Modern businesses require an innovative, effective, and low-cost way to perform due diligence on potential partners, customers and investors, around the world. Business of all sizes need to able to determine the authenticity of a business, in order to help detect fraudulent behaviour and criminal activity, such as tax evasion and money laundering.
To be useful, identity verification needs to be fast, thorough, global and cost-effective. Verifying business identities adds a few more layers of complexity. Compliance, legal and financial teams need to automatically validate a number of company vitals – including business registration numbers, company names, addresses, status, key management personnel, and dates of incorporation – by querying hundreds of government registers and public records in real-time.
The Need for Business Verification
In many jurisdictions, there are strict requirements for proper Customer Due Diligence (CDD) and adherence to Know Your Customer (KYC) rules for businesses opening accounts. For example, in the EU, the new AMLD4 rules took effect in June and in the US, the FinCEN Final Rule is coming into full effect in May 2018. While the exact rules depend on the specific jurisdiction and industry your business operates in, there are two general considerations:
1) Verify Business Details
· Obtain and verify company vitals of the applicant
· Registration Number (Business Registration Number)
· Business Name (The Name of the company)
· Business Status (Operation status of the company)
· Address (Contains the address where the company is operating)
· Managing Directors (This may include key management personnel of the company)
· Date of Incorporation (The Day, Month, Year of the incorporation of the company)
2) Verify Ultimate Beneficial Ownership (the UBO)
Once you have the company vitals, you need to perform a risk assessment to determine if Enhanced Due Diligence (EDD) is necessary. Depending on the applicant’s industry, the countries they operate in, the value of transactions, the volume of transactions, and other risk factors, an EDD check might be in order.
If so, then steps must be taken to ensure you know who the UBO(s) are for that business. According to the FATF, “beneficial owner refers to the natural person(s) who ultimately owns or controls a customer and/or the natural person on whose behalf a transaction is being conducted. It also includes those persons who exercise ultimate effective control over a legal person or arrangement.”
The problem with traditional business verification solutions
While the regulations for Business Verification are becoming more rigorous, these procedures are not entirely new. Financial institutions (FIs) always needed to look at business documents. They’d want an applicant to come in with all their business records. They’d pore over the documents manually, make copies, make notes, pass them on to other departments, get responses, ask the applicant back in for clarification, and around the merry-go-round it went.
This manual-intensive process is slow, expensive, and frustrating, both for the FIs and for the business applicants. To give some specific numbers, a Forrester Consulting survey found that it cost up to USD $25,000 and it took up to 34 weeks go through the AML, KYC onboarding process. For emphasis, $25,000 and 34 weeks to onboard one client. While the average is lower ($6,000 per client), it indicates the severity of the issue.
The good news is that businesses now have the option of requesting business registration documents – containing shareholder information and annual reports – from the applicable in-county register, identify the primary beneficiaries or Ultimate Beneficial Owners (UBOs), and perform watch list checks in real time.
The application of Optical Character Recognition (OCR) technology helps automate compliance workflows by extracting data from official documents retrieved from government registers. With use of both Artificial Intelligence (AI) and Natural Language Processing (NLP), extracted data can be reliably allocated into searchable fields, where it is then delivered into a formatted and consumable report, which can be reviewed during the due diligence process.
The latest business verification solutions empower organisations with the necessary information required for Know Your Business (KYB) due diligence to help meet regional and international AML/KYC compliance requirements. Automating compliance workflows, reducing manual front-to-back office operations, taking advantage of digital processes, decreasing the risk of fraud, and allowing staff to focus on key compliance considerations.
Modern solutions analyse, verify and provide data intelligence for over 250 million business entities around the world. Enabling real-time verification of company records through official registers, performing AML checks, uncovering the ultimate beneficial ownership (UBO) structure, and running KYC checks on UBOs – all through a single API integration. Fully automating the retrieval of company vitals from government registers, worldwide, to help streamline workflows for Know Your Business (KYB), Anti-Money Laundering (AML), Know Your Customer (KYC), and Customer Due Diligence (CDD) processes.
Ultimately making it easier – and more secure – to conduct business on a global scale, while mitigating risk and adhering to a diverse range of current and future compliance regulations. Now, your compliance staff, customers and executive team have a better way to verify your business customers. to start really knowing who you are doing business with.
Trulioo is a global ID verification company that provides advanced analytics from traditional and alternative data sources to instantly verify identities and businesses online. Trulioo’s bank-grade electronic identity verification (eIDV) platform, GlobalGateway, enables businesses to perform frictionless identity verification for more than 4.5 billion people in over 60 countries via more than 200 data sources – the widest coverage in the market. GlobalGateway helps businesses comply with Anti-Money Laundering (AML) and Know Your Customer (KYC) identity verification needs and provides a reliable and trustworthy way for businesses to evaluate new and existing users through one single API. Available through the GlobalGateway platform,Trulioo’s Global Business Verification automates the due diligence process for Know Your Business (KYB) and KYC compliance workflows by leveraging innovative Optical Character Recognition, Natural Language Processing, and Artificial Intelligence technology, allowing customers to instantly and cost-effectively verify over 250 million business entities online. Named as a 2017 CNBC Disruptor 50 Company, Trulioo’s mission is to solve global problems associated with verifying identities by powering fraud prevention and compliance systems for customers worldwide in an effort to increase trust and safety online. For more information visit www.trulioo.com.