BUSINESS STRATEGY
AND CUSTOMERS ? WHEN BUSINESSES FAIL TO COMPLY WITH KYB OBLIGATIONS , CUSTOMERS MAY LOSE CONFIDENCE IN THE BRAND , ESPECIALLY IF THEY FEEL THEIR DATA IS NOT PROTECTED OR THEIR FINANCIAL INFORMATION IS AT RISK . can ensue , leading to costly settlements or court orders that further drain the company ’ s resources .
Non-compliance can also completely wreck the reputation of a business – as customers and partners lose trust and pull their support . When legal issues and financial threats come up , business activities slow down , hurting efficiency , income and overall finances in the long-term . Over time , shareholders will start to lose faith in the business as lawsuits from non-compliance continue . They will become upset if they don ’ t see a return on their investment due to court cases and penalties . As the business ’ s value drops , investors will pull out in large numbers . like who owns the business , legal status , financial records , etc . However , KYB can be time-consuming , expensive and even prone to human error .
However , this process gets even more efficient and scalable when it ’ s automated . With an automated KYB verification system , users are provided with real-time data to verify business registration details , regulatory compliance , financial records and other essential information , ensuring the establishment of a legitimate business without compromise . Today , there are automated KYB verification systems that are able to test and confirm business legitimacy by connecting to over 180 global business registries from more than 120 countries and accessing credit and financial reports worldwide for over 160 countries .
The role of KYB in reducing financial penalties and litigation
Automated KYB can extract and validate information from public datasets , company registries and other trusted APIs ( Application Programming Interfaces ). This makes data collection a great deal faster and accurate .
While most would agree that it goes without saying – this is an important reminder of just how business-critical it is to pay attention to compliance and regulatory measures . If you don ’ t and if you ’ re lucky , it will result in some very timeconsuming and highly expensive bumps . However , if you are not lucky , and follow in the footsteps of others who failed to pay compliance its due , it could lead to the total collapse of your business .
It ’ s time to KYB ( Know Your Business )
One way to prevent this kind of situation is through KYB . But , to really see how beneficial it is , we need to understand what KYB involves .
Since its inception over 50 years ago , KYB has helped create a safer financial system through customer verification . However , the initial framework focused mainly on individuals , leaving out businesses entirely . It likely comes as no surprise that criminals exploited this loophole – using shell companies or legitimate businesses to launder money . In 2006 , the US watchdog , Financial Crimes Enforcement Network ( FINCEN ), took a significant step to tackle this issue by including KYB regulations in the Enhanced Customer Due Diligence Requirements aimed at identifying illegitimate businesses .
Today , KYB is essentially like playing detective – checking if a business is legal by looking at things
Then , to kick it up a notch – Optical Character Recognition ( OCR ) technology can pull relevant information from scanned documents and verify their authenticity with techniques like watermark detection and hologram recognition . ID verification speeds up even further , and the risk of fraud is dramatically reduced even more .
Through KYB , organisations can access global sanctions lists and use advanced algorithms to screen corporate entities in real-time . It triggers an alert for further review , if there ’ s a match on the sanctions list , so businesses can deal with the potential compliance risks quickly and effectively .
By connecting to data sources that give realtime updates on ownership changes , legal status , financial performance , regulatory actions and negative media coverage , KYB can also provide continuous monitoring of companies . KYB can alert businesses to important changes or red flags this way , enabling timely interventions and risk mitigation .
Enhancing KYB with Machine Learning ( ML ) and Artificial Intelligence ( AI )
Some of today ’ s automated KYB solutions are now starting to use ML and AI to analyse various data points , such as financial indicators , market trends , news articles and social media
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