Have you ever thought about how to avoid fines and improve the efficiency of your processes? If so, we present to you a tool that will change your life and your business: KYB.
Yes, KYB is crucial for maintaining the security and integrity of your company, allowing you to comply with regulations and prevent fraud. In this article, we want to explain the necessary requirements for you to complete your KYB process. But first, we want to explain a few more things. Let’s go!
What is KYB (Know Your Business) briefly?
This process allows companies to verify the identity and legitimacy of their corporate clients and is an essential part of anti-money laundering (AML) and counter-terrorism financing (CFT) regulations. And we are not the only ones saying this; the Financial Action Task Force (FATF) introduced KYB standards in its Third Anti-Money Laundering Directive in 2007.
Since then, KYB has become a standard for all types of businesses.
The increase in competition, the growing sophistication of digital fraud, and the global regulatory complexities are just other challenges this sector faces.
For these reasons, every company needs to implement an effective KYB process now:
- Regulatory compliance: KYB ensures that you comply with AML and CFT regulations, avoiding sanctions and protecting your reputation.
- Fraud reduction: Identifying and verifying your corporate clients’ identities help prevent fraud and illicit activities.
- Improved customer experience: An efficient and frictionless KYB process provides a better experience for your customers, generating trust and loyalty.
- Protection of financial stability: KYB helps mitigate risks associated with fraudulent transactions, maintaining the financial stability of your company.
- Efficiency in onboarding: Modern KYB systems allow real-time verifications, speeding up the customer onboarding process.
How KYB onboarding works
How is a perfect KYB onboarding process structured to avoid fines, comply with regulations, and save money and time?
Step 1: Retrieving company information
The first step of the process is to retrieve the company’s information. The company contact enters the company name and, if necessary, legal documents. With solutions like Silt, all the information from government records and databases can be easily obtained, including details of the representatives and UBOs.
Step 2: Discovery of representatives and UBOs
Identify owners with more than 25% participation (UBOs) and the company’s legal representative. The company contact provides a preliminary list of these individuals and their emails. Through databases, government integrations, legal documents, or manual introductions, the information of these individuals is verified.
Step 3: Representative verification and legal acceptance
The company representative must provide their identification and a selfie for the KYC process. After verifying their identity and confirming that they are the authorized representative of the company, they must approve all the provided information. This step is crucial to ensure that the representative is who they claim to be and has the authority to act on behalf of the company.
Step 4: Verification of UBOs
A verification link is sent to each UBO. If the UBOs are individuals, a KYC and/or AML verification is required. If they are other companies, a KYB verification flow begins, creating a double-check process that reinforces the legitimacy of the involved entities.
Step 5: Change notifications
Once the onboarding is completed, tools like Silt can notify about any updates in the company information, the UBOs, the AML lists, or the representative, ensuring continuous compliance beyond the initial registration.
What are the essential requirements for performing KYB onboarding?
Do you know how you can save time? By knowing in advance the necessary and sufficient requirements for onboarding corporate clients to ensure an efficient process and comply with regulations.
How do you know if a company is legal, trustworthy, and compliant with regulations?
Sometimes we get bogged down searching for more information than necessary, wasting precious time on something unnecessary.
Here, we detail what you need (no more, no less) to avoid fraud and, above all, fines and to comply with requirements:
KYC & KYB
It is essential to distinguish between the verification processes for individuals (KYC) and companies (KYB). Both processes share certain elements, but KYB specifically focuses on the identification and verification of business entities, ensuring that the companies you do business with comply with legal and financial regulations.
Government Business Information
This requirement involves obtaining official documents that validate the legal existence of the company. It includes:
- Certificate of incorporation
- Trade register
- Articles of association
- List of UBOs (Ultimate Beneficial Owners)
It is crucial to identify the ultimate beneficiaries of a company who control or profit from the entity. This list should include names, ownership percentages, and relationships with the company.
Verification of UBOs
Once UBOs are identified, it is necessary to verify their identity through official documents, such as passports or national IDs, and ensure they are not involved in illicit activities.
Ownership Structure Diagram
This diagram shows the company’s ownership structure, detailing the relationship between different owners and associated entities. It helps visualize how control and ownership are distributed within the organization.
Verification of the Legal Representative’s Identity
The company’s legal representative must be verified through official identity documents to ensure their legitimacy and authority to act on behalf of the company.
Verification that They Are the Legal Representative
It is essential to confirm that the person presented as the legal representative actually holds that position within the company, which can be done through official company documents or public records.
Sanctions Checks for Individuals, AML, and PEP
A thorough sanctions check must be conducted for all key individuals (such as UBOs and legal representatives) to ensure they are not on sanctions lists, involved in money laundering (AML), or politically exposed persons (PEPs).
Sanctions Checks for Companies
Similarly, it is necessary to verify that the company itself is not on international or national sanctions lists, which could indicate illegal activities or reputational risks.
Government Monitoring
This involves continuous monitoring of changes in the company’s legal status, new regulations, or sanctions that may affect it, ensuring the company continues to comply with all pertinent regulations.
Proof of Address for Individuals
To verify the address of key individuals, documentation proving their place of residence is required, such as utility bills, bank statements, or official documents.
Proof of Address for Companies
Similar to proof of address for individuals, but focused on the company’s physical address. Valid documents include lease agreements, utility bills in the company’s name, or official correspondence.
Bank Account Verification
It is necessary to confirm that the company’s bank accounts are in the correct entity’s name and verify their legitimacy. This can be done through bank statements or confirmation letters from the bank.
Questionnaire
A detailed questionnaire allows the collection of additional information about the company, its activities, ownership structure, and internal policies. This helps to get a more complete and detailed view of the entity.
Financial Reports
Reviewing financial reports, such as income statements, balance sheets, and cash flow statements, is crucial to assess the company’s financial health and its ability to meet its obligations.
✅ At Silt, we are committed to providing KYB and KYC verification solutions that are accurate, secure, and compliant with current regulations. Our advanced technology and rigorous processes ensure that you can trust the entities you do business with, thus protecting your interests and ensuring the integrity of your operations.
Contact Silt today to learn more about our KYB and KYC verification solutions. Our team of experts is ready to help you meet all regulatory requirements and protect your business against financial and reputational risks.
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