Businesses are upgrading their operations by expanding their services to global firms. In this process they onboard and partner with other companies. There are fraudulent firms or criminal owners who opt for this partnership to carry out their malicious interests. For instance, money laundering, terrorism financing, and financial uplift. The companies simply hide their identities, Ultimate Beneficial Owners (UBOs), and sources of funds to dodge the verification process.
Therefore, parent businesses need robust KYB checks to make sure they are partnering with any compromised firm. The AI-enabled verification tools help businesses to verify the management’s identities and cross-check backgrounds. This way they can make sure that the partnering firm was not involved in any crime. Further processes of how Know Your Business verification tools authenticate companies are discussed in the blog.
Know Your Business Meaning – A Detailed Overview
Know Your Business is a regulatory obligation put forth by various authorities. This involves the standards that partnering firms need to keep under consideration before they onboard other companies. For instance, to verify companies’ backgrounds, validate their documents, and identify managerial staff. All of these add to the definition of Know Your Business meaning.
Moreover, according to Shufti Pro News, the regulatory authorities oblige the parent firms to keep track of their affiliates’ activities. This way they can detect suspicious activities and prevent financial crimes. Similarly, businesses should understand the ownership structure of companies while predicting the risk factor. Businesses should also pen down the working pattern alongside some laws to keep the overall growth secure. For instance, the parent business should mandate the subsidiaries to keep them in the loop while making decisions and changes within the firm.
Therefore, to make all of this easy, seamless, and authentic, businesses need to incorporate digital company verification services. These solutions offer a variety of authentic checks that will prevent businesses from falling prey to fraudster companies.
Business Verification Services – How Does the Process Verify Partnering Firms?
Business verification services enable corporate firms to detect whether the partnering company holds an authentic status or is just confined to papers. Furthermore, regulatory authorities mandate businesses to do thorough AML screening to mitigate the chances of money laundering and terrorism financing. Therefore, Shufti Pro Funding indicates that businesses need accurate and seamless verification processes to validate firms. It involves the following checks:
Cross-verify Companies Against Various Sanction Lists
Every country holds sanction lists like AMF’s warnings and blacklists of unauthorized companies which contain all the risk-possessed and criminal firms. By scanning their partnering firms against these lists, businesses can ensure that they are not getting exposed to illegitimate companies.
Therefore, businesses need robust Know Your Business solutions to analyze large data, and cross-verify company names, addresses, aliases, and identities of managerial staff.
Moving on, there is another check in this category named verification against Politically Exposed Persons (PEPs) lists. At times the companies available in the market for partnerships are run by corrupt politicians. These companies have owners and other staff with high-profile positions that increase the chances of corruption, money laundering, and bribery. However, the advanced verification services enable businesses ta access global sanction and PEPs lists to verify their subsidiaries.
Validates and Verifies the Documents of Partnering Firms
When businesses provide services to other firms, they should ask for documents to verify the company. These include bank statements, tax filer information, proof of address, and registration certificate. The AI-powered solutions offer OCR technology that extracts the required information and cross-matches it in the databases. It also validates them by authenticating features like holograms, watermarks, signatures, and ink type. The more information a business can obtain, the more it can ensure that the partnering firm is a legitimate company.
Detects the Level of Risks Company Possesses
Along with other KYB checks, AI-powered verification tools provide access to adverse media coverage which helps the businesses to detect risk factors. Moreover, authorities also mandate this step under the due diligence standard. In the process, the system scan reports from global territories to look for references. Ultimately, it helps the businesses pick less risky and legitimate companies.
Cross-checks the Background and ‘Existence in Real World’ Claim
Background checks are another crucial part of the company verification process because it provides insight into how the firm works. Criminals often use the name and structure of pre-existing firms to commit their illicit activities. For instance, laundering money, reaping illegitimate benefits, and other such crimes.
However, with an authentic and accurate verification system in place, companies have fewer chances to fall into this trap. Also, they can check their background and make sure they are partnering with a legit firm.
Verifies the Ultimate Beneficial Owners (UBOs)
Criminal companies hide their UBOs so that they can escape the sanction list scans. This is why it becomes difficult for businesses to identify the companies and incorporate authentic verifying companies’ solutions. These will help businesses to identify and verify the UBOs as well as keep track of transactions and activities. This way they can mitigate unforeseen criminal threats.