Onboarding a shady company is a serious financial threat to the business world. A company may be involved in money laundering, bankruptcy, corruption, terrorist financing, and tax evasion. When the cooperation onboards such a company, it may affect the financing and reputation of business partners. If the company is not complying with anti-money laundering AML and international standard regulations, the business partner may face fines, sanctions, and other legal consequences. For this reason, companies must rely on business verification while establishing financial bonds. 

KYB Know Your Business

Know Your Business is the complete investigation of the company to determine its legitimacy, as it is necessary in building legal bonds. The KYB solution is crucial in evaluating the financial status of the company to enhance security in future transactions. It is considered a business screening service to identify potential risks and detect red flags. If the business makes bonds with shady companies, the KYB solution helps in constant monitoring to keep every transaction on track. 

Business Verification Process

The business verification process is a unified solution to understand the company’s legitimacy and financial performance. The business information is gathered and reviewed to validate its authenticity. This process consists of the following steps:

• Information Collection

The first step involves the collection of business information, including its name, physical address, contact number, registration number, tax reference number, country or state, and website. The gathered information is rigorously examined to assess the company’s credibility. The article of incorporation, proof of address, tax record, and other industry-specific documents are collected. The invalid or missing document raises red flags for the partner companies. The company needs to collect financial documents such as balance sheets, cash flow statements, and income statements specific to the business.

• Documents Screening

All the gathered documents should undergo screening against the official databases of government and legal entities. The data screening step reveals the red flags and alerts the business partners. The business documents are available on the country’s public registry, but sometimes, they are paid depending on the jurisdiction.   

• UBO Verification

Ultimate beneficial owner UBO is an entity behind a business holding a significant percentage of a company’s assets. UBO has high voting rights in decision-making, so his role is crucial to company performance. In business verification, it is necessary to identify UBO and assess its legal status. For this purpose, the UBO information, including his name, address, contact number, email ID, and photocopies of his driver’s license and passport ID, are collected. The corporation must collect and screen all industry-relevant documents of the UBO against official databases. Additionally, the UBOs’ details of companies are not given in public databases, but the shareholders’ details are given. In the case of providing shareholders details, an organization must determine their legal status.     

• Adverse Media Screening

Adverse media screening, also known as negative media screening, is a critical component of business verification. This screening involves gathering business information from multiple resources and checking it in cross-reference to databases. The media is actively identifying the company’s involvement in financial crimes. It helps businesses to detect false negatives and onboard trustworthy companies.

• AML Checks

The local and international regulatory bodies set standards to comply with regulations. Businesses are required to comply with anti-money laundering (AML) regulations. The international bodies enforced sanctions, penalties, and other sentences against companies that breached the regulations. The Know Your Business Verification involves applying the AML checks over the business in question. It evaluates whether the business is high-risk or medium, so the partner company plans a risk management strategy. 

Additionally, the background checks are applied over the company to identify potential risks. If the company has any criminal record or black money history, it alerts the business partner. In this way, evaluation of a company’s history is crucial in effective risk mitigation. 

• Enhanced Due Diligence

Making the financial bond with high-risk businesses requires enhanced due diligence EDD. EDD involves the constant monitoring of the business partner to stay vigilant about its financial performance. So, the partner company keeps a record of financial transactions and reports suspicious activities to relevant authorities.  

Ensure Financial Security

The business world must rely on efficient business verification methods to ensure financial security. Onboarding the legitimate companies is possible through rigorous business due diligence. An organization must be active from collection to screening of the business data. The  Know Your Business Solutions detects the red flags to alert the business partners and provide ongoing monitoring to maintain financial relations with them. In the long run, KYB helps to build healthy financial relationships in the market.