KYB Verification Process and Its Difference with KYC Verification

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The phrase "Know Your Business" (KYB) describes the thorough investigation of a company's dealings with another business. Any prospective business client must undergo tests to verify their identity and authenticity in accordance with AML requirements. With this, attempts to finance terrorism or money laundering are prevented.

Though there are some similarities between the Know Your Business (KYB) procedure and the KYC for specific consumers, there are differences in the specifics. Corporate clients typically engage in more transactions per year and spend more money, along with taking on more risky situations.


What Makes KYB and KYC Different from One Another?

There are several similarities between Know Your Business (KYB) and Know Your Customer (KYC) protocols. Their primary goal is to adhere to AML standards in order to protect financial transactions and stop money laundering activities. The type of consumers that a firm deals with makes a distinction between them.

A publicly accessible customer knowledge base was reported by more than 70% of respondents in Poland between 2019 and 2020.

When the client is an identified individual, KYC requirements and processes are appropriate. In addition, KYB standards have been designed to deal with situations where the client is any kind of corporate or business entity. Any business providing B2B services will be required to follow these KYB regulations.


How Does KYB Safeguard Your Commercial Interests?

Any biometric identification service may have Know Your Customer (KYC) services as its primary goal, yet the same set of solutions can also be used to verify the legitimacy of any business entity. Banking firms managing funds from a sizable customer base and business entities greatly benefit from these KYB services. Banks, brokerage houses, and dealers of investment in various institutions need to be very watchful of any company that wants to work with them.


Major Processes of KYB

For organizations to successfully adopt a KYB programme that detects and classifies high risk consumers, the following crucial processes must be put in place:


Collection of Data

Organizations must carefully collect data and integrate it into their processes even though the specific information they collect may vary from region to region. The registration number, registration paperwork, license documentation, company name, company address, company status, and director/owner identities are just a few of the pieces of information that can be utilized to locate and confirm an accurate company record.


Ownership Percentages and Structure of the Company

Organizations must identify the entities or people who are directly or indirectly interested in an ownership position. Organizations may have numerous owners, each of whom may have various rights and obligations, including more influence over decisions or greater financial rewards.

Identification of the business's ultimate owner and any significant shareholders is required by KYB checks. Business addresses, licenses, and registrations, as well as the identification papers of the actual business owners, should all be checked for accuracy and reported.


Verifying the Ultimate Beneficial Owners

A person who owns or controls more than 25% of the voting rights or shares in a legal organization is known as the ultimate beneficial owner. They have the authority to exercise considerable control or influence over the corporation and have the power to appoint or dismiss the majority of the board of directors.


Identifying the Company sources

These KYB checks may involve consulting the institution's internal databases, public databases and datasets, government registers, and customer-provided data. Nowadays, a lot of KYB procedures and tests are computerized. 

Initial inspections are crucial when beginning a new relationship, but continued monitoring is also crucial as the partnership grows. Similar to KYC, transactions should be watched over and anomalous or high-volume ones should be identified.


Checking Ultimate Beneficial Owner Personnel for AML/KYC Violations

All people found to be the ultimate beneficial owner must go through extra AML/KYC checks. The completion of customer due diligence and the identification of the UBO are made possible thanks to Know Your Customer (KYC) processes and sanction checks. 


Observing KYB Regulations

Organizations must use an AML framework to fall in line with KYB laws and other regional legislation of a similar nature.According to a survey of risk management professionals, business interruption, which include supply chain disruption (BI), will be the top risk for companies in the United States in 2022. Nearly 50% of the respondents saw BI as a significant danger, and 37% thought that cyber incidents put firms at risk. Businesses should evaluate the risk posed by their commercial relationships and put in place an effective AML control, which includes:


Monitoring and Screening of Negative Media

Companies should keep an eye out for their participation in unfavorable or negative news reports that could point to their involvement in unlawful behavior. Continuous monitoring should be done using both offline and online sources, including classic screen and print media.


Monitoring of Transactions

A corporation may be engaged in laundering money or terrorist funding if certain transactional patterns are present. Transactions with high-risk nations, large numbers of transactions, or unusual regularities are frequently warning signs of money laundering.


Screening for Sanctions

Companies are required to conduct sanctions screening on businesses and their workers against lists including the EU, UN, and OFAC sanctions lists.


Due Diligence

To develop and verify UBOs, organizations should conduct adequate due diligence on the businesses with which they have ties. Companies should perform heightened due diligence in areas with elevated AML risks, subjecting firms to higher levels of AML inspection.


Screening for PEP

Political corruption exposure increases the danger of AML for businesses. As a result, businesses should undergo screening to determine whether they are politically exposed persons (PEPs).



Since there is always a chance that money will be laundered, failing to comply with your KYB verification duties could result in severe penalties. Biometric verification systems can quickly identify any attempt to falsify ownership structure or identification documents thanks to machine learning techniques. False credentials or private details about the top management, which is prevalent in Shell organizations with complex management systems, can also be easily discovered, especially in the year 2023 with the use of online verification services. Ensure that your KYB checks and business operations are up to date at all times to stay compliant and avoid having your company exploited as a front for illegal activity.

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