Sometimes criminals use shell companies to participate in their illegal ventures. Shell companies are companies that exist only on paper and not in reality. They can be used as a front business to legalized the laundered money or the criminals can use this as a way of data breaching by partnering with legit businesses. In order to have secure business dealings, the businesses need to be able to verify the authenticity of the businesses. This can be done through KYB. But in order to understand what is KYB first, we need to understand how it works and the need for it.
What is KYC to What is KYB
KYC, Know your customer, is a way for businesses to identify their customers and Document Verification to ensure that they are dealing with legit individuals. But businesses do not only deal with customers, they have to get in touch with other businesses as well. This is where the need for KYB, Know Your Business, arises. KYB is a way businesses use to verify other businesses to ensure that they are not getting involved with shell companies. This allows businesses to assess any suspicious activities.
In Australia last year, around $91.4 million was lost in businesses to business invoice fraud according to a report by Australia Competition and Consumer Commission’s Targeting Scamp. According to a survey done with businesses to business merchants that states that 19% of all inquiries related to online purchases are an attempt at fraud.
Repaired Driver News states that around 6.7 USD million worth of loans were taken fraudulently by the owner of the auto body shop in California. Another study was conducted that concluded that the in last 5 years, 60% of the business to business fraud losses are represented by payment fraud.
What is KYB Service
The KYB process can be a lengthy and insipid task the manual method might require a lot of operational costs. This is where the automated KYB solution comes in handy in fighting the business to business fraud.
This online KYB service can detect fake credentials and the AI-based software can catch the forged or tampered documents within seconds. Identities of the business owners and employees can be verified through face verification, document verification, address verification.
AML checks can also be performed. The owner of the business or their main employees can be verified against the global watch list to see if they have been involved in money laundering activity or not. The nationality and geolocation of the business can be verified as well to ensure that the business actually exists or not. The KYB checks also verify if the business has been involved in tax fraud activity or not.
The Need for KYB
The businesses do not have to face the loss of money or data breach now that the KYB Know Your Business services are available. The authenticity of any business organization can be verified in no time. The businesses can save the operation cost of managing the hectic manual KYB process. Business dealings can be safer than ever now. With the machine learning algorithm, fraudsters do not stand a chance at all. This also saves the businesses from facing million-dollar penalties for getting involved with criminals and fraudsters and not taking precautionary measures of verifying the businesses before dealing with them. The business does not even have to lose their good reputation. The customer onboarding rate will increase as the businesses will be able to maintain their good reputes.