The Rise of Fraud and the Need for Business Verification Services

Business verification solutions lie at the forefront of defence against fraud. Fraudsters can commit fraud in various forms, from fake companies set up to identity theft used to gain access to sensitive information. Banking and FinTech institutions are prime targets for business verification fraud. According to a Regula Forensics study, a whopping 94% of these organizations have come across this kind of fraud. These figures show the urgent need to implement verification procedures in businesses of all sizes to protect them from financial fraud.

Business verification services encompass a variety of advanced tools tailored to authenticate the legitimacy of businesses, trustworthiness in transactions and transparency in their operations. Business verification software provides insightful knowledge on a company’s identity, operations, and compliance status.

Here is a better view on how business verification services help in minimizing fraud:

KYB Verification:

Know your business verification gives you a better understanding about a company’s registration, operations, structure, legitimacy and transactions.

KYB vs KYC:

It is important to know the difference between the KYC and KYB processes. KYC identifies an individual’s identity, whereas KYB verifies a business’s identity and legitimacy.

Streamlined Verification Process:

Business verification software involves a list of tasks to verify a business. The software helps analyze data quickly while saving companies valuable resources and time.

The Role of KYB Solutions in Mitigating Fraud

In the intricate online interactions, KYB solutions underpin trust and security. A more holistic assemblage of checks for such verifications goes beyond merely confirming an organization’s identity. It is essential to realize that Know Your Business—a concept rooted in Know Your Customer protocols—forms the core of business verification services. Know your business solutions help companies identify their corporate clients, evaluate associated risks, and comply with applicable standards.
Here’s how KYB solutions come in:

Unmasking Fraudulent Entities:

KYB solutions apply advanced techniques for revealing shell companies, pretenders, and fraudulent entities in organization. This prevents organizations from falling victim to cunning thieves’ comprehensively planned tricks.

Exposing Financial Risks:

Experts using KYB can identify possible financial instability or insolvency cases. This enables firms to make informed decisions concerning potential partnerships, avoiding future difficulties resulting from lack of money.

Enhancing Regulatory Compliance:

Compliance with KYC/KYB requirements is obligatory in various sectors. By ensuring that all these specifications are implemented, businesses save themselves from heavy penalties and reputation loss, mostly incurred due to misconduct or inadequacy of some provisions under relevant law.

Benefits of Implementing KYB KYC

It is very important to have a well defined and implemented KYB KYC policy which helps in mitigating risk as well as building trust. The purpose of KYC is to confirm the identities of individuals while KYB investigates the genuineness as well as financial soundness of companies you are dealing with. In this manner, one can:

Deter fraud:

This will help you see signs of uncertainty among people therefore escaping from being duped or participating in money laundering schemes.

Strengthen your defense:

Minimize exposure of your network or supply chain to exploitation.

Assess before deciding anything:

This makes it possible for starting on a credibility foundation that relies on verified information from business partners and customers.

Choosing the Right KYB Company

The most significant thing is to opt for the accurate KYB supplier so that your business verification strategy works well. They must have a good reputation and worldwide presence that matches your corporate requirements and data security apprehensions. The best KYB provider will also have a full suite of checking tools like access to public registries, credit bureaus and sanctions lists.

Furthermore, efficiency requires an easily usable platform that facilitates the checking process and can be integrated into current systems. One of the leading companies in providing KYB solutions is IDMERIT which has a robust platform, global coverage, 24*7 services and is committed to accuracy. Their AI-supported verification process ensures fast and reliable results which enable companies to make informed decisions fearlessly.

IDMERIT, on its part, has IDMkyb; this service is purposely designed for smooth business verification processes across the globe. It allows instant business identity verification, simplifies onboarding and helps firms form partnerships or trust quickly. For instance, where validation needs are running manually can consume time as well as cause errors. IDMkyb records higher match rates with strict adherence to the most comprehensive data encryption and security protocols required by law.

The result? You can verify business information in real-time, thus enabling you to make informed choices.

