Four ways to deliver effective know your business (KYB) checks
With many banking services now available online, fraud - whether by an individual or a business – is on the increase.
Unfortunately, those in financial services are putting themselves at increased risk of fraud because too many put little thought into know your business (KYB) screening, since all they care about is the KYB compliance box being ticked.
This could mean some financial institutions invest the bare minimum in KYB, which might be enough for the regulators, but not for their requirements, while others could be investing too much beyond what they need and regulations require.
When undertaken successfully KYB screening enables financial organisations to fully understand the risks posed by new and existing business customers and suppliers. This is important because fraud is frequently committed by shell companies or organisational structures that just don’t exist in reality, so KYB checks can greatly reduce the opportunity for that type of fraud from occurring. Such an approach will also help to prevent financial crime, including money laundering and terror financing, which could result in considerable reputational damage.
To deliver effective KYB screening it’s important to:
- Understand the difference between KYB and KYC checks: The main difference lies in the information required to verify identity. With KYB you don’t verify a name, address, date of birth, for example, as is carried out for an individual, although this data is obviously important for both KYC and KYB checks.
- Have knowledge of what’s possible with KYB checks: For a reliable and cost-effective approach to KYB screening it’s prudent to cross-check a company name, address, business registration number, and operational status. Those who want to deliver a more in-depth KYB screening process, which includes identifying any person with significant control – the beneficial owners, the company’s annual returns, or financial statements – must consider the benefits against the often significant cost of doing so.
- Access global business registry and regulator data streams: It may seem obvious but for effective KYB screening financial institutions need to access to leading business registry and regulator data streams, such as Companies House data in the UK. They should acquire data from these sources, not only in their own country, but globally to ensure best practice screening and protection.
- Obtain a full service SaaS eIDV platform: The growth in fraud has made software-as-a-service (SaaS) electronic identity verification (eIDV) platforms that integrate KYB and KYC functionality increasingly popular. The platform sourced must have access to reputable global data streams, such as government agency, credit agency and utility records, to match the name, address, date of birth, email, or phone number, to confirm ID, along with recognised sources of business data, such as from a business registry or regulator. Mortality screening checks should be offered by the platform, along with the ability to highlight any errors in the data, such as a typo in the address, which can easily be corrected. It should also have access to worldwide sanctions data and offer adverse media checks of individuals and businesses. As well as providing a full ID verification service, such an integrated eIDV platform with all this data and functionality in one place provides economies of scale for those who use it.
With fraud on the increase financial institutions can no longer tick a compliance box with KYB. Moving forward, it’s advantageous that they undertake KYB checks while using a full-service SaaS eIDV platform because of the protection and cost benefits it offers.
This guest blog was written by Barley Laing, UK Managing Director at Melissa. To learn more about Melissa, please visit their LinkedIn and Twitter page.
Authors
Barley Laing
Barley Laing joined Melissa and set up the UK office in 2014 during an exciting expansion phase of the California headquartered company.