Effective KYB to improve business-to-business transactions

In relationships established between two companies (B2B, Business to Business) applying verification protocols known as KYB (Know your business) is essential.

Aside from certifying the company’s current status, this procedure certifies whether it complies with all legal standards in relation to laws against money laundering or financing of criminal activities.  It is also a mechanism to prevent fraudulent business practices and corrupt operations.

These verification processes are similar to the well-known KYC (Know Your Customer) but require greater complexity in the verification methodology.  KYC verifications tend to be based on basic analyses of a person’s identity through key data, such as address, paychecks, or identity documents; focused on assessing the level of risk to access a service, like for example opening a bank account, etc.  The KYB protocol, on the other hand, can be a lengthy and costly process involving the exhaustive examination of a great deal of data that is not always of public domain.  It involves digging deep into the corporate structure to find out exactly what the financial status is or who the Ultimate Beneficiary Owner (UBO) is. In addition, the whole KYB process can also involve a multitude of small KYC verifications.

KYB, Know your business: it’s much more than collecting data

An effective KYB strategy must be able to check from the most basic company information, such as legal name, date of registration or contact information, number of employees or field of activity, to data concerning taxation or ownership of real estate or movable property.  It will also delve into the existence of any open litigation; what is the cause, who are the parties involved, the aggregated total amounts claimed if any, as well as debts to third parties or with the public treasury.  In order to discover the whole organization chart of the corporation before starting the contractual relationship and carrying out the transaction, everything must be scrutinized, from the management body to the individual shareholders.

Achieving a good KYB rating implies important benefits for companies.  Generally, companies avoid doing business with shell companies or companies that do not comply with all AML (Anti Money Laundering) regulations and, ultimately, it will be key to ensure the reputation and credibility of all parties.  Correctly identifying the businesses with which a transaction is initiated is vital to reduce risks, but also, eventually, to attract new business contacts.

Digital onboarding for companies, as rigorous as onboarding individuals

Not all companies are familiar with these strategies and, nowadays with a remarkable growth of the digital ecosystem, there is still room for improvement in B2B.  Companies, especially financial institutions, usually redouble their efforts to provide a smooth and digitalized onboarding to their new users.  In comparison, the process of onboarding a new company is often burdened with obstacles.  Also, electronic payments with private customers are more than widespread, but this isn’t so among companies.  There is necessity to transfer the technology and the forged maturity in business-user relations to B2B.  Taking care of inter-company relationships from the start with efficient KYB systems, would streamline operations and encourage expansion.

Companies should rely on qualified entities that offer the most advanced technology at the service of an agile and secure KYB strategy, such as TrustCloud; which turns lengthy corporate onboarding procedures into fully automated workflows. TrustCloud KYB verifies a company’s complete information, cross-checking extensive databases thanks to artificial intelligence; it improves transparency and offers a trusted experience throughout the verification process, allowing even the notarization of powers of attorney to be streamlined.  Company onboardings can also be an easy process in which new clients can be signed up in just a few hours.