Concluding Thoughts

In conclusion, fraud perpetration calls for robust commercial verification services that shield transaction integrity. Adopting measures such as using KYB solutions and associating with reputable KYB providers are some ways businesses can safeguard their firms even during uncertain times. Businesses today must show transparency, build trust, and conform to compliance standards if they seek success amidst complexity.

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Trade-Based Money Laundering (TBML) exploits international trade and trade finance systems for laundering illicit proceeds. It involves a series of schemes for TBML, including falsifying invoices, commodity misclassification, forming shell companies, forging trade documents, etc., for illegally moving funds across the continents.

Currently, international financial institutions estimate $2 trillion worth of trade, out of around $20 trillion, to get laundered annually in the form of Trade-Based Money Laundering. Customs fraud is mainly synonymous with Trade-Based Money Laundering. Customs manipulations like price, quantity, and quality alterations in the import/export of the goods are involved in the TBML of illicit bulk cash across nations. This blog sheds light on the TBML methodologies, TBML red-flag indicators, and its regulatory compliance policies.

Widespread TBML Methodologies Exploited by Money Launderers

Over Invoicing, Under Invoicing – When an exporter receives more money than the value of goods sold to an importer, it’s over-invoicing. On the other side, when an importer receives more money while selling the goods in the local market after buying them at an unvalued price from an exporter, it’s under-invoicing. Both the instances trigger an extra value transferred via trade between the parties as money laundering.

Multiple Invoicing or Carousel Transactions – A money launderer misuses the legal system to produce multiple invoices for the same shipment by complicating the payments with more than one financial institution. It’s a typical multiple-invoicing method for legitimizing one payment more than once and integrating illicit money into the financial system.

Over Shipment, Under Shipment – The trade involves misrepresenting the number of goods; the over and understatement of items give the money launderers a scope to process excessive payments of illicit money.

Inferior Shipment – It involves exporting cheaper quality goods with falsified invoices and submitting bills for relatively costly goods to customs.

Front Fake Commodities – The shipment of commodities does not match with the business classification, and the trade is made to transfer the illicit money value rather than the actual goods.

Shell Companies – Offshore companies, acting as front or shell companies for organizations involved in sending excessive funds across the continents. For years, law-breakers have preferred shell companies as camouflage to facilitate TBML activities. At times, it may so happen that established companies make their foray into an entirely distinct market segment to divert their income via shell operations.

Phantom Shipment – There may be no shipment at times, and the invoices are still generated and bills passed in the customs.

Major TBML Red-Flag Checks for Customs and Financial Institutions

A joint effort of Egmont Group and Financial Action Task Force (FATF) to combat the worldwide TBML activities has set-forth imperative red-flag checks on this trade-based financial crime.

Common Anomalies – International trade-related activities involve a lot of paperwork. All the more challenging is that the financial institutions are only exposed to the official documents and not the commodities in trade. So, on the face of it, common TBML red flags involve finding anomalies in product pricing, irregular product description, and price matching with the product quantity and quality standards.

Unnatural Transactions – Financial institutions must keep a regular Transaction Monitoring on the trade activities of the parties involved; the monitoring includes the nature of transactions, business locations, background checks, the characteristics of the traded goods, etc. Unusual transactions also consist of substantial below-threshold cash payments and inexplicable third-party payments.

High-Risk Jurisdictions – Businesses set up in jurisdictions with weak AML-CFT regulations, suspicious addresses, with an indistinct online presence. All the mentioned red flags give a clear indication of out-of-sync business activity. Such entities generally have unstructured business operations with no proper payroll, marketing, advertisement, or accounting reports.

Free-Trade-Zones (FTZs) – The customs-free nature for bringing liberalization in global economic activities has paved the way for acceleration in the TBML activities as criminals are continually exploiting the eased-up trade barriers in around 3500 ports worldwide. Trade activities at the FTZs are more vulnerable to being misused for laundering money.

How Regulated Institutions Must Remain AML-CFT Complaint

Risk-Based Model – Financial Institutions (FI) must follow regulatory Customer Due Diligence (CDD) and keep their Know-Your-Customer (KYC) records updated. It is on the part of the FI to conduct proactive Enhanced Due Diligence (EDD) on the potential high-risk clients with stringent identity checks and transaction monitoring. In addition, the records must be kept updated and presented to the Financial Intelligence Unit (FIU) authorities on suspecting unusual trade activities.

