address, owner structure, and contact information. The remote collection of necessary information reduces customer time and enhances the onboarding experience.
Computerized Document Attestation
The online KYB solution automatically verifies these documents through various checks. These include verifying the paper’s legitimacy by attesting their visible security features, such as fonts, borders, signatures, etc.
Digital business verification solution utilizes robust AI technology to ensure the documents are not counterfeit or tampered with. Certain documents need to be verified by government authorities, and the automated KYB process remotely verifies these papers through cross-reference against the databases.
Advance Data Validation
The written information on the papers is not readable for the computer, so online KYB solutions utilize optical character recognition (OCR) technology to convert data into computer-readable text.
This will read the text and keep these in secure databases. After converting the required information, KYB Solutions checks all this information from watchdogs’ sanctions lists such as AML, CFT, and politically exposed persons (PEPs). Proactive data validation ensures the company and its owners are not involved in illicit activities.
The Nutshell of Digital KYB Solutions
Overall, KYB verification with the traditional method is time-consuming and costly for companies. However implementing digital business verification accelerates onboarding, including compliance with rigid regulations.
Online KYB solutions software assists companies by using machine learning and AI technology during business verification. It will save the customer and company time. Moreover, it improves the company’s reputation by providing a trustworthy environment for clients to start new relationships confidently.
