Document verification is used to verify the legitimacy of documents that are either real or forged. Know Your Business (KYB) is verifying the business before working with them. It includes verification of business documents such as name, business license, ultimate beneficial owner, company registration number, address, etc.
Who Needs To Conduct KYB?
KYB is not as popular as KYC, but it’s getting more famous by the day. Document verification is needed for businesses that want to prevent fraud and remain compliant.
Banks, fintechs, and other companies doing business with them need document verification to safeguard their operations. Document verification allows businesses to comply with all legal regulations, including anti-money laundering (AML), counter-terrorism financing (CTF), and know your customer (KYC).
The following are the companies that need KYB verification:
- Financial services
- Security brokers or dealers
- Future commission merchants, etc
Any business can benefit from KYB to prevent fraud and increase trust. Companies stand confidently when they know that all their business partners are legitimate.
Procedure To Conduct KYB Document Verification
By conducting thorough KYB document verification, businesses make sure these two things
- That they are working with a legitimate firm that is not fake or just exists on paper.
- And the people involved in the business are not involved in any wrongdoing or crimes.
The process is as follows:
The first step is to know that the business with which the company will work exists in the real world. So, document verification checks that all the business kyc documents are legitimate and all financial activities are real. The document verification ensures that the business income doesn’t fund any illegal activity.
Business verification is completed by requesting and verifying official documents that are:
- Company’s name and address
- Company’s registration number
- Details about the company’s ownership structure
Verify The People Behind The Business
Once a company is confident that the business they will work with is legitimate, they need to take a look behind the scenes. Companies verify each stakeholder, known as ultimate beneficial owners (UBOs), by confirming their identities. The ultimate beneficial owner is the owner of the business or anyone with 25% or more shares in a company.
During KYC document verification, it must be ensured that all UBOs are not involved in any fraudulent activity, are not on any sanction list or watchlist, or are not politically exposed persons (PEPs). By verifying their identities through KYC document verification, organizations safeguard their businesses from exposure to bad actors and scammers.
Simplifying Know Your Business (KYB) Verification
KYB verification is important for all companies working with other businesses. But the document verification in KYB is time-consuming, complex, and costly due to the following challenges:
- A large number of documents required to verify
- Multiple databases and lists are required to verify against , so it’s hectic and time consuming
- It is challenging to compile and understand multiple KYB results into one
For this type of document verification, businesses must use automated KYB tools that run, collect data, and verify companies or beneficial owners, and, if necessary, conduct manual investigations.
KYB vs. KYC
Both are verification processes used to prevent fraud and illicit activities and to enhance trust and confidence. But the main difference is that knowing your business is used to verify businesses and the people behind them, and know your customer is used to verify the customer’s identities. The difference is in the documents needed for both verifications.
For KYC, companies require
- Date of birth
And for KYB verification, business documents such as a company’s license, registration number, name, and address are required.
Know your business is not limited to some specific companies or fintech. It’s required for all the companies that work with other businesses. KYB document verification prevents identity theft, money laundering, and other financial crimes.
While KYB is time-consuming, the process can be made as frictionless as possible by using automated tools.
How To Automate KYB Document Verification Process?
No business wants to work with a dishonest person. So, a proper set of KYB requirements can keep businesses safe and operational and prevent fraudsters and money launderers. Performing enhanced due diligence on the identity verification process can seem expensive, but technology has automated the process.
Document verification in business is used to check the legitimacy of a firm and the people behind it. The verification process ensures that the business is legitimate and prevents financial crimes.