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Why KYB Solutions Need to Adapt to Business Needs

The process of onboarding a new entity or entering into a new business relationship traditionally involves substantial manual techniques that include intensive paperwork—from filling forms and checking boxes to performing thorough background checks. Entering a business relationship requires the same prudence exercised by many businesses for their B2C KYC risk mitigation. The regulatory environment, which includes the Payment Services Directive (PSD2), 5th Anti-Money Laundering Directive (AML5), and General Data Protection Regulation (GDPR), has further mandated business onboarding requirements. Know Your Business (KYB) is a process for identifying companies and their Ultimate Beneficial Owners (UBOs), CEOs, directors, and compliance adherence.

The need for a KYB process is evident from the increasing online presence of organizations, especially those under scrutiny, e.g., financial service providers. The need to know the risk within the initial onboarding of a business can mean the difference between staying in a business and crashing out completely. With all these complexities and the need to fulfill compliance requirements, companies have adopted technology to get ahead of the curve and automate the due diligence underwriting process.

Several effective solutions on the market, which offer a better alternative to manual compliance and risk mitigation checks, possess the following characteristics:

  1. Extensive Global Database: Identity is all about information. A successful KYB process requires access to data from various sources: global corporate registers, government registers, public records, international PEP records, and sanction lists.
     
  2. Real-Time and Continuous Monitoring Capability: KYB is an on-going process owing to the dynamic nature of online onboarded business relationships. Constant additions or information updates from varying sources require a service that can adapt to fast-changing environments and keep companies compliant.
     
  3. Cross-Border and Multi-Jurisdictional Capability: Such solutions enable companies to onboard businesses across borders regardless of territory and local or international compliance obligations, thereby accelerating the onboarding process and forging long-lasting relationships.
     
  4. Efficient Risk-Management Controls: KYB is not just for compliance; it is a leading data-driven dynamic fraud prevention process. Businesses and their associated customers and transactions are verified with a certain level of subtlety without additional friction to the online experience.
     
  5. Simplicity and API Integration: Since many organizations employ an array of systems, an API endpoint facilitates ease of integration for quick information retrieval, sharing with appropriate parties, coordinating responses, and flagging cases for additional reviews. A simplified dashboard makes data consumption accessible and enhances user experience. Global data points and hundreds of KYB/KYC data sources are harmonized through one API access, giving a 360° view of a business or customer. In addition to cost reduction, this global view of compliance and fraud prevention improves reaction time for fraud prevention and accessing real-time intelligence for various risk mitigation segmentations.

KYC/KYB Solution Providers

The KYB solution offered by 4Stop addresses the needs of modern global businesses by making KYC and KYB processes more robust, agile, and consequential through technology. 4Stop provides companies with a turnkey solution to efficiently address onboarding risk analysis and regulatory compliance adherence in a fully automated manner. The company is significantly streamlining business underwriting and saving organizations a lot of time and unnecessary paperwork. Furthermore, its solution provides access to global best practices through shared experiences and networks rather than the unitary siloed approach to information management, which most organizations have used in the past.

Through one API integration, businesses have access to one of the world’s largest KYC/KYB data orchestration hubs where they can activate any data source in real time. All relevant data is on one centralized view for easy analysis and investigation of real-time verifications and reports. The KYB solution offered by 4Stop fully supports a wide range of compliance workflows per region and market with full customization on data due diligence to underwrite and onboard businesses quickly while maintaining business relationships with ease. Companies can select relevant parameters attuned to their specific requirements—from locating an entity in an advanced business search identifier to performing a comprehensive data analysis on businesses’ identity, share structure, operational performance, compliance adherence, online presence, and credit—while obtaining supporting registry documentation. Furthermore, a deep dive KYC verification of an identified UBO or director can be activated through a click. Risk analysis, profiling, and recommendations are conducted in real time, and all underwriting files are accessible on one modern, feature-rich case management platform.

Cost Implication

For many entities, underwriting businesses can take as much as 26 days to process. Adopting data-driven due diligence methods allows entities to improve their onboarding time and acceptance rates. Partnering with an orchestration hub comes with many advantages and eliminates the need to integrate and manage multiple third-party data providers—it reduces data costs, manual processes, and resource requirements. The industry average is $165 per business onboard. 4Stop is an orchestration hub that allows entities to reduce this cost to as low as $10 per onboard through an enabled pre-screening process. Businesses are quickly evaluated with built-in cascading verification logic prior to granular due diligence to ensure the best data output, coverage, and performance.

Closing Thoughts

Historically, technological advancement in the area of compliance has lagged. However, as we continue to see evolutions in regulatory obligations worldwide, many technology providers within the RegTech sector are striving to simplify and future proof processes. Partnering with orchestration hubs is proving to be the future in leading risk mitigation because of ever-expanding extensive data hubs and endless possibilities for verifications, rule configurations, and advanced analysis intelligence. 

Enterprises can enhance their risk mitigation protocols to increase authorization rates and profitability and obtain future-proofed fraud prevention and compliance adherence with little to no impact on their businesses. 

To learn more about the end-to-end automated KYB solution offered by 4Stop, please visit 4stop.com.