Criminals nowadays are using various techniques to dodge the KYB checks and partner with legitimate firms. For this, they either hide their Ultimate Beneficial Owners or use the name and information of a pre-existing company. If businesses lack accurate verification checks, they will face criminal threats. For instance, money laundering, data breaches, and non-compliance.
Therefore, businesses need to incorporate authentic verification solutions to make sure they are not partnering with risk-possessed firms. AI-powered verification solutions help businesses to identify the UBOs and verify companies. For this, the system asks for information like proof of address and registration number. Later the system asks for original documents to support the information as evidence. The blog covers steps that the Your Business (KYB) process use for verification.
Company Verification – Types of Checks Involved in the Process
According to Shufti Pro News, regulatory authorities are imposing numerous regulations. These mandate businesses to identify the UBOs, registration details, and addresses of partnering companies. Moreover, businesses should make sure that the company, as well as its employees, does not fall under any sanction list. For this, the AI-powered company verification solutions enable businesses to access global watchlists and commercial registers.
Furthermore, these solutions provide accuracy while consuming less time and resources. Businesses can curb criminal activities and prevent them in the first place. AI-powered solutions offer seamless and authentic partnering opportunities. The process is user-friendly and has the below-mentioned checks:
- Verification of Companies’ Document
When businesses opt to partner with global firms they are required to verify them. For this, they should validate the registration documents. Alongside they should verify addresses for making sure the companies do not only exist in papers. Therefore, businesses need accurate and in-time verification services. For this, the system asks for verifiable information that confirms the authenticity of the firms.
After submission of information, the systems further ask for documents to serve as evidence. The OCR then extracts the required information and cross-match it against the commercial registers. The information includes the company number, date of establishment, registration certificate, and identity documents of UBOs.
- Cross-verification Against Balcklists
Keeping in view the instances of fraudulent companies manipulating legitimate businesses, regularity authorities of the majority of countries are revamping Know Your Business standards and established blacklists. These include the details of fraudulent firms as well as owners and UBOs. Prominent examples of these lists are the AMF’s Warning and Blacklists of Unauthorized Companies, FATF Blackist, and the European Union’s High-risk Third Countries list.
The AI-enabled KYB checks enable businesses to access these global watchlists and verify their partnering firms against them. This ultimately aids in legitimate onboarding and long-term partnerships.
- Identification of UBOs and Employees’ Identities
According to the requirements put forth by the EU, UBOs are the entities that own 25% of the shares in a particular company. Fraudulent company owners often keep their UBOs’ information confidential to hide their source of income and risk-possessed entities. This ultimately leads to money laundering, data breaches, and terrorism financing. Therefore, the regulatory authorities mandate businesses to verify employees’ identities and validate UBOs prior to B2B partnerships.
- Screening Against Sanction Lists and Adverse Media Coverage
In this step, the system cross-verify companies and their employees against a global watchlist including adverse media converge. This involves scanning reports presented across territories, background checks, and cross-verification against sanction lists. The system also enables businesses to access global Politically Exposed Persons (PEPs) lists to ensure the employees or UBOs do not possess potential risks.
Know Your Business Checks – Major Benefits for Authentic B2B Partnerships
Businesses are establishing partnerships with global firms. However, there are increased chances of fraudulent companies opting for registration. Moreover, digital transformation has paved the way for criminals to dodge company verification checks. This is why businesses need to employ authentic and accurate verification mechanisms. AI-powered solutions here shield the businesses’ operations and further provide the following benefits:
Fraud Detection and Prevention
Online Verifying companies solutions help businesses detect fraudsters and minimize the chances of money laundering, terrorist financing, and reputational damages. Criminals use the information of a company that was functional long ago and trick the verification process. This helps them become subsidiaries of legitimate businesses and until they will find out, the criminals will be long gone. Therefore it is a must for businesses to recognize the red flags in time and prevent fraudulent attempts.
Compliance with KYB Regulations
Regulatory authorities are enforcing stringent rules on businesses to verify the companies they are partnering with. These also mandate them to keep track of their subsidiaries. Shufti Pro Funding indicates that AI-powered Know Your Business solutions help companies to detect suspiciousness, risk-factor, and fraudulent firms in real-time.
In the End
Know Your Business solutions are helping companies to build and shield their operations. They provide accurate verification mechanisms that mitigate the chances of fraudulent partnerships. AI-powered KYB checks further enable businesses to accurately verify the companies and their employees. Hence, businesses having accurate verification in place are less likely to fall prey to criminals. Ultimately ensuring better compliance with KYB regulations.