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How corporate KYC can reduce fraud and increase trust

Discover what corporate KYC is and how it can protect your business.

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⚡ Key takeaways
  • Standard KYC involves verifying individuals. With corporate KYC, you take this one step further by also verifying the legitimacy of businesses themselves.
  • While regulators only legally require corporate KYC for financial institutions, it can benefit any organization, especially B2B service providers.

Know Your Customer (KYC) protocols have been part of anti-money laundering (AML) regulations for some time. But due to the ever-increasing threat of fraudulent and criminal activities, it’s no longer enough to just verify individuals interested in buying your product/service or working with you. To properly protect your business, reduce fraud, and comply with legal requirements (especially for fintechs) you’ll also need to know and verify any company you do business with. This is known as corporate KYC, or KYB (Know Your Business).

What is corporate KYC?

By definition, standard KYC only involves investigating and verifying individuals. With corporate KYC, you take this one step further by also verifying the legitimacy of businesses themselves. While regulators only legally require corporate KYC for financial institutions and any related businesses (such as fintech or cryptocurrency companies), it can benefit any organization, especially B2B service providers.

By implementing corporate KYC, you can be confident that companies you work with are legitimate. You’ll also be able to confirm who stands to benefit if the business does well and ensure they’re not involved in any illegal activity.

Why corporate KYC is important

Following KYC requirements for corporations can benefit your business in three key areas:

  • Compliance: If you’re in a regulated industry, you must comply with corporate KYC regulations or face penalties such as heavy fines and even prison time. Some regulations are country-specific, such as the United States’ 2016 CDD Final Rule. Other compliance measures are more widespread, such as the need for all companies to avoid doing business with companies or entities on the OFAC sanctions list.
  • Fraud prevention: Corporate KYC can reduce the risk of fraud and any associated losses. By thoroughly vetting businesses before beginning a relationship with them, your company is less likely to get involved in money laundering, the funding of terrorism, and other illegitimate activities.
  • Trust: A rigorous corporate KYC process can increase trust and safety in your brand and make your customers feel more comfortable working with you. Marketplaces in particular can benefit from corporate KYC as it ensures everyone on the platform can trust each other since they’ve all passed the verification process.

How corporate KYC works

Step one: Gather information about the business and its key stakeholders

The first, and often most labor-intensive, step of corporate KYC is to collect any relevant information you need to verify the legitimacy of the business, such as its business name, address, and corporate KYC documents such as its proof of incorporation and details about its business structure. These pieces of information can help you determine that the company actually exists and is not just a shell corporation on paper.

You’ll also need to gather information on the people behind the business, or its ultimate beneficial owners (anyone with a 25%+ ownership stake) — including each individual's name, date of birth, address, and identification number at a minimum.

Step two: Verify and enrich information

Next, it’s time to verify the information you’ve collected and enrich with other signals as necessary. For example, even if you’ve verified that a UBO is who they say they are, you may also want to ensure they aren’t on any watchlists or involved in fraudulent activities.

Step three: Grant a decision

Once you’ve collected, verified, and analyzed all relevant information about the business and the people behind it, it’s time to make a decision. Use what you’ve learned to determine what level of risk, if any, working with this company presents to your business. Is it worthwhile to pursue a relationship?

Finally, you’ll need to communicate your decision to the company in question. This must be done in a timely fashion or you risk losing the relationship.

Simplifying corporate KYC through automation

Despite its importance, corporate KYC is often still manual, time-consuming, and costly. In fact, many KYB processes today resemble KYC from 10-15 years ago — straining compliance teams and resulting in undesirably long wait times for the end customer.

With an automated KYB solution like Persona, you can collect business information and documents, look up and screen businesses, run KYC checks on business owners, and more. This seamless process all takes place on one convenient platform — and makes it easier to onboard companies quickly, as Branch discovered.

And as the only solution that brings KYC and KYB together in one automated, customized, process, your team will be able to make faster decisions. This enables your business to deter bad actors and lower your risk without damaging the conversion of legitimate, well-meaning businesses.

Unlock corporate KYC with Persona

Corporate KYC is an important AML practice for all businesses. Even if it’s not legally required for your industry, KYB gives you the power to protect your business and provide a better experience to your customers.

