Know Your Business, abbreviated as KYB, refers to verifying the identity of client entities that companies deal with. For instance, if bank ABC opens an account for a client company, it is necessary for the bank to first verify the source of the proceeds as well as the true nature of that business. KYB customer services are provided by numerous third parties worldwide, making the identity verification market reach as much as USD 15.8 billion by 2025. In the field of finance and banking, KYB customer services provide numerous benefits, some of which will be discussed in this blog.
Understanding Know Your Business Checks
KYB checks are generally implemented to ensure that businesses are dealing with authentic clients and not shell companies that are just present on paper. Anti-money laundering checks and identity verification are some components of the KYB checking that allow companies to avoid being used for facilitating money laundering, terrorist financing, and other illegal activities. KYB customer services implement checks such as verifying the business registration document, in-depth verification of the ultimate beneficial owners (UBOs) and monitoring the transactions being made by client businesses.
Benefits of KYB Customer Service
1. Transparent B2B Relationships
In today’s world, building a long-lasting B2B relationship requires trust, transparency, and mutual understanding. Financial institutions need to ensure that their clients, vendors, or business partners are not facilitating organized crimes, such as money laundering and other types of corruption. Additionally, it must also be verified that the company itself is not a shell company. KYB customer service takes care of both of these requirements, making sure that straightforward and transparent B2B relationships are formed.
2. Meeting AML Regulations
Anti-Money Laundering (AML) regulations have been mandated by global regulatory bodies such as the FATF. These regulations ensure that criminal organizations are kept under close monitoring. Any attempt made to eliminate the threat of money laundering counts as an AML practice. Thus, KYB customer services are opted for by banks and other financial institutions.
To meet AML requirements, it is required to know the business from the inside out. Business verification services screen every client against global sanction lists, criminal watch lists, and adverse media news to weed out high-risk entities. Once the high-risk entities have been identified, businesses can implement enhanced due diligence and minimize the threat where possible.
3. Enhance Customer Acquisition
Procedures such as AML, Know Your Customer’s Customer (KYCC), and KYB verification ensure that the company is able to last in the long run. This is because such checks make the clients believe that the company they are dealing with puts transparency, accountability, and the customer’s interest at a high priority. This helps build up a strong brand image, making the business sound more attractive than its competitors. As a result, customer acquisition rates have increased.
4. Avoid Hefty Fines
Banks and other financial institutions face the threat of financial crime on a daily basis. If caught dealing with an established crime ring, a bank can be charged with hefty fines, penalties, and criminal lawsuits. On top of this, KYC and AML requirements need to be met, which becomes easily possible with the help of KYB customer services.
5. Clean Customer Base
Listed below are some verification checks processes that are implemented by KYB customer service:
- Company name
- Jurisdiction code
- Registration date
- Date of incorporation and dissolution
- UBO verification
- Industry code, etc.
These checks are generally performed with the help of AI-powered KYB verification tools. These tools provide verification results with the highest rate of accuracy, and that too in less than a second. This makes it possible for companies to create a clean customer base, as all criminal entities and shell companies are weeded out during the initial stage of onboarding.
- Business verification processes have crucial importance in the field of finance and banking
- KYB customer services ensure that a transparent relationship is formed between two business entities
- KYCC, and AML requirements need to be met by the financial industry to avoid facing hefty fines and penalties
- KYB processes are now implemented with the help of AI-powered tools
- KYB customer services provide results with accuracy and in less than a minute