Transaction Monitoring – The financial institutions that handle large trade-related activities must monitor their clients in real-time. All Suspicious Transaction Reports (STRs) and Suspicious Activity Reports (SARs) must put the financial authorities to alarm. A series of SARs and STRs trade datasets also help establish emerging TBML typologies for predictive analysis.

AI-Based Machine Learning Algorithms – All leading financial institutions utilize the best-in-class data analytics technology to monitor transactions. The Artificial Intelligence-based rule engine algorithms instantly trigger unusual events to discover trade-related suspicious activities occurring across the businesses in real-time.

Know-Your-Business (KYB) – The financial and other regulated institutions must regularly check on the businesses they are doing business with. Know-Your-Business (KYB) involves business identity verifications for genuine business onboarding. At the same time, the regulated financial institutions must authenticate the Ultimate Beneficial Ownership (UBO) for both individuals and businesses involved in trade transactions.

Sanctions, PEPs and Adverse Media – The compliance officers must screen businesses and individuals against Sanctions and PEP lists. In addition, adverse news about the owners and entities across the press and online media indicates brewing illicit activities somewhere down the line.

Conclusion 

Given the scope plus volume of today’s trade, masking illicit gains with trade-based activities has become easier for the launderers. Furthermore, there are fewer initiatives taken in the TBML AML-CFT methods than in other money laundering methods. It has been believed that the global trade system is so complex – involving many deterrents and regulatory sluggishness – that it has made laundering money for criminals and terrorists more convenient via global merchandising activities.

The unrestrained threat of Trade-Based Money Laundering has given this financial crime an Advanced Persistent Threats (APTs) risk status, which is otherwise mostly used for cybercrimes. If you are a financial or regulated institution seeking AI-Based client behavior tracking, document verification, and suspicious transaction reporting solutions to fulfil your business compliance, schedule a call with the IDMerit AML solution advisor. We offer best-in-class Fraud Protection and KYC-KYB Compliance solutions to businesses worldwide.

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In the past, verification of business entities was managed in-house with lengthy physical background searches unless there was a pre-existing relationship. This opened the door to fraud and bias in the customer onboarding process. The move to digital did not do much to alter the current status quo. Customer onboarding remained in high focus, but Business to Business (B2B) still lagged.

The introduction of regulations and strict guidelines for due diligence made it easier for banks, financial institutions, and businesses to onboard customers while increasing protection for all parties.

Still, fraud increased, and customers’ and business’ data were still at risk. As the responsibility fell to organizations to comply and implement these guidelines, many still overlooked creating effective ID validation systems thus leaving gaps in the onboarding and compliance process.

Why KYC Verification Did not Work for B2B?

Know Your Customer (KYC) in the very name and policies focused on individual customers. This left businesses and other financial institutions to interpret how to treat their business clients. Too many times that meant lapse ID validation and almost non-existent B2B customer onboarding.

Customers and businesses alike paid for that lack of security protocols with increased money laundering activity, fraud, identity theft, malware, and virus attacks, hacked accounts, stolen data, and eventually money. Unless the customer was deemed high risk, global ID verification and document verification services were seen as unnecessary, and basic due diligence was the norm.

For complete customer due diligence, there were four crucial elements for KYC verification.

• ID validation and document verification
• Beneficial ownership identification and verification
• Understanding the nature and purpose of customer relationships to develop a risk profile
• Ongoing behavior monitoring and transaction screening for reporting suspicious transactions and digital identity management

These didn’t take into consideration organizational structure, who were the key decision-makers, and if they differed from the ever-changing signatories. Nor did it consider who had record access, cross-border payments, their existing customers and employees or suppliers.

Adapting the KYC acronym to Know Your Client was meant to be a more inclusive term to cover corporate entities. Sadly, many did not get the memo and B2B customer verification continued to be left up to organizations until regulators once again stepped in.

