The complicated regulatory requirements and the rise in illegal activities point that business verification has become a necessity for businesses to achieve long-term stability. A report by UNDOC states that up to 2-5% of the global GDP is laundered annually, which accounts for 2 trillion USD. Digital frauds have also increased significantly recently especially virtual ID theft. Verifying business requirements is a necessity but in order to fight such crimes, banks and financial institutions are putting in more than USD 48 million into the process of due diligence of the businesses.
Technological advancement and digitization can help businesses to capture the fraudulent businesses that are involved in illegal activities and fulfill their regulatory responsibilities. The global requirements about the KYC, AML, and KYB shows the rising need for business to have secure dealings and prevent financial crime. In this blog, let’s highlight how you can verify your businesses with robust Digital kyb solutions.
KYB is the process through which you can verify your businesses. It is just like Know-Your-Customer but for the due diligence of the verifying businesses to ensure the authenticity of the businesses dealings. There are strict regulations that require businesses to perform know your business checks.
The 4th AMLD, the regulatory requirement by the EU highlights the strict audit trail to prevent financial crimes. The 6th AMLD also emphasizes transparency regarding the beneficial ownership of the companies. Similarly, the 5th AMLD also demand strict monitoring of customer as well as business to before carrying out any businesses dealings with them. This is to make sure that the businesses are not connected with an entity involved in illicit activities. Many regulatory authorities including FinCEN has made stringent amendments in the law regarding the transparency of the ownership of the companies have ordered the companies to register their ownerships. This is done to tackle the shell companies and shut down the fake and fraudulent companies. Due to these regulatory requirements, the digital process of business verification has gotten immense popularity recently.
Money launderers use many businesses as a cover to hide their illicit funds and this is why the global regulators are rolling out stringent regulations to track the illicit activity and the funds attached to it.
Know your businesses’ work by checking the identity of the businesses against the official registration documents using AI-powered software. Digital KYB service can extract the registration number and the jurisdiction code to verify the business is authentic. An automated process makes the whole process swift and efficient and the due diligence process becomes error-free. The businesses can not only be secured but also save their valuable time, resources, and manpower on the manual businesses verification process.
This part includes the background data check such as the registered address of the company, type of company, UBOs, registration of a trademark, etc. This part also provides the financial summary of the company’s operational account. This is done to ensure the authenticity of the company.
In this step, the company’s filings are verified including information like access to financial statements, sources, register reports, shareholder lists, and annual accounts.
Business statements assist companies to remain on top of everything including the changes in management and the businesses connections. A change in the company owner can indicate the changing businesses environment. This requires an update of information on business matters and the validation process.
The detailed information regarding the structure of a company also provides detailed insight into the entities and subsidiary companies. The company registration region is also a key factor along with the nature of business activities and how much transaction it carries. This plays an important role in verifying the authenticity of the company.