Know-Your-Business (KYB) Verification: Strengthening Fintech Industry

As the financial sector evolves in the fast-paced digital life, a proactive and efficient know-your-business (KYB) verification system is more essential than ever. The companies must have deep knowledge of the KYB to comply with various rigid regulations. These laws play a crucial role in protecting businesses from financial fraud and customers’ potential risks.

The KYB is an immense regulation that covers all laws. It allows companies to verify customer identity and access the associated risk. An effective KYB procedure confirms the client ID for financial transactions and commercial operations. It is also compulsory for the fintech industry to comply with regulations, and the regulatory authorities constantly upgrade these obligations. The fintech industry needs to utilize machine learning technology and take leverage from the technology for adequate identity verification. For that, fintech industries can use remote business verification services, which protect them from financial fraud and fines.  

What is Digital Know-Your-Business (KYB) Verification? 

KYB is a process to verify the customer and corporate business partner. It verifies the legitimacy and associates the risk that comes along with onboarding them. This process is vital in the fintech and neobank companies to reduce money laundering and financial fraud. Ensuring companies are working with legitimate customers and businesses assists them in complying with the anti-money laundering (AML) and counter-financing terrorism (CFT) regulations. Non-compliance with these regulations can lead companies toward unwanted fines. The Minister of Economy UAE fined Dh65.9 million to financial institutions, for failing to comply with AML and CFT regulations. The KYB process is essential to protect companies from fraud and reduces the chance of significant unwanted fines. 

Traditionally banks and other financial institutes conduct KYB checks manually by attesting documents. The customer or business owner submits the required papers to the banks. The bank’s representative checks the legitimacy of the documents by manually checking the visible security features such as holograms, fonts, signatures, and borders. Then they add the written data to the computer and cross-check these against various sanction lists, including politically exposed persons (PEPs) or financial crimes. 

Unfortunately, complying with regulations in the traditional know-your-business process is costly and time-consuming. Fintech industries need to seamline KYB checks to accelerate the onboarding procedure and boost customer experience. The digital KYB process is the revolutionary identity verification that assists fintech industries in complying with regulations effectively and verifying customers without physical contact. Given below are the  steps to seamline the complex KYB process: 

Step 1: Registration

In the initial step, the customers must register on the digital platform. For registration, they provide personal information such as full name, date of birth, and official corporate email. The KYB process requires some additional information like business nature and activities. 

Step 2: Document Collection 

After completing the registration, customers can upload documents on the platforms. The KYB software assorts records according to format for further verification. It is essential for businesses to submit various documents to prove their legitimacy. These documents include business registry papers, licenses, tax identification numbers, articles of incorporation, and various legal documents depending on the fintech company policies. Remote submission of documents eliminates the customer workload of visiting offices and filling stacks of paperwork. It enhances the onboarding experience for individual clients and corporate business partners. 

Step 3: Document Verification 

The KYB service providers attest the papers by utilizing machine learning AI inventions technology. It checks the visible security features to detect counterfeit elements on the paper. Know your business software and meticulously examine the documents to ensure their authenticity and validity. For accurate results, KYB software verifies the papers by cross-checking all documents from government databases. Digitally verifying the documents helps fintech to detect signs of manipulation, forgery, and tampering. In the traditional system, there is a chance of human error, which is eliminated by machine learning robust know-your-business verification.

Step 4: Data Extraction 

Computers can not read the original language written on the papers, so KYB software uses the latest optical character recognition (OCR) technology. It is used to extract written data into computer readable-text format. With the help of this technology, know-your-business systems can read, count, and secure data in databases. It extracts various information from the submitted documents, such as the legal business name, registration number, ultimate beneficiary owners’ (UBOs) names, date of incorporation, etc. So it can be used for the further verification process and seamless onboarding experience. 

Step 5: Data Validation 

After extracting the data KYB software checks the authenticity of that by cross-referencing these from various government databases. It ensures fintech companies that data is authentic and business is registered in the records. The know-your-business verification services provider also compares this data from various watchdog lists. It ensures fintech companies are not onboarding criminals or money launderers. It also concludes the validation by monitoring the business’s previous funding to comply with enhanced due diligence (EDD).

Key highlights of Know-Your-Business (KYB) Software 

Business verification is essential for fintech industries because it protects them from financial fraud and fines. The KYB checks various regulations and allows fintech industries to onboard businesses promptly. Remembering that KYB laws depend on local regulations and company policies is important. With online know-your-business solutions, fintech companies can customize the KYB process according to the requirements. It streamlines the process and gathers accurate results for fintech companies.