What KYB does that KYC Verification Cannot Do?

With 2% to 5% of the global GDP being laundered every year and an estimated 90% of money laundering activity remaining undetected, according to the United Nations (UN), it’s clear KYC verification alone can’t get the job done.

Financial institutions are the first to pay the price of the losing battle against money laundering and other financial crimes. In 2016, Financial Crimes Enforcement Network (FinCen) addressed the oversight of KYC and implemented Know Your Business (KYB) to provide the same Anti-Money Laundering (AML) policies and address Combatting the Financing of Terrorism (CFT) laws for businesses.

As KYB or the US Customer Due Diligence Requirements for Financial Institutions (CDD) or the EU’s 5th Anti Money Laundering Directive (5AMLD), was put in motion, it set about increasing fines for non-compliance.

Therefore, ensured some effort was made by all parties to design and execute a KYB verification process. The goal of KYB is to minimize the risk of money laundering and other fraudulent activities, identify Ultimate Beneficial Owners (UBO), and monitor and screen businesses against blacklists and grey lists.

Aside from the basic customer due diligence that is part of the requirements for KYB, businesses are required to provide:

• Company name
• Company address
• Business registration number
• Operational status
• Incorporation date
• Key management personnel

Requirements and policies may vary from institution to business. Some may require additional information in both the KYB and KYC verification processes. Additional Personally Identifiable Information (PII) may include names and addresses of board members and key decision-makers.

Some businesses can demand that your business be AML/CTF compliant before you do business with them. Depending on the nature of your business, Know Your Customer’s Customer (KYCC) requirements may come into play.

After Germany’s Wirecard scandal in 2020, banks and other financial institutions saw the reasoning behind KYCC, but the execution was another matter. Due to some business entities like payment providers having multiple businesses who in turn did business and had multiple customers, it was a nightmare to attempt KYCC without complete compliance of all entities. Listing all Fintech or consulting companies as high risk at the onset seems unfair, but that is just what happens when banks can’t identify who your business serves.

By backing KYCC with AML policies and automation, regulators and implementers were able to get a better handle on KYCC and prevent the creation of more dummy corporations and reduce the likelihood of mislabeling companies as ‘high risk’.

Ongoing monitoring is a requirement of KYC Verification, but for KYB ongoing monitoring appears to be reserved for high-risk entities. Then there is the ongoing issue of tracking down UBO’s which can drag out the corporate onboarding process for 2 to 3 months! These factors create frustration and despondency for financial institutions and their corporate clients.

The Importance of KYB For Financial Institutions

Banks and other financial institutions have always been the centralized hub through which all commerce takes place. They have a massive responsibility in implementing due diligence at every stage of the customer journey. In this digital era, a breach in that financial system can have global financial and security ramifications.

Money laundering and fraud are the least of the potential issues. Banks can become unwitting parties to financing human trafficking, illegal drugs, and global terror. Using enhanced due diligence methods in the KYB and KYC verification process can assist banks in KYCC and lessen the chance of onboarding non-compliant entities.

The finance industry knows well the war it is in. Having been the focus of constant cyberattacks, scandals, embezzlement, and fraud schemes, banks, and other financial institutions recognized the power of KYB and AML/KYC compliance. However, many Small and Medium Businesses (SMB’s) do not. Even some large corporations push aside AML/KYC compliance over the cost of customer onboarding.

Assumptions within other industries end up putting banks at risk. One employer hired on his gut, thinking it is just an entry-level position with no need for invasive background checks. A few years later HR is promoting this employee to a key decision-making position assuming the background check was done before.

We all know Jim so well now. All it takes is a few parties to assume the others are doing their part while they only do basic customer due diligence without document or ID validation.

Protecting the financial industry begins with everyone within and outside the industry doing their part for AML/KYC compliance. Fines for non-compliance should not be the only reason companies seek KYC verification. It should be a moral and ethical responsibility for all companies, from SMBs to large corporations to invest in strenuous KYB and KYC verification services.

Making sure who you onboard are trustworthy is the key to preventing fraudulent activities and strengthening global security. That is why executing an effective KYB and KYC verification process is so important to financial institutions.

