HomeBusinessA Look at KYB Checks: What are They and How Do They...

A Look at KYB Checks: What are They and How Do They Protect Businesses


Know Your Business (KYB) does not differ much from Know Your Customer (KYC), the basic difference between both is that KYB focuses on suppliers and companies while KYC focuses on clients or customers. For successful B2B relationships, the companies need to perform KYB checks to ensure that the companies they are transacting with are authentic and not a fraud. 

What are KYB Solutions?

KYB verification is the business’s AML compliance that obligates the companies to protect their interests when they are going to carry out business with other companies. The companies must be aware of their income if it is being misused by the shareholders, corrupt business owners, or money launderers. To check this, KYB applications are required.

They determine whether the corporate sector is dealing with a legal company or a shell company. What company verification does is that it verifies the company’s information and its potential clients. Moreover, it verifies the personal details of companies’ higher management which actually manages the tasks of that client company.

Besides the legal obligations, companies must be aware of the UBOs of the company they are going to do business with. What shell companies are doing these days is that they hide billions of dollars from the legal taxes, which then fall into the hands of those who already have a strong burden of taxes on their shoulders. Performing business with such entities is highly risky as it would undermine the reputation of one’s company. So, it is mandatory for the company to carry out UBO checks through Customer Due Diligence for verifying companies. 

The Procedure of KYB Checks

To comply with terrorist financing as well as Anti Money Laundering, the companies need to adopt Know Your Business solutions. Whether it is a KYB procedure or KYC, both help the companies in preventing terrorist activities and money laundering crimes and to better comply with the international Anti Money Laundering regulations. 

Any company fulfills the KYB requirements by getting identity documents from authenticated sources and then verifying that information whether it is authentic or not. The documents include the business register of the company and all the identities of UBOs as well as shareholders who are having a share of 25% or even more than this. 

Once the information of identities is verified, the company keeps a check on the activities of the institution to check if there are any risk profiles of the partners. The main purpose of doing all this is to identify as well as evaluate if there is any kind of suspicious captivity carried out. Know Your Business protects the companies from even accidental terrorist activities and money laundering, thus keeping them away from unwanted fraud. 

Automated KYB Compliance

Whether it’s verifying the identity of a business’s owner, examining the documents and ownership structure, or identifying the UBOs, when done manually is a time-consuming task. So, the businesses that want to better comply with the AML regulations, need to adopt KYB processes that are automated. The automated verification solutions not only monitor and control the businesses automatically but also makes sure that the companies remain compatible all the time. The automated business verification services

validate the company’s information using APIs. Besides the authorization code of the business, the digital kyb solutions also gather important information for the company. 

Businesses that Require KYB Checks

The financial institutions which are dealing with the money transfer such as banks are required to perform the KYB procedures for verifying businesses. They must analyze as well verify the companies and financial details of their partners before they start any kind of business with them. This is the only way that any business can protect itself from any kind of document fraud and ensure secure transactions. Another reason why businesses need company verification is to ensure that they comply with AML or “Anti Money Laundering” regulations. Companies that follow AML compliance protect themselves from heavy fines and also build their brand image in the market.

Final Thoughts

Whether it is Know Your Business or Know Your Customer, both have the same purpose which is to understand the risk that the ongoing or the new company and client could pose. For a better understanding of the risk profile of any company, MIRO’s are required to understand the individuals who are responsible for that business and those who would be the Ultimate Beneficial Owners. They must know that the client or the business has any previous sanctions, and if yes then by whom. They must understand who are the Politically Exposed Persons and if there are any bad media that would surround the company or that business. And this all can be done by performing KYC and KYB checks.

Blogger By Passion, Programmer By Love and Marketing Beast By Birth.

Related Post

How to Compare Home Loan Interest Rates and Find the Right Lender

With so many banks and financial institutions offering different home loan interest rates and terms, figuring out which one is the best fit can take...

How to find the best broker for futures training?

The process of studying and developing information and abilities relevant to trading futures contracts is referred to as futures training. Futures contracts are financial derivatives...

5 Reasons Reusable Pallet Covers Are Changing the Packaging Game

In Logistics and distribution, the push towards sustainability and efficiency has never been more critical. As businesses across the globe strive to minimize their environmental...

Most Popular