5 Steps Of An Effective KYB (Know Your Business)
What do you know about the businesses that you are working with? Your partners, clients, suppliers? How can you make sure that they are real companies but not shell companies? Where do they get money from? Where does their money go? What are the financial risks of doing business with them?
In order to answer those questions Know Your Business (KYB) practice was created.
KYB is a procedure that is a part of due diligence performed on all businesses that your company has a relationship with. Performing such control is mandatory for financial institutions, credit institutions, auditors, external accountants tax advisors, notaries, trusts, estate agents, and gambling services according to AMLD5.
5 Steps Of An Effective KYB
- Application form.
As a first step, the customer has to complete a basic application about him/herself and the company.
- Company documents.
Documents that verify the registration of the company should be provided by the customer.
- Ultimate Beneficial Owner (UBO) identification.
UBO is someone who owns 25% or more of the company. These people have to complete the Know Your Customer (KYC) procedure. This step includes document checks and AML/PEP screening.
- Purpose and nature of the relationship.
The source of income and the purpose of the business relationship should be identified.
- Ongoing monitoring.
After the initial KYB procedure, ongoing monitoring has to be performed. This includes assessing the transactions, continuously screening against AML blacklists, and keeping the information up to date.
2 Ways To Perform KYB
As with KYC, there’s always a choice either to build an in-house verification solution or outsource to KYB service provider. Doing it manually is usually a lot more expensive as it requires paying salaries to verification experts and compliance officers, building an IT infrastructure, compiling blacklists, and lists for Adverse Media Screening. Additionally, if done manually, there’s a high chance of false positives and a risk of performing KYB not in accordance to some regulations.
It is essential to keep the standards high as inefficient KYC, and KYB processes cost the average bank £47 million a year.
The easier, safer, and cheaper way is to subscribe to a third-party solution. Many of the KYC and AML service providers such as BASIS ID also offer KYB procedures.
“The move to subscription-based, browser-delivered approaches has allowed companies to efficiently acquire new tools and shift most of their IT spending to operating expenditure,”
comments Yoav Vilner, one of the top FinTech bloggers.
We are seeing a trend where even big corporations are outsourcing KYB and KYC by using a subscription-based identity verification software.
Doing so will ensure that providers take care of all of the compliance issues, make sure that your customers have the easiest possible onboarding and you have the lowest possible risk of financial fraud.
Being Compliant With BASIS ID
BASIS ID, one of the best KYC software solutions, which is famous for its seamless onboarding, has recently launched a KYB service as well.
BASIS ID offers full legal compliance across the world while efficiently fighting fraud and mitigating any risks by performing comprehensive due diligence.
BASIS ID has managed to create a smooth KYB experience, in which users provide all of the data at once. Some of the data is also automatically requested from the government databases, making it very reliable. This also allows for ongoing monitoring after the initial onboarding.
BASIS ID makes KYB automatic meaning that you don’t need to hire verification specialists. Furthermore, by removing false-positives BASIS ID allows you to onboard customers who otherwise could have been rejected while reducing the possibility of risky partnerships.
Automatic Vs Semi-automatic
One of the key features of BASIS ID solutions is that it makes KYB even easier for your clients by making it fully automatic. In many countries business is only required to enter the country, the name of the organization, and its registration code. Then BASIS ID automatically pulls all of the necessary information from official sources and performs due diligence without any other user input.
For countries where this feature is not supported, BASIS ID offers a user-friendly widget that allows users to upload all of the necessary documents in one place. Although this option is not fully automatic, it usually takes only a few minutes for a user to complete. Take a look for yourself. Сюда можно гифку с флоу
How To Start Using BASIS ID In 4 Simple Steps
- Integrate the widget with a few lines of code.
- Your customers either use a fully automatic process only entering the company’s name and number or semi-automatic process uploading the documents through the widget.
- BASIS ID performs verification of the documents, UBOs and runs AML screenings.
- You can view all of the applications in a simple to use data management platform.
One of the key features of this solution is that it doesn’t only provide a binary answer (user accepted or rejected) but also gives a risk score that is calculated to bring the risk of any kind of fraud to the minimum while reducing the number of false positives.
BASIS ID always strives to optimize customer spending by creating an extremely smooth onboarding, making the churn rate as low as possible. BASIS ID also uses different tools such as retargeting to lower the bounce rate.
KYB solution is also easily customizable and BASIS ID can quickly create a personalized flow for a company depending on their risk strategy while being compliant with all legislations.
It is crucial to know businesses that you are dealing with and usually performing manual due diligence is not enough and costs lots of resources. Most of the time businesses prefer to outsource both KYC and KYB to service providers. This saves financial resources, provides better customer experience, and mitigates any risks of financial crime.