The KYB verification process requires business entities to enact global ID verification, behavior monitoring to assess the risk and sustainability of B2B customers and their clients before establishing a business relationship with them.

When businesses and banks conduct ongoing behavior monitoring, they ensure that transactions are consistent with their risk profile. Proper digital identity management ensures employee records, and other key information is secure and kept up to date.

Knowing the business partners and high-risk customers of a business keeps your company’s reputation clean and free from criminal negligence due to enabling the flow of illicit funds.

How to Make Automated KYB and KYC Verification the Norm in Your Business?

Developing your KYB and KYC verification process is a great start in achieving AML/KYC compliance. Sticking to the European Union (EU), UK, US, and other local and regional laws and regulations concerning AML/CFT compliance is a great way to ensure transparency in financial operations. Having ready access to the relevant global watch lists, spam lists and sanction lists helps with ongoing customer screening and risk assessment.

As noted, before, verification for business entities can be a time-consuming process and even ID card verification is not so simple without the right global ID verification system.

To ensure you meet AML/KYC compliance, your KYC verification system must have access to the right databases to be able to quickly validate ID and documents, check watchlists and assess risk. Most identity verification service providers can only provide ID validation for customers, but no means for behavior monitoring nor do they provide document verification services.

The drawback to the do-it-yourself approach when it comes to creating your own KYC verification system is data collection and digital identity management. Aside from using customer information to keep customers abreast of upcoming changes and events, businesses sometimes forget there are also regulations for data handling. Global Data Protection Regulation (GDPR) and California Consumer Privacy Act (CCPA) help consumers retain control over their data.

And now Japan has introduced its version of the GDPR, Act on Protection of Personal Information (APPI) that will have the same far-reaching implications for third-party data providers outside of Japan as the GDPR.

These data regulations and digital identity management should be part of the cost of customer onboarding, especially when dealing with global ID verification. Identity verification service providers also need to cater to mobile ID verification.

This is the one grey area that banks and financial institutions have problems: combining their existing customer onboarding process with mobile ID verification.

Automated customer onboarding systems powered by artificial intelligence can help

Bridge the gap for banks and businesses and deliver an automated KYC verification process that can detect fraudulent information faster than any human ever could. As part of B2B customer onboarding, KYB and KYCC should be done in sync and with flawless online ID verification.

IDMkyX As Part of Your KYB and KYC Verification Strategy

Knowing what to do and how to do it are two very different things and that’s the problem with most identity verification services providers. They claim they know what to do, but either does not know how to do it or do not have the capabilities to do it flawlessly.

At IDMERIT, we know how to create an automated customer onboarding system that checks all the boxes for enhanced due diligence and mobile ID verification ensuring AML/KYC compliance. Our document verification services will work smoothly in the background of your ID validation systems and assist in digital identity management.

Our behavior monitoring system uses biometric data to mitigate suspicious behavior.

Because of the internet, no matter how local your business is, we all end up interacting with someone in another country. That is why global ID verification is part of our online ID verification system.

Using device fingerprinting and IDMsocial, we can even identify bad actors who try to hide behind their screens and fake social media profiles. Our IDMkyX platform, can quickly and efficiently identify various business institutions, beneficial owners and handle automated KYC verification to the highest standard.

IDMtrust can be seamlessly integrated into your existing ID validation systems to assess a customer or business risk.

No matter customer, B2B, SMB, or a large corporation, IDMERIT’s IDMkyX platform has the global reach, technology, and digital identity management systems in place to give your business an automated KYC process that won’t go over the cost of customer onboarding.

Let us prove that we can verify anyone, anytime and anywhere.

Talk to IDMERIT today!

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However, most individuals fail to determine the comparative distinctions between KYC and KYB. To start, KYB (Know Your Business) compliance shares each one of the major requirements found in KYC (Know Your Customer) compliance. They both share the same core objective and that is to follow AML/CTF regulations to make financial interactions safe and protected.

Both of the verification checks are stringent and meet compliance guidelines and, at the same time, they share a unique distinction. The distinction between both is the target that is being analyzed or attributes of that person or organization’s identity . 

