Role Of KYB Checks In Verifying A Business Entity

business success

Verification was relatively easy in the past. The then fraudsters were also not advanced in their tricks. The time was relatively easy but it is not the case anymore. As the new technology has been integrated and became part of the system, cybercriminals also developed new ways to commit crimes. From knowing your customer to knowing your business, enterprises are adopting new measures to verify a business in order to keep up with a streamlined workflow.


All the businesses knew about verification was the validation of their customers. But a deep study on the matter revealed businesses that are being fooled by fraudsters. The realization of this gave birth to a security measure called Know Your Business (KYB).

KYB is helpful in verifying a business partner. In a corporate world, because of the demanding work needs, enterprises have to shake hands with other potential partners. But that does not call to partner up with anybody that is apparently looking genuine. There are proper checks that need to be met before the partnership.

KYB In Europe

The importance of AML/KYB was forced in the 4th AML directive. According to the 4th AML directive, reasonable measures should be taken to know who the ultimate beneficial owners are in order to mitigate risks. There are certain KYB measures in Europe for example:

  • The information obtained from a liable source should not be verified and identified by the customer.
  • To carry out necessary checks to identify the rights holder in companies.
  • To the quality of business, relationships are assessed.
  • Lastly, to deter the potential risk of fraud, business relationships are monitored on a regular basis.

How KYB Can Be Performed?

Verifying a business is an easy task, it just requires conscious use of the steps included in the KYB checks.

Know your business is the due diligence process of businesses against money laundering techniques. It is used to develop policies to assess suspicious activities. Businesses need to verify if the entities they are going to deal with are genuine businesses or any shell company.

A typical know your business means if the corporate organizations are collaborating with legitimate businesses or not. The 4th AML directive has emphasized on businesses verifying a business through KYB checks.

There are several ways to protect a business. KYB is an entire process to carry out the processes involving in verifying a business. Analysis of the basic information is the first step of the process. The name, address, origin of birth, and other similar information are verified in it. Corporations also verify the business filings of any entity. Financial record is examined to check if the company was ever involved in any kind of money laundering or have become a bridge for any other entity to carry out money laundering or terrorist financing.

Business statements refer to as the document that involves the overall summary of business purposes. A business network is also an important category to check the behavior of businesses in terms of their connections. Having an insight on business networks can tell a lot about their relationship with other corporations and also says about what type of companies businesses like to interact with.

Automated KYB In Verifying A Business

The time when businesses used to verify customers manually was a very hectic one. Professionals have to carry out all the steps manually which means the intervention of human resources and a time-consuming process. But with the arrival of advanced technology, as the digital world gain popularity, automated operations made their place in businesses.

Verifying a business through an automated check, not only cuts down the human intervention in the process but also saves time for both parties i.e. business and customer involved. Automated checks also provide authentic results which also is a benefit that manual processes cannot provide.

KYB – A Way To Gaining More Customers

Collaborating with businesses means you are having a chance to attract their customers as well. Partnering up can facilitate merchants in a lot of ways. From sharing their workload to getting more exposure in the market, collaboration offers a win-win strategy. Businesses can also attract customers of other businesses which can ultimately serve organizations in generating big revenue.

Know your business is helpful in verifying a business that can prove a helping hand for entities requiring to partner with other companies. Some of the businesses because of their negligence ignored KYB checks in order to gain temporary benefits. But they ultimately face troubles afterward when collaborating with shell companies.


The rapidly increasing world demands work requirements that are efficient in their nature. Businesses nowadays are collaborating with other entities to expedite their productivity. Know your business is useful in verifying a business to help companies reduce fraud that can emerge from partnering up with shell companies.


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