Nowadays B2B businesses have to stay more vigilant during the customer on boarding process. According to Bluetrap, “19% of the time, queries in B2B are fraud related attempts, and 77% of businesses lost money due to a fraudulent activity”.
For this reason, KYB (Know Your Business) is quite handy, if it’s used to determine the corruption or money laundering trail of business owners. It conducts verification of the corporate information obtained either from customers or authentic sources. KYB ensures that the company is following rules and regulations as determined by the countries in their respective region.
Along with the legal considerations, UBO (Ultimate Business Ownership) is equally important to run a background check of the beneficiary company. Most shell companies are hiding billions of dollars by evading taxes. Carrying out business with such entities could tarnish the reputation of an organization. Therefore, along with KYB, KYC is required to know the real identity of a business owner to determine if they are included in any watch list.
Table of Contents
What is Know Your Business?
Know Your Business means monitoring and verifying companies in real-time to achieve AML compliance. It is required to review businesses against any money laundering activities.
How KYB Can Protect Your Business Interests?
By integrating a third-party AI-powered solution into the system, companies can determine the true identity of their B2B customer. It is to determine any risks attached with the business while keeping up with AML compliance. By obtaining anti-money laundering services, organizations could verify an entity through global watch lists.
The AI-powered solutions help organizations to fight back any criminal activity with Know Your Business services, especially financial institutions such as banks. As banks have to check and verify the authenticity of funds received from a large customer base. Financial institutions can stay vigilant against any malicious activity conducted by their partners. Get more at Jhhdhasdsfg.host
Know Your Business Procedures
Organizations, especially financial institutions are bound by regulations in their respective countries to comply with AML (Anti-Money Laundering) regulations and CFT (Counter-Terrorist Financing). KYB procedures are deployed by companies to prevent any possible crimes related to money laundering and terrorist financing. Therefore, organizations must comply with the AML regulations. In case companies don’t comply with the regulations, they could face heavy fines and penalties from regulatory bodies.
Even after verifying the profile of their partner organizations, companies keep monitoring the activities of these companies to ensure no suspicious activity is detected. It’s an ongoing KYB check that helps in avoiding any frauds or money laundering attempts. However, companies fulfill KYB requirements by checking various information and documents obtained from reliable sources. These documents contain identities of Ultimate Beneficial Ownership (UBO) for KYB checks.
Monitor Red Flags, Unique To Your Business
Since various businesses have different types of fraud indicators that are unique to their specific industry. It could work in the favor of these organizations if these signs are noticed early – whether an organization is working with a solution provider or an in-house team of experts.
Here are some common red flags, an effective system would detect early in its track that would be a great help for organizations. For example,
- The shipping address doesn’t match the company’s office location.
- The company has reported a huge revenue, but it doesn’t show up in the credit bureau report.
- The company has made multiple mistakes in its financial statements that could be easily avoided.
- The company doesn’t have a big credit history.
These are just some red flags that help companies to determine any suspicious activity and ensure if the customer is innocent.
Implementing effective KYCC and AML measures could effortlessly prevent fraudulent activities from taking place. The information containing the fake credentials of a shell company could also be traced. Nationality verification and Geo location services would also help to examine the authenticity of a company by determining the country of origin.