What is KYB (Know Your Business)
KYB, or know your business, similar to know your customer which are used for verifying customers identities, is a tool commonly used by companies to verify the businesses they work with. Know your business, also known as corporate KYC, is the process of verifying the legitimacy of another business. KYB is an offered solution, which is primarily used by businesses and financial institutions to assess the risk of working with customers, suppliers, and borrowers, therefore empowering them to take informed decisions.
Know your business reports enables obligated entities, assess the anti-money laundering and counter financing of terrorism risk that new and existing business relationships pose. It provides business scrutiny solutions to firms, which enables them to determine whether the entities they are doing business with are authentic or not.
Primarily, a KYB should focus on ultimate beneficial ownership (UBO), in order to reveal who is benefitting from their financial activities. This allows firms to establish that whether a business, or its employees, has been engaged in any kind of unlawful or criminal activity, and are authentic individuals or not.
KYB Related Information
In order to establish the beneficial ownership, KYB regulations may require identifying information such as
- Company address
- Registration documents
- Licensing documentation
- Identities of directors and owners
- Identities of directors and owners
In addition to these, firms may refer to a range of various other resources for conducting the KYB checks. This is done through scrutinizing the publically available government registries and records and global corporate registries. Furthermore, it may be necessary to collect official materials such as passports, driving licenses, and bank statements, along with proofs of addresses and date of birth.
Advantages of KYB
Along with the transparency a KYB offers to firms, it comes with various other benefits:
- Legal compliance: Firms that implement KYB processes are ensuring they meet compliance obligations.
- Less money laundering: Benefitting the entire business community, KYB process makes it harder for fraudsters to launder money and carry out other financial crimes such as terror financing.
- Lower risk of fines: Companies that comply with KYB requirements are at less risk of fines than companies that don’t. Therefore, preventing unwanted to outflow of funds..
- Less corruption: KYB eventually results in transparency, which means corrupt activities become hard to hide..
- Secure business relationships: KYB gives business verification methods a new sense of authenticity and eases the lengthy business operations, ultimately increasing sales and nurturing business interest amongst both parties.
- Enhanced B2B conversion rates: KYB is a quick and easy way to create positive impressions on your partner organizations. By running a series of identity checks, the business is all set and ready to collaborate, as it creates trustworthy relationships between both parties.
- Reputation protection: With an elaborate study of the internal environment of a company, a KYB report confirms the authenticity and legal status of a business.
Conclusion
To conclude, it can be said that KYB checks are essential to on-boarding, and monitoring corporate customers, by giving a clear inside-out view of a business.
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