Home » Know Your Business Processes – Ultimate Protection Against Shell Companies

Know Your Business Processes – Ultimate Protection Against Shell Companies

Criminals are targeting enterprises, vendors, and affiliates for carrying out malicious activities. Money laundering and terrorist financing efforts have increased and unauthorized firms are a threat to other corporations. Establishing a relationship with shell companies and a lack of due diligence measures can be catastrophic for your business. Companies must verify their affiliates and third-party vendors before a data breach can cost them a lot of money. With the rapidly evolving threat of online identity thefts, data breach attacks have increased as well. Businesses that are part of criminal exercises, have to face non-compliance penalties but also damage their market reputation. A robust KYB solution is required for preventing fraudsters that depict themselves as verified vendors and suppliers to trespass the system.

An automated business verification solution is a better approach for dealing with criminal activities and ensuring secure B2B transactions.


What is KYB or Business Verification?

Business verification is the due diligence analysis of the businesses against money laundering efforts. It helps businesses to design policies and check suspicious transactions. KYB facilitates companies to determine whether they are partnering with an authentic business or a fake one.

Know Your Business (KYB) In Detail

Know your business protocols facilitates corporate businesses to ensure that the company they are partnering with is authentic and not a fake entity that is only existing on paper. Regulatory authorities demand document verification and AML screening for businesses, particularly in developed countries when engaging with foreign corporations. The regulations such as Electronic Identity Verification (eIDV) and the 6th AML directive from the EU are the main examples of KYB legal requirements for businesses. 


On the contrary, in the United States, customer due diligence procedures are compulsory for determining the actual ownership of the firm. Many KYC solution providers are offering KYB solutions to collect business verification data. With the help of ID and document verification mechanisms, businesses can be authenticated in a matter of seconds. Identity authentication of the top-tier management is done through govt-issued ID documents and AML screening. KYB solutions providers verify enterprises by retrieving official commercial register data through API. With the registration number and jurisdiction code of any corporation, an effective digital KYB solution can find the authentic information of the business.


KYB For Protecting Business Interests

The AI-based KYB solution verifies the real identity of UBO or top-tier management and also checks the level of financial risk associated with each entity with AML screening solutions. These solutions validate whether the top officials of the partnering enterprise are present in any global adverse media lists or watchlists. It performs customer due diligence measures and AML background tests in real-time. KYB customer service is essential for the administration of funds for a huge customer base and corporate businesses. It is critical for banking, trading, and dealers of investment firms to be aware of each corporation that wants to build a relationship with them.

Digital Identity Verification For Detecting B2B Scams

Know Your Business process is an arduous task and might need specially trained manual resources, but digital document verification services might be a better approach. Automated verification measures are a robust approach for preventing B2B scams. But, business activities carried out online are vulnerable to ID frauds while automated business verification processes prevent suspicious fraud attempts. It helps businesses to comply with the requirements of regulatory bodies and secure themselves from facing compliance penalties.

Business Verification – Is it Effective?

The majority of the banks are suffering from the troublesome KYC verifying procedures for transaction authentication, user onboarding, and online banking services. That is the main motive why many financial organizations are in desperate need of KYB solutions. It helps in determining the Ultimate Beneficial Owners (UBO’s) of the companies that they deal with. With AI-driven ID verification services, business verification can be done in seconds. It has the capability of verifying the real identity of the individual through a govt-issued ID document such as an ID card or passport. 


With the rapidly growing threats of identity frauds and third-party data breaches, businesses need to adopt robust know your business processes. Enterprises need to verify the company before engaging in a relationship with them. Shell companies pose a greater threat to businesses that lack proper due diligence measures. Therefore, it is high time for corporations to employ digital verification solutions to verify the true beneficial owner of the partnering firm and prevent financial crimes. A great ERP system from ZARA ERP system solutions can protect the companies from data breaches and helps a lot in enterprise resource planning. 

Zaraki Kenpachi