With financial crime efforts increasing regularly, businesses need to rely on more than simply surface-level information; they need to have a good understanding of complete ownership structures, who the directors are, and any potential risk indicators linked to the relationship.
When looking at choosing the right tool for effective KYB checks, a strong solution should help businesses to build a clear, accurate, and auditable picture of an organisation, those behind it, and any potential risks when onboarding.
For those firms that are operating in regulated sectors, this is of particular importance, with KYB checks supporting both customer and enhanced due diligence, sanctions and PEP checks, adverse media screening and ongoing monitoring. Disconnected checks or manual processes can mean compliance teams face delays, doubling up on work, and a risk of missing crucial information.
KYB checks are designed to confirm that the company data presented is correct and to identify who it is who controls the business.
This is important because companies can often be used to cover up financial crime, disguise who really owns it, and obscure the sources of funds, creating distance from high-risk activity. Without a clear understanding of this company information, firms may unwittingly expose themselves to a number of issues, including fraud, money laundering, sanctions risk and reputational damage that’s very hard to come back from.
By conducting effective KYB checks, firms can better understand whether a business is legitimate through these business verification tools, as well as ensure the true ownership, whether any of its directors or beneficial owners may present a risk, and then assess properly whether any further due diligence is needed.
Certain features are key when looking for a strong KYB tool, such as company verification, analysis of ownership, risk screening, automation, and ongoing monitoring. Businesses need to find a solution that helps them move more seamlessly from manual, document-heavy checks to a more secure digital option, which is faster and more reliable.
What to look out for when deciding how to choose KYB software solutions:
It’s not just about collecting information; it’s to aid compliance teams in assessing risk more confidently and being equipped to make better-informed onboarding decisions.
Of course, ensuring the data is reliable is one of the most important features of a KYB tool; businesses need to know that the information they are using to assess a company is accurate, current, and relevant.
A KYB solution being able to perform checks accurately can help teams to understand a business’s structure and, crucially, whether there are any areas that will need further review.
SmartSearch’s KYB solution is specifically designed to do just this. It can verify businesses and support KYB checks for AML compliance, and it does this by providing company identification data, information on shareholders and ultimate beneficial ownership, and any consolidated financial information.
Identifying ultimate beneficial owners is a key part of an effective KYB process. It may seem, at first, that a company may appear low risk; however, the information provided may not be painting a full picture, and the ultimate owners may present additional risk.
The type of KYB tool you want helps to identify UBOs quickly and clearly, allowing businesses to understand the complete structure of a company. This includes understanding who may benefit financially from the relationship and whether those people require any further screening.
SmartSearch ensures that UBO checks form a part of its wider AML solution, helping businesses to strengthen their KYB process. This is an important feature because UBO identification is so closely linked to wider AML checks, which can include KYC, enhanced due diligence, and the appropriate sanctions screening.
KYB checks shouldn’t just end as soon as the company and ownership structure have been identified. Businesses will need to screen all relevant individuals and entities against key risk indicators.
These risk indicators include, but are not limited to:
Sanctions checks
These checks help identify whether there are any links to financial crime, political exposure, or reputational risk caused by negative media.
When performing these checks, the best KYB tools should combine them into current workflows, rather than teams having to use separate systems. This drives efficiency, reduces manual work, and creates a more complete view of risk.
SmartSearch combines KYB with sanctions screening, PEP checks, adverse media screening, and enhanced due diligence capabilities, all combining to help businesses thoroughly assess both a company and the people connected to it.
Traditional manual KYB checks can often be slow and rigorous, especially when teams need to spend time gathering documents, searching registers, identifying ownership structures, and screening multiple individuals. Taking so much time at this stage can delay onboarding and create a sense of friction for genuine customers.
By automating these tasks, businesses can complete KYB checks faster and with much more consistency. A digital KYB tool helps to streamline the company verification stage, which, in turn, reduces administrative work and assists compliance teams with focusing on higher-risk cases that require their attention.
This is of particular importance to those businesses that work a lot with corporate clients, as it enables them to onboard a lot quicker, yet without weakening any compliance controls.
No business should treat KYB checks as one-offs. This is because company structures can change, new directors can be appointed and old ones removed, beneficial ownership can shift, all meaning that new indicators of risk can emerge over time.
By performing ongoing monitoring, businesses stay alert to any changes that may take place or come into effect after onboarding and are therefore ready to respond as soon as a customer’s risk profile changes.
Regulated firms should pay particular attention to ongoing monitoring, as they will need to maintain an up-to-date understanding of customer risk right through the entirety of the business relationship.
Audit trails and reporting are essential for all KYB solutions as regulated businesses need to be able to show the checks they’re carrying out and how decisions have been made.
A strong KYB tool that provides clear records of any company checks, screening outcomes, alert findings, and due diligence activity can help firms prove the consistent, risk-based process that has been carried out.
Choosing the right tool or business verification software for carrying out effective KYB checks means finding a solution that does everything you need it to when verifying a company. Businesses need to be able to rely on technology that can perform all of the necessary checks, detect risk indicators, and support ongoing monitoring to provide clear audit trails.
SmartSearch helps businesses carry out KYB checks as part of a wider AML and compliance workflow, bringing everything together in a cohesive system. This benefits compliance teams by offering a clearer view of any business risks and helping to onboard corporate customers with greater confidence. If you’re looking to streamline KYB checks and gain a clearer view of business risk, request a free demo today or contact our team to find out how SmartSearch can support faster, more effective due diligence.