What Does KYB Mean?

Also known as Know Your Business, KYB compliance checks seek to identify the veracity of businesses, companies, organizations and, in extended due diligence, monitor their financial transactions over time. These stringent checks verify a  business’ attributes, ownership, and other identifiable information to protect organizations from falling victim to any type of financial fraud. KYB compliance includes business verification which is followed by the submission of the verification data and some monitoring stages that are very similar to the KYC compliance process. The verification information is checked against data pulled from public archives and automated AML databases.

What Does KYC Mean?

Anti-money laundering compliance focuses on individuals who apply to open accounts at banks, financial institutions, or crypto exchanges to verify their financial backgrounds and past histories against any financial fraud/illicit activity to determine a risk score. These risk scores and profiles are extremely useful to banks and financial institutions and are meant to comply with stringent, and growing, AML legislation. 

The compliance and identity industries first focused on KYC, and as regulations increased, the industry pivoted to KYB and business attribute verification. KYC  digitization is more advanced than KYB. As technology and cloud computing became more prevalent, KYC became known as eKYC since its shift into the cloud and SaaS improved efficiency, lessened compliance costs, and took out the manual labor that used to slow down the verification process.

KYC To KYB: A Brief Background

Back before the introduction of KYB or KYC or their digitization, the financial fraud levels reached an epic proportion of total crime. According to the UN’s Office of Drugs and Crime, the global money-laundering rate was 2-5%, annually. There was no legitimate way to control individuals or businesses’ illegal financial interactions and major fraud cases despite the adoption of a few pieces of AML legislation.

In an effort to regulate and control financial crimes, the Bank Secrecy Act of 1970 introduced new AML guidelines, which were later incorporated into the 2001 USA Patriot Act. These guidelines were then embraced in 2003 and the term KYC was born. These guidelines were built to check the financial progression and transactions of individuals. They required financial institutions like banks to keep a diligent eye on all of their customers and follow specific regulatory requirements. KYC compliance proved to be successful however it left a loophole.

This loophole aided businesses’ UBOs and corporate owners. Banks weren’t required to check and verify the partners and representatives of the businesses they worked for so this left a huge opportunity for fraud and illicit activities to go unnoticed. Therefore, this implied that businesses could protect the personal information of financial criminals associated with them and perform illicit exchanges and activities and go unpunished. A famous incident that required an update in KYC compliance laws was the Panama Papers Scandal, which in 2016 eventually led to the birth of KYB compliance.

KYB & KYC: What Is The Distinctive Factor?

KYB and KYC compliance both follow the same causes, that is to regulate financial transactions and keep an eye on any potential financial crimes. However, the factor that sets them apart is their target scope.

● KYB: The regulatory guidelines in KYB compliance are followed by almost every industry as a massive fraud and Ponzi schemes have led to a crackdown on anonymous ownerships or shell corporations. KYB incorporates all business types and structures (S or C Corp) and is well-established throughout most industries including virtual service providers, money service providers, online businesses, the health and wellness industry, non-profit associations, and especially financial institutions/banks.

Business and Ownership Verification

In the standard KYB compliance procedure, businesses and companies are required to verify themselves as legitimate businesses by providing their own information and incorporating documents. Financial activities are then verified along with the identities of the business’ unique beneficial owners or their representatives.

● KYC: KYC compliance regulations require a more thorough verification of identity (depending on the new customers’ risk profile or geographical location). Banks are required to verify all new customers’ identities. Banks and financial institutions of all sizes have become huge proponents of eKYC regulations because it has led to the arrest and recovery of millions of dollars due to fraud and illicit activities.

Fundamental Requirements For KYB & KYC

Since KYB and KYC target different client types, data attributes that are verified are different. To register for verification, the core focus data remains the same, that is financial information and records.

