Why know your business (KYB) as is important as know your customer (KYC) in preventing fraud

Fraud is on the increase, largely due to many products and services now available online - a convenience that comes with some risk for anyone selling online.

While many organisations employ know-your-customer (KYC) strategies to help prevent fraud, it’s only part of the solution. Know your business (KYB) checks are equally important and should be performed in tandem with KYC to combat fraudulent activity.

Why provide KYB and KYC checks?

 Delivering KYB screening enables organisations to fully understand the risks posed by new and existing business customers and suppliers, and therefore help to prevent fraud from occurring. This is very beneficial because fraud is frequently committed by shell companies or organisational structures that just don’t exist in reality. Also, KYB checks help to prevent financial crime, such as money laundering and terrorist financing, which could cause substantial reputational damage.

It is worth highlighting that undertaking best practice due diligence by delivering KYC and KYB screening not only reduces the opportunity for fraud but has many other benefits. These include the ability to personalise communications, improve the delivery of services and the overall user experience, and provide a competitive advantage. Furthermore, KYC facilitates operational efficiencies. These factors are very important, particularly during a time of high inflation and economic uncertainty.

How to implement effective KYB screening

The main difference between KYC and KYB checks 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. For a reliable and cost-effective approach to KYB screening it’s advisable to cross-check a company name, address, business registration number, and operational status. Those who want to go a step further and 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 assess the benefits against the often significant cost of doing so.

Source a SaaS eIDV platform with integrated KYB and KYC functionality

 To implement effective KYB and KYC checks globally, it’s best to source a comprehensive electronic ID verification (eIDV) platform that delivers both. Growing fraud has made these services increasingly popular, particularly as they are available as a software-as-a-service (SaaS) so easy to deploy, scalable, and support real-time cross-checks against an individual's contact data and company data.

The eIDV 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, along with recognised sources of business data, such as from a business registry or regulator, like Companies House. Also, the platform should offer mortality screening checks to effectively confirm the ID of an individual and be able to highlight any errors in the data, such as a typo in the address, which can easily be corrected.

In addition, the service should provide access to worldwide sanctions and politically exposed person (PEP) data, as well as adverse media checks of both individuals and businesses to provide a full ID verification service. This way, tight budgets can be protected against scammers, while also supporting best practice KYB and KYC. Furthermore, accessing all this in one place provides economies of scale – rather than buying everything in separately, and potentially from different suppliers.

Organisations can no longer ignore KYB and KYC with fraud on the increase. KYB and KYC checks must be implemented in tandem as a matter of course, ideally via a full-service SaaS identity verification platform, such as what we offer via our market leading eIDV service.

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