With the digitization of the business world, an organization requires an accurate, speedy, and automated verification process. Especially in the Fintech industry, digital threats are increasing over time. The manual business verification approach is as reliable as eKYB, but the big difference is that the automated solution requires less time and less human effort. Electronic knows your business is a fast and safe process of verifying the companies to make legal bonds. This ensures secure financing for the long term with less risk of financial crimes. Additionally, development in artificial intelligence AI and machine learning ML is empowering automated solutions to verify business identity.
What is E-KYB?
Electronic KYB accelerates the company verification process by evaluating its legal status. This helps to ensure that onboarding companies comply with anti-money laundering AML and counter-terrorism financing CTF regulations. It is a systematic approach to reduce illegal funding and promote legal business dealings. KYB includes gathering business data and its screening, understanding its ownership structure and nature of business, and assessing financial risks. Hence, corporations must rely on KYB verification procedures while onboarding companies with transparency.
An Overview of the EKYB Process
The EKYB process helps to determine real and shell companies; the process is based on the following steps:
- Data Collection
The primary step of the Know Your Business process is collecting the business information to evaluate its legitimacy. Collect the company, including the following documents:
- Name
- Registration number
- Business country residence
- Website
- Register location
- Postal address
- Shareholders
- Ultimate beneficial owners
- Gathering Documents
In eKYB, business documents are uploaded online for verification purposes. The required documents are necessary to determine the legal status of the company. The documents are
- Articles of Incorporation and Association
- Certificate of Incorporation
- Copy of Director registry
- Copy of Shareholder registry
- Copy of State Business Registry
- Memorandum
- Document Verification
All the gathered documents undergo digital verification using advanced technologies such as optical character recognition (OCR) to extract text.
- Ultimate Beneficial Owners (UBOs) Verification
The entities behind the business that hold at least 25% of the company’s share are called ultimate beneficial owners (UBO). UBO may be the beneficiaries, directors, and shareholders of the company. Shell companies have a policy to hide UBO identity, so criminals are encouraged to do business there. While onboarding the company, verifying its beneficial owner is mandatory to prevent fraud and risks. eKYB exposes if blacklisted, politically exposed persons, PEPs, and criminals are present behind the business.
- Biometric or Multi-Factor Authentication
Ekyb processes may include a biometric or multi-factor authentication process to verify the business identity for security purposes.
- Ongoing Monitoring
The final step also requires covered entities to provide information on agent banks, jointly and severally liable parties, related parties, and feeder and shell companies in BSA enforcement to provide information about beneficial ownership and identify natural persons.
Benefits of the e-KYB process
- Better Efficiency
This means that through the e-KYB process, many KYB checks can be conducted within a relatively short time, thus reducing the onboarding process and time that may be needed to address any of the issues.
- Improved Accuracy
The e-KYB process significantly helps minimize human errors since it is more automated. Consumers can be assured of continual and accurate results with automated algorithms when performing functions on existing data. They consist of ensuring more accurate decisions in remediation processes via direct comparison to the original source instead of relying on entered data, which may contain a wide range of errors and omissions.
- Risk Mitigation
The eKYB assists in establishing increased risk factors and excluding unjustified access to the financial system. Companies do not have to scan physical papers and documents for submission, download printed paper forms and documents, or physically go through the departments or sections. Corporations benefit from quick assistance and simple account generation because electronic data is easily and quickly authenticated.
Implement eKYB Process
The primary aspects for businesses that seek to shift from manual to eKYB include identifying which technology or a combination of these technologies to apply. There are basic dimensions that need to be evaluated for selection, and these include business requirements and compliance requirements, installation ease for the business, and budget. Ekyb helps choose the most adequate solution to digital KYB needs. That is when businesses embraced eKYB, which changed the notion that several people check the data. This means that businesses, in general, enjoy more privacy as they shop for their necessities.
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