For KYB

Since KYB targets businesses and organizations, its verification process requires information that includes a character report of the unique beneficial owner of the organization and that of all investors that hold a quarter share, each. The verification requirement includes:

●      Business Address

●      Recruitment Reports

●      Business Licence and Registration

●      Identification Documents of UBOs (directors and representatives)

For KYC

KYC focuses on individual customers of a bank that need to verify themselves by submitting identity and address records. These records solidify the financial character of the individual and help the bank to estimate the level of diligence they may require. The verification requirement includes:

●      A PAN (Permanent Account Number) card with a picture.

●      An ID card issued by the State.

●      Any Debit or Credit card issued by a bank.

●      A copy of utility bills such as electric bills with an address

●      Visa/Driver’s License with a digital picture.

KYB & KYC: The Digitization

After their introduction, KYC and KYB both had to go through several stages of experimentation by the financial institutions that employed them. They customized and altered the verification process to their needs but still, KYC and KYB remained labor extensive. To improve compliance, digitization was introduced to lessen manual labor and eliminate the chances of human error.

The digitization of KYB and KYC compliance includes the utilization of new advanced features such as Identity Verification, Virtual Verification, Online submission of verification records, Online Database, and AI-based Diligence. This digitization could undoubtedly forestall any slip-ups and improve the diligence procedure.

The progression in the digitization of KYB and KYC compliance is improving with each passing year as AI continues to get smarter. For instance, AI-based questionnaires aid in the process of business verification and take out the shortcomings and slip-ups that occur when registering new clients. The key elements of KYB and KYC compliance that have permanently been improved due to their digitization are:

AI KYB & KYC Registration

It is now customary for a renowned bank to employ an AI-based verification system that expands the proficiency of the registration process. It additionally decreases the expense that may involve hiring manual labor and cuts down the whole process and speeds things up.

This AI-based verification was first used for KYC compliance only, with the process requiring 25-30 days. Now, the same process is used for KYB compliance as well with the registration and verification procedure cut down to 5 minutes.

E-Archives For Business Registries

Before the digitization of KYC and KYB compliance, the records that were used to verify against the customers and businesses were physical and took up days to get through. Now banks utilize online archives that can store and protect the verification records of up to thousands of customers. This is an improvement that makes the compliance process faster and more efficient.

Advanced Due Diligence

The AI used for KYB and KYC diligence is sharp and precise, therefore improving the process of vigilance. This feature can monitor thousands of customers while efficiently providing information whenever the investigation officer looks it up by a couple of keywords. For instance, a business’s license number can be used to look up the database for that business.

Advanced diligence also includes microservices such as special APIs that can separate and check the information of a unique beneficial owner very quickly instead of taking days. These APIs are equipped for cross-referring to information across different data sets and public records that are filled in.

Virtual Identification For KYC & KYB

One of the major reasons that are causing banks and financial institutions to employ digitized KYB and KYC compliance is the efficiency that they provide. What first required in-person registration, now takes a single virtual call to accomplish. The virtual identification process has also encouraged individuals to register since they are aware of the efficient process.

The whole process can be finished in only 2–3 minutes, depending on how fast the identification software is. This virtual identification process can permit authorities to save and check the authenticity of the information provided by the individual. This process has reduced the potential of human error and cut down the hiring costs for banks.

Key Takeaways

KYB and KYC guidelines are carried out to infiltrate any individual whether alone or related to a business that is indulging in illegal tax avoidance and money laundering activities, while a side benefit for KYB includes the verification of businesses as well.

Financial fraud continues to grow with each passing day, therefore it is necessary for banks to monitor their clients. While they target different scopes of individuals, KYB and KYC follow the same cause. Other than detecting extortion these compliances strive together to make financial interactions, all around the globe more safe and smooth, while diminishing the rate of financial crimes. 

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About IDMERIT

Headquartered in San Diego, California, IDMERIT provides an ecosystem of identity verification solutions designed to help its customers prevent fraud, meet regulatory compliance and deliver frictionless user experiences. The company is committed to the ongoing development and delivery of offerings that are more cost-effective and comprehensive than other solution providers. IDMERIT was funded by experts who have been sourcing data on personal and business identities across the globe for over a decade. This access to official and trusted data throughout the world has become increasingly important as companies find themselves completing transactions across borders as a standard course of business. www.idmerit.com

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