Know Your Business – Why is it Inevitable for Enterprises?
When we talk about the corporate world, business verification or Know Your Business (KYB) is the ultimate tool to ensure secure business relationships. It allows enterprises to stay compliant with Anti Money Laundering (AML) obligations that are mandatory while initiating ties with partner entities. This is essential since businesses before they establish an agreement with other parties, should clear any doubts regarding their financial and company status. Know Your Business helps verify associated entities to establish trustworthy partners.
A Look into the Compliance Landscape
According to GlobalScape, enterprises worldwide spend almost 5.47 million USD to meet compliance regulations set forty by global watch dogs. Another research, by the Ponemon Institute, states that 4 million USD are lost as a result of not complying with business verification obligations. The purpose of a KYB process is similar to that of a Know Your Customer (KYC) process, but the client is a business rather than an actual customer/end-user.
Know Your Business means to verify important details regarding your partner firm such as their company registration number (CRN), corporation date, and their verified address. Compliance requirements also require verifying the company’s financial standing in the market and its Ultimate Beneficial Ownership (UBO) documents.
4 Reasons How Business Verification Works Wonders
Safe and Secure Ties
These days, it is essential for business entities to have a mutual understanding between each other to establish a safe communication channel. Even though partner firms may be trusted, they need to make sure they are updated about current technology trends and the digital space setting. Since an enterprise has minimum control over its associates, it is always important to verify before getting them on board. Who knows the business you’ve been trusting for years was a shell company that has been carrying out illegitimate pursuits all this time?
Know Your Business defines a new means of reliable authentication protocols that allow corporations to avoid unnecessary and unwanted delays while keeping intact the compliance standards of business verification. This allows companies to be mindful of KYB compliance that makes room for secure B2B relationships. With developments in digital solutions over the years, regulatory technology has been surfacing the market that allows businesses to perform automated verification of their business partners and achieve KYB compliance across the board.
Abiding by AML Regulations
Recently, due to the surge in financial crime, there has been an increased demand for Anti Money Laundering requirements by regulatory authorities. The Bank Secrecy Act of 1970 is one such example that was introduced to regulate the legal financial system, prevent illicit acts like money laundering, tax evasion and cross-border trafficking, and streamline financial business operations. Regulatory Acts like the BSA laid the foundation for the creation of the FATF and FinCEN that play a key role in mitigating financial fraud and terrorism financing activities through corporate organizations.
When it comes to businesses, AML obligations are a good bet in safeguarding mutual interests and reputation. Enterprises that do not invest in compliance practices end up losing their market credibility and recognition in the eyes of global regulators. That is why more than 5 million USD is paid to regulatory authorities in AML non-compliance costs.
Redefining the B2B Experience
In the corporate sector, customers are of prime importance whether they are an actual customer or a business. B2B conversion rates are directly linked to what services clients receive and how. This not only develops credibility but also smooth communication between both parties. Business verification services can help enterprises win that all-important trust required to establish strong and secure business ties in the B2B market.
Good business relationships mean that your company will have a trustworthy reputation in the industry that will lead to increased sales opportunities. Hubspot states that business prospects have an average conversion rate between 20% to 25% while the expectation lies somewhere between 1.5 % to 3%. KYB helps increase the client conversion rate as well as retain existing partner entities.
Cutting on Operation Costs
With technology growing at a rapid pace, intelligent solutions are here to save the day for enterprises. Automated tools for business verification allows enterprises to increase productivity and cut operational expenses. Unwanted delays can cost businesses a good deal of their income in the form of lost clients and compromised business relations. KYB can help address this problem by automating onboarding procedures and verifying business entities in real-time with confidence.