Why Businesses Need KYB

Author : Emily Clarke | Published On : 16 Oct 2021

Know Your Business (KYB) is a verification process in many global jurisdictions requiring businesses to verify the identities of businesses they deal with as stakeholders, a section of their supply chain, beneficiaries, or other relationships. The verification is part of adherence to anti-money laundering (AML)/combating financing of terrorism (CFT) regulations.

What Does KYB Mean to a Business?

The starting point to know what KYB is by exploring the objective. Know Your Business objective is to meet an obligation for entities to assess the AML/CFT risk created by existing and new business relationships.

KYB process enables firms to examine entities they deal with to determine if they are authentic or if owners use them to conceal their identities for illegitimate purposes.

KYB serves the purpose by focusing on UBO (ultimate beneficial ownership) to conceal the beneficiaries from the financial activities of any suspect business. The reason is that high-risk individuals or criminals can set enterprises offshore to low regulation to transact with genuine businesses at different locations anonymously. That way, they can avoid scrutiny of AML/CFT measures.

Firms must also find out if a business or employees are:

- Subject to international sanctions

- Exposed to political corruption

- Subject to international sanctions

- Exposed to political corruption

- Subject of news reports indicating involvement in criminal activities

KYB Requirements

Specific regulations may vary by jurisdiction, but KYB regulations normally require firms to do proper due diligence. Due diligence involves collecting and analyzing a range of information and data on businesses that they have a relationship with. KYB regulations might require identifying information like:

- Registration documents

- Company address

- Identity of directors or owners

- Licensing documentation

Firms can use a range of formal official and private resources when conducting KYB checks. KYB goes beyond establishing UBO and is more like a continuing AML process. Firms must routinely perform KYB on their business relationships by checking entities against sanctions lists, political corruption exposure, and other indicators of involvement in criminal financial activity. Visit this website if you need to know about "what is KYB ?"

Compliance with KYB Rules

Firms should apply risk-based anti-money laundering programs to comply with the Fincen KYB and similar regulations imposed by global jurisdictions. Firms evaluate the risk level for their business relationships by deploying AML reaction including some or all these controls:

- Due diligence

- Sanctions screening

- Transaction screening

- Adverse media monitoring

- PEP screening

Automated KYB Solutions

Everyone who knows what is KYB also understands that manual collection, analysis, and management of business data takes much time. Automated KYB solution saves time, labor cost and increases accuracy. Integrating technology into a KYB process improves adaptation to regulation changes, criminal methodologies, and the provision of high-standard KYB compliance.

Author Resource:-

Emily Clarke writes about identity verification and business verification service. You can find her thoughts at online id verification blog.