Know Your Business (KYB) is an important due diligence process that can provide valuable insights and advantages for law firms, financial businesses, and property professionals. KYB is similar to the more familiar Know Your Customer (KYC) process used in regulated industries. KYB involves gathering and analysing information about a company, which involves establishing the structure, ownership, purpose, and activities of a given company and is a key component of Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) regulations. Legally required by various international and national AML laws, KYB verification measures are essential when establishing a business relationship with a corporate client. Typically, this involves following specific CDD procedures in accordance with AML regulations.
What are the challenges with KYB checks?
However, KYB presents challenges for law firms. One of the main challenges is the collection of accurate data, which can be difficult to gather for compliance professionals.
To overcome this challenge, firms should take a proactive approach to KYB. By treating it as an activity that adds value, rather than just a compliance exercise, law firms can use KYB to gain a competitive advantage. For example, by gathering as much data as possible in the first interaction, law firms can better understand their clients’ needs and tailor their services to meet those needs.
KYB can also provide a competitive advantage by helping firms identify potential risks and compliance issues. With the right information and a detailed insight into a company, firms can spot red flags at an early stage which can indicate risks associated with working with hat particular client.
Continuous monitoring of business activities and changes in ownership structures can help identify potential compliance issues and ensure ongoing compliance with AML regulations. To make the most of KYB, law firms can leverage technology to streamline the process. For example, with the use of automated KYB software firms can easily collect and analyse data, reducing the time and resources needed for manual data collection. They can also use advanced KYB tools to identify trends and patterns in the data, helping them better understand how the company is structured and the involvement from other individuals and subsidiaries.
Automated vs Manual KYB checks: Which should you rely on?
The KYB process can be both automated and manual, and each approach has its advantages and disadvantages.
Automated KYB checks
Automated KYB processes use software solutions such as Verify 365 that can quickly verify companies and individuals in real-time while ensuring compliance and seamless onboarding. Automated solutions can screen through vast amounts of data and match it against watchlists, sanction lists, and politically exposed persons (PEP) lists. Automated KYB processes are fast, efficient, and can reduce errors caused by manual data entry but also access ‘live data’ in a format that is digestible and useful.
Manual KYB checks
Manual KYB processes, on the other hand, require human involvement, including a lot of input from fee earners and compliance officers, who can analyse the collected data and identify any compliance risks. Manual KYB processes can account for the complexity of certain company structures and industry specifics that might be challenging for automated solutions to handle. However, manual KYB processes can be time-consuming, error-prone, and require significant resources to manage.
Hybrid KYB checks
Hybrid KYB approaches are a combination of automated and manual KYB processes. They leverage the strengths of both approaches to offer tailored solutions to meet specific compliance needs. Hybrid KYB approaches can provide a higher level of accuracy and reduce false positives, which can be a problem with automated KYB processes. Verify 365 uses an hybrid approach to with its KYB Concierge Service.
Verify 365 KYB Concierge Service
Verify 365’s KYB Concierge Service is a hybrid approach to KYB that combines automated and manual efforts. This approach is used for jurisdictions where live data cannot be found completely automated, such as Turkey, and for companies looking for a more detailed insight.
The KYB Concierge Service utilises expertise in KYB through business analyst who compiles an enhanced report based on both automated and manual efforts. The analyst can account for complexities and provide a tailored solution that meets specific compliance needs.
Automated KYB processes are fast and efficient but can sometimes jurisdictions that are not as well accounted for can produce false positives or miss certain complexities. Manual KYB processes can account for these complexities but can be time-consuming and require significant resources.
The KYB Concierge Service leverages the strengths of both automated and manual KYB processes to provide a more accurate and efficient solution. The service uses automated processes to collect and screen data, but also provides human intervention from a business analyst to analyse the data and identify any compliance risks.
How Verify 365 KYB works
Verify 365 offers a dashboard interface that can verify companies across the world. To begin with, the firm needs to have the basic details of the company, including the name, company number, and jurisdiction in which the company is registered. These basic details are necessary for the automated checks performed by the system.
The dashboard interface enables users to easily input and manage company information, including documents, questionnaires, and additional information about ultimate beneficial owners (UBOs), shareholders, and representatives. This information can be uploaded to the system manually or through API integration, depending on the firms preference.
Verify 365’s dashboard interface provides a user-friendly experience, allowing firms to easily navigate the system and view all the information related to their company verification in one place. The system also provides updates on the status of the verification process and any necessary follow-up actions required.
The KYB verification process involves 5 steps:
Collecting company data – Firms can configure the required levels of verification and data to determine the types and quantity of required information and documents. Using the live access KYB dashboard interface, firms can select the different reports, documents and information that’s required. This information is instantly available through the automated KYB software.
Obtaining a company report – The firm can download the ‘live access’ report with all the automated checks performed, all information from registries, documents, and questionnaires, the company structure, and officers, UBOs and corporate documents, and confirmation of PEPs/sanctions for the company and the individuals concerned.
KYC verification of officers or shareholders– Based on the findings from the reports, the firm will want to carry out additional checks on the UBOs, shareholders, and representatives in the system, which includes automated KYC checks verifying the identity with the use of biometric ID and liveness checks, screening against sanctions lists, global watchlists, PEPs lists, adverse media, etc and verifying the source of funds.
KYB Concierge Service – Should further information on the company be required or the KYB Concierge Service utilises expertise in KYB through business analyst who compiles an enhanced report smoothing any complexities and providing a tailored solution that meets specific KYB compliance needs.
What are the advantages of using Verify 365 KYB checks?
A company’s reputation is crucial to its success, and having a good reputation can help build trust with stakeholders and attract new customers. Before doing business with other organizations, it’s important to ensure that they have a good reputation to protect your own company’s reputation and mitigate the risk of financial crime.
By implementing KYB policies and using Verify 365’s solution, firms can ensure that they only collaborate with companies that have a good reputation, reducing the risk of negative publicity, legal consequences, and financial crime. The KYB verification process involves collecting and verifying information about a company’s background, reputation, brand image, and ultimate beneficial owners (UBOs), which provides vital insights into the company’s integrity, financial stability, and risk of financial crime.
Implementing Verify 365 KYB solution can help firms accelerate and optimise their processes and workflows when doing business with other companies. KYB processes involve collecting and analysing vast amounts of data on business partners to verify their identity and ensure compliance with international regulations. This allows businesses to quickly know the identity of their business partners and adopt secure control methods to mitigate the risk of financial crime.
With the use of advanced technology, and comprehensive data sources, Verify 365 can help reduce costs and simplify compliance tasks by automating repetitive manual processes, such as data entry and KYB/KYC verification.
Mitigating Risks and Ensuring AML Compliance
Verify 365’s KYB solution offers a range of automated and manual checks to ensure that businesses comply with AML regulations and avoid working with high-risk clients.
By performing sanctions screening checking thousands of lists on an ongoing monitoring basis, verify 365 can help ensure your firm do not work with individuals or entities that are on sanctions lists. This automated check helps to prevent businesses from inadvertently engaging in financial crime and violating international sanctions regulations. By providing the required information, Verify 365 can help firms prevent fraud and eliminate risks.
Get in touch
Don’t let the risk of financial crime compromise your business. Get in touch to learn how Verify 365’s KYB solution can help your business comply with AML regulations, avoid high-risk clients, and safeguard your reputation.
Our all-in-one solution combines automated and manual checks to ensure that you have the information you need to make informed decisions about your business partners. With Verify 365, you can reduce the risk of financial crime and protect your business from reputational damage.
Book a demo today to see our KYB solution in action and take the first step towards a more secure future.