Know the business – how to establish a successful corporate relationship
It’s understood that the process of verification is a necessity when it comes to any kind of business or organization. Be it identity verification of customers before the onboarding stage, or verifying other businesses, no process can be secure without knowing who the other entity is.
As well as knowing the customers/clients of a business, it’s equally important to know the business before establishing a corporate relationship. The basic purpose of collaborating with the other business is to improve certain operations and get things done, but where the business isn’t trustworthy, the collaboration cannot produce favourable outcomes.
What is KYB
For those who Know your patient and Know your business that requires interactions with other business entities, it’s crucial to know the business. According to a study, a huge amount of 3.3 billion dollars was lost in 2020, all associated with fraud complaints. This is because of shell companies – companies that don’t have proper operating mechanisms, and exist only on paper.
In today’s digital spaces, technological advancements have made fraud easier. The process of KYB (know your business) comes in handy when it comes to checking the legitimacy of a particular business entity. Everything, including the personal details of the higher management of the potential partner company, and their clients, is verified using know your business checks.
The EU has directed companies to adhere to KYB solutions in the 4th AML directive. Whereas, the US has a procedure of due diligence, which involves obtaining information about businesses and determining their true owners.
How KYB protects businesses
Just like KYC services, which are used by businesses to Verify Patient identity that a potential customer is real, the KYB solution checks the authenticity of the business entity itself. Various details of the business in question are checked with the use of APIs.
Details like the actual owner of the business, whether the business is registered, and also records of money laundering are checked to know the business. These systems have emerged thanks to the anti-money laundering regulations. This is because businesses obtain money, sometimes in the form of loans, with various illegal tricks and then leave no traces.
Another important reason to know the business is that once a company accidentally collaborates with a blacklisted company, they get into trouble and have to deal with fines as well. KYB solutions using AI technology and AML screening make it easy to know the people involved and risk associated with those people. In situations where the top employees of that company are suspicious cases, KYB can verify their presence in watchlists around the world.
KYB solutions provide security to businesses by implementing a series of checks on the companies in question. They verify everything from the basic data saved on the daily basis, to business statements and other such records of financial transactions. Also, the links to shell companies, if any, are identified.
Automation in KYB
Sometimes, it can become quite a tough task to manually carry out so many checks in order to patient verification and know the business. It’s both time consuming and complicated to search through data from different sources, and there are chances of human error. Therefore, the automated process of KYB is an efficient solution.
Digital kyb solutions make the process of verification a time-efficient one, increasing productivity for both collaborating businesses. In fact, with the latest technology, the verification is done in a matter of seconds. KYB solutions provide original and accurate results, and have become an integral part of major businesses.
Why is KYB the vital solution?
As well as saving time, automated KYB provides data in larger volumes and gives productive solutions for overcoming future fraud attempts. Also, businesses secure their value and reputation, avoiding the need to pay large amounts in AML fines.
Some companies go for the cost saving way of guess work when it comes to verifying businesses to collaborate with. They just assume that they know the business, which might appear legitimate, and spend money on expanding the business rather than securing it.
Since they do not comply with KYC regulations, these companies actually do not know the business they get involved with, and face the constant risk of financial fraud. Due to the lack of KYC services, customers often lose considerable amounts of money and lose trust in the company.
To sum it up, the need for collaboration and expansion arises when businesses grow. Obviously, it’s a favourable outcome for a business if it grows, but when customers and other business entities are involved, the decisive factor is how secure the business is. Therefore, businesses need to implement KYB services in order to know the business.