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As the pandemic of COVID-19 hits the business economy, everything is automated and digitized. Dishonest and illegal activities are rapidly evolving in this era of digitization, so does business fraud. Businesses that involve greedy people are in search of new tactics that result in advantageous financial outcomes. There are various different types of fraud that can occur to carry out fraudulent activities such as internet auction fraud, charity fraud, non-payment of funds, reshipping scheme, and over-payment scheme.

About 5% of the gross revenue faces a downfall because of business fraud. Business partners have almost no access to the vendors of the partner company. Know your Business (KYB) plays a crucial role when it comes to cooperative collaborations and Business-to-business (B2B) relationships. Know Your Business (KYB) falls under the regime of AML obligations and standards. Not only trust and reliability but also security is very significant for business partnerships.
What Is Know Your Business KYB?
KYB is the mandatory process enforced by many regulations for the verification of businesses for collaborative corporations. KYB is the best bet to safeguard the interests, credentials, and sensitive data of the businesses. Many regulatory changes in the PSD2, GDPR, and 4AMLD required companies to verify businesses they transact with and their Ultimate Beneficial Owners (UBOs) using KYB.
Any merchant acquirer or financial institution that involves money transfer activities are required to adopt the service of KYB for security reasons. There also exist numerous platforms that offer efficient and accurate KYB services, with which businesses tend to integrate. KYB (Know Your Business) dramatically automates verification processes, which saves a lot more time as compared to traditional verification processes.
Problems of KYB
Beneficial services are often difficult to find. Shareholders can hide their true ownership. The ownership percentage is potentially obscured by complex paper trails. This makes identifying the true as well as beneficial ownership costly and complex. There are no documented requirements for beneficial ownership in some jurisdictions. There still exist such companies that are using KYB just as they are handling KYC using time-consuming intensive processes.

According to a study in the UK, inefficient KYC costs about $47millions per year. The same study also states that in the upcoming couple of months, AMLD4 and AMLD5 will substantially increase their cost. The company structure of every organization is different and also it is changing with time continuously. Due to this fact, companies face difficulty while collecting data. The dataset could be in another country’s office. Data is often inaccurate and old, in a variety of different formats that are hard to accommodate.
KYB and AML Compliance
Know your business (KYB) has undoubtedly enhanced the business to business relationships for having the best of experience with cooperative collaborations. This compliance of KYB with AML is an effective measure adopted by businesses globally to not only fight against a strong battle against fraud but also money laundering is prevented with efficient security measures and with a high rate of accuracy and efficiency.
Cutting Human Resource Expenses
In this rapidly evolving and increasingly digitized world, businesses adopt automated solutions to increase productivity and to reduce operational costs, and cut human resource expenses. The fact that machines are less prone to errors and mistakes, increasing the opportunities for profit with a high rate of accuracy and efficiency. Constant process delay could be harmful to the image of business as well as the relationship between businesses, which could increase the risk rate and decrease sellings. The efficient rate of operational activities is as obligatory as security.

For better engagement, corporative collaboration, and customer due diligence, businesses are enhancing their identity verification services for related businesses. Efficient KYB solutions play a crucial role and trying their best to achieve the benchmark standards which helps to reduce the operational costs. This process involves validating the identity of the business’s owner, the company registration number, and Ultimate beneficial ownership.
Conclusion
To sum up, KYB helps businesses to develop strong and effective business relationships, reducing operational costs, and enhancing the B2B conversion rate, complying with anti-money laundering obligations. This way businesses can prevent themselves from fraudulent and advantageous financial transactions. If KYB service is not adopted by organizations, this can be very harmful to the profile baseline and brands’ integrity. For the assurance of security, many regulations by countries require their businesses to perform KYB service to have reliable collaborations.

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