KYB Verification Solutions: Combating Fraud in the Corporate Sector

KYB verification is a due diligence procedure that helps corporations actively discourage shell companies, money laundering & terrorism financing cases.

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The rising crime cases involving shell companies, and financial scams can hinder the growth of modern-day businesses. As per the statistics from UNODC, money laundering is around 2-5% of global GDP which is about $2 trillion. This is because the rate of digital data breaches has increased with time. To combat rising crime cases, businesses have to spend around $50 million to implement due diligence & KYB verification. International requirements such as KYB & AML are becoming stringent with time to streamline business transactions and discourage illicit activities. 

The following article discusses in detail the significance of know your business services and how cutting-edge solutions can help corporations discourage crime. 

Know Your Business Services: A Quick Insight

As per Markets & Markets Research, the global identity verification market size will reach a monetary worth of around 18.6 billion by 2026, displaying a CAGR of 16.6% during the forecast period (2021-2026). 

According to the report, key market drivers are: 

  • Increasing digitization
  • Intelligent infrastructure

KYB verification is the due diligence review of any organization regarding money laundering and sanctions data. This empowers the business to design policies and identify suspicious activities quickly. With know your business services, corporations can ensure that only legitimate identities can collaborate with the business and no shell companies can exploit the system.

International regulatory bodies not only demand the implementation of anti-money laundering measures but also record verification to deal with foreign entities. Electronic IDV services & AMLDs guide the KYB verification laws in the corporate sector. 

Complete Process Behind Know Your Business Services

Know Your Business (KYB) is an authentication solution that cross-matches the business credentials of corporate entities by extracting official commercial register information with the help of APIs. Utilising business registration numbers and jurisdiction codes, an efficient digital KYB service can gather valuable information for the corporate sector. 

Gaining access to automated commercial registers with data-driven KYB verification services makes the due diligence procedure easier than ever. This not only saves time but also the company’s resources. 

Conducting Business Search

This refers to background data on companies, such as:

  • Registered addresses
  • Current status
  • Company Type
  • UBOs
  • Previous name
  • Trademark registration

A financial summary of business accounts is also part of the KYB verification. This supports determining the authenticity of documents.

Using Business Filings

Business filings provide instant and verifiable data regarding company financials, such as:

  • Access to financial statements
  • Links to downloadable reports (e.g., annual accounts & shareholder lists)

Making Use of Business Statements

This can help companies keep track of changes in the management and organization of concerned businesses. Any changes in directors or beneficiary owners can show evolution in the business environment. For this reason, there should be follow-up sessions to update the information regarding business matters. 

Utilizing Business Networks

Detailed data on business structures also offers business insights regarding parent entities and their subsidiaries. Important factors within focus are dependent on:

  • Jurisdiction in which the company is registered 
  • Nature of business activities
  • Value of monetary transactions

Understanding the Regulatory Approach to KYB Verification Services

According to international standards, businesses must comply with the latest compliance protocols and streamline the onboarding process to attract only genuine customers. For this reason, the application of KYC & AML regulations becomes necessary. Similarly, the AMLD6 directive demands strict identity verification of new customers and business entities. This approach discourages not only identity theft but also illegal monetary transactions. 

Money launderers often exploit businesses to hide their black money and the European Union (EU) wants to introduce stringent regulations to discourage bad actors. For companies under regulation, this highlights the need to fulfill legal compliance measures. Other regulations such as GDPR, PSD2 and PCI DSS demand corporations to identify UBOs of concerned business partners. 

As per the latest regulations, all EU states must maintain national registers of beneficial ownership data on potential businesses and other legal entities. In this light, all business owners must get corporate details registered which makes it easier to identify identities participating in suspicious activities. Later on, information on such businesses becomes publicly available with a legal interest in business partnerships. 

The Bottom Line

The application of KYB verification services can help corporations attract genuine business partners. This way, building trust and achieving mutual interests can help both parties involved in the relationship. Moreover, companies can easily maintain their market reputation.

The application of Business verification allows corporations to mitigate the risk of fraud effectively. The PCI DSS-compliant solution can help corporations to achieve mutual interests timely and effective. 

Kevin Peter