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Business verification checks allow corporate entities to verify their clients and partners to develop transparent and secure business relationships.
Digital businesses are on a roll these days since they are now banking on technology trends. Whether you want to buy groceries from the store, book a ticket for your tour, or purchase a product or service online, everything is in popular demand. When we talk about the corporate sector, business verification becomes necessary when dealing with clients in the B2B space.
These checks are often called Know Your Business or KYB through which a corporate entity can identify and verify if their clients and business partners are legitimate. As a matter of fact, verifying businesses entails a lot more than just onboarding checks incorporating Anti Money Laundering (AML) compliance obligations and Countering the Financing of Terrorism (CFT) checks
According to an estimate, nearly $4 million is recorded in non-compliance penalties each year in the corporate industry. The number is surprising because almost $5.47 million are spent on ensuring compliance practices. This calls for robust business verification tools, frameworks and outsourcing professionals that could better identify shell companies run by illicit cyber actors.
Transparent B2B Associations
These days, B2B relationships are based on mutual trust and understanding. It is important to make sure that your partner is well aware of other important aspects like corporate fraud, impersonation theft, and fraudulently-run entities, etc. Apart from that, business partners do not have control over third parties that are associated with their partner entities, which makes business verification the need of the hour. Know your business checks create transparent and secure relationships between business entities that could benefit them in the long run.
Taking into account company data such as their name, corporation date, and company type, automated software based on business verification checks is the way to go.
Method to Ensure Your AML Standards
In the past, the surge in financial crime has made it necessary for law enforcement to implement stringent regulations to put fraudsters in their place. The Bank Secrecy Act of 1970 is one such example, that keeps a vigilant eye on tax evasion and entities that are involved in these crimes. Any transaction above the limit of 10,000 dollars is marked as suspicious and the Financial Crimes Enforcement Network (FinCEN) of the US investigates it as a potential money laundering case. The Financial Action Task Force (FATF) also plays its role in mitigating such heinous crimes.
AML obligations are a good way to verify if an organization is hiding necessary information or not. A report on Know your patient verification shows that almost $5 million is paid in administrative costs for not complying with anti-money laundering obligations.
The 4th anti-money laundering directive (4AMLD) issued by the European Union (EU) in 2017 shows that companies should perform know your business verification checks to rule out any dangers of tax evasion and terrorist financing. Therefore, know your business offers a competitive solution in protecting business interests at scale
Better Conversion Rates
B2B conversion rates are a good metric when evaluating a company’s progress. When it comes to corporate entities, mutual trust is essential between both parties to ensure a transparent and healthy business relation. Know your business is a quick and straightforward approach towards making this possible. By running a series of checks to ensure consistency of company data, stakeholder information and analyzing the ultimate beneficial ownership, KYB offers a viable solution to safeguard mutual interests. According to HubSpot, business clients have a landing page rate that lies somewhere between 20-25% on average while the expected range for customer conversion is 1.5-3%
Also, Read: Core IT Improvements for Businesses
Reduced Overhead Expenses
In the digital space, businesses tend to use products and services that are in their best interest. Artificial intelligence and machine learning have brought a game-changing revolution in the corporate sector that makes the market more competitive and increases customer demand. As far as reducing operational overhead is concerned, maintaining secure operations is also necessary.
Know your business checks can reduce the overall burden of verifying partner entities and business clients through automated mechanisms that perform real-time verification. Now, verifying the ultimate beneficial ownership, company registration number (CRN), board members, and other investors has become quite straightforward.
Business verification entails not only your business partners’ needs but also plays a vital role in reducing operational costs that save an enterprise from a budget disruption in the long run.
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