If you’re interested in corporate KYC but are worried about the burden it could add to your team, you need to consider an automated corporate KYC process. Take back the power to reduce fraud and implement Persona as your corporate KYC solution today.

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Table of contents

Know Your Customer (KYC) protocols have been part of anti-money laundering (AML) regulations for some time. But due to the ever-increasing threat of fraudulent and criminal activities, it’s no longer enough to just verify individuals interested in buying your product/service or working with you. To properly protect your business, reduce fraud, and comply with legal requirements (especially for fintechs) you’ll also need to know and verify any company you do business with. This is known as corporate KYC, or KYB (Know Your Business).

What is corporate KYC?

By definition, standard KYC only involves investigating and verifying individuals. With corporate KYC, you take this one step further by also verifying the legitimacy of businesses themselves. While regulators only legally require corporate KYC for financial institutions and any related businesses (such as fintech or cryptocurrency companies), it can benefit any organization, especially B2B service providers.

By implementing corporate KYC, you can be confident that companies you work with are legitimate. You’ll also be able to confirm who stands to benefit if the business does well and ensure they’re not involved in any illegal activity.

Why corporate KYC is important

Following KYC requirements for corporations can benefit your business in three key areas:

  • Compliance: If you’re in a regulated industry, you must comply with corporate KYC regulations or face penalties such as heavy fines and even prison time. Some regulations are country-specific, such as the United States’ 2016 CDD Final Rule. Other compliance measures are more widespread, such as the need for all companies to avoid doing business with companies or entities on the OFAC sanctions list.
  • Fraud prevention: Corporate KYC can reduce the risk of fraud and any associated losses. By thoroughly vetting businesses before beginning a relationship with them, your company is less likely to get involved in money laundering, the funding of terrorism, and other illegitimate activities.
  • Trust: A rigorous corporate KYC process can increase trust and safety in your brand and make your customers feel more comfortable working with you. Marketplaces in particular can benefit from corporate KYC as it ensures everyone on the platform can trust each other since they’ve all passed the verification process.

How corporate KYC works

Step one: Gather information about the business and its key stakeholders

The first, and often most labor-intensive, step of corporate KYC is to collect any relevant information you need to verify the legitimacy of the business, such as its business name, address, and corporate KYC documents such as its proof of incorporation and details about its business structure. These pieces of information can help you determine that the company actually exists and is not just a shell corporation on paper.

You’ll also need to gather information on the people behind the business, or its ultimate beneficial owners (anyone with a 25%+ ownership stake) — including each individual's name, date of birth, address, and identification number at a minimum.

Step two: Verify and enrich information

Next, it’s time to verify the information you’ve collected and enrich with other signals as necessary. For example, even if you’ve verified that a UBO is who they say they are, you may also want to ensure they aren’t on any watchlists or involved in fraudulent activities.

Step three: Grant a decision

Once you’ve collected, verified, and analyzed all relevant information about the business and the people behind it, it’s time to make a decision. Use what you’ve learned to determine what level of risk, if any, working with this company presents to your business. Is it worthwhile to pursue a relationship?

Finally, you’ll need to communicate your decision to the company in question. This must be done in a timely fashion or you risk losing the relationship.

Simplifying corporate KYC through automation

Despite its importance, corporate KYC is often still manual, time-consuming, and costly. In fact, many KYB processes today resemble KYC from 10-15 years ago — straining compliance teams and resulting in undesirably long wait times for the end customer.

With an automated KYB solution like Persona, you can collect business information and documents, look up and screen businesses, run KYC checks on business owners, and more. This seamless process all takes place on one convenient platform — and makes it easier to onboard companies quickly, as Branch discovered.

And as the only solution that brings KYC and KYB together in one automated, customized, process, your team will be able to make faster decisions. This enables your business to deter bad actors and lower your risk without damaging the conversion of legitimate, well-meaning businesses.

Unlock corporate KYC with Persona

Corporate KYC is an important AML practice for all businesses. Even if it’s not legally required for your industry, KYB gives you the power to protect your business and provide a better experience to your customers.

If you’re interested in corporate KYC but are worried about the burden it could add to your team, you need to consider an automated corporate KYC process. Take back the power to reduce fraud and implement Persona as your corporate KYC solution today.

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