All businesses want is their interests to be secured while they make corporate collaborations. Ponemon Institute conducted a study which states that more than 4 million dollars are lost due to non-compliance. Thus, Know Your Business is the sole source to check partner companies and stay compliant with AML regulations
KYB, when compared to KYC, verifies companies instead of clients through certified identification parameters which consist of identity documents of the company owner as well as the company’s registration number, etc. Failing to perform know your business checks lead to the risk of terrorism funding, money laundering, and other criminal activities.
Now that you know what know your business meaning is, let’s jump onto the reasons why KYB checks are important for any business.
1- Secure Business Relationships
Today’s commercial alliances rely on mutual understanding and shared goals. While an affiliate business may be trustworthy, it is possible that they are unaware of the effects of an ever era of online technology. Moreover, companies have little influence on their partner’s customers. In order to develop secure as well as durable connections, both companies must verify each other constantly. Know Your Business regulations provide a secure route of communication and a dependable technique to establish confidence.
2- Compliance with AML Regulations
The rise in economic fraud has made law enforcement authorities implement regulations to mitigate such fraud. An important guideline adopted in the Vietnam war was Bank Secrecy Act. The main objective of it was to fight tax evasion that occur due to illegal drug dealings. All the banks are obliged to reveal the dubious activity of clients, as their transactions exceed 10, 000 dollars under these monetary policies. This legislation offered a framework for AML and other important company verification criteria. As a result, in the following years, organizations such as FinCEN and FATF were formed.
AML solutions are a solid bet for certifying corporations and safeguarding their interests. KYB compliance is part of a hierarchy of anti-money laundering (AML) standards that safeguards corporate interests while also protecting against potential criminal activity. Staying compliant would also help the businesses avoid penalties and heavy fines. Thus, to satisfy the requirements of the modern regulatory environment, an automated KYB/AML solution is a must.
3- Boost B2B Conversion Rate
Good relationships with other business partners are important to develop a great brand image in the market. They can make and break a company’s financial success and has a direct effect on business-to-business conversion rate. Partner collaborations are a top priority for any company, whether it’s a startup or a well-established company. Affiliated firms could use know your business solutions to validate their identity without visiting and reporting to offices physically. According to Hubspot, the page visitors’ conversion rate is between 20-25% while the expectation to convert a visitor into a client should be 1.5-3%. Thus, companies that use business verification services could understand their partners and their specific needs better. As a result, they would offer interest-based services, which help the company boost its conversion rates.
4- Reduce Operational Costs
In this era of digitization, company verification solutions are the best choice to cut down costs of manpower and enhance their productivity. Because machines are less error-prone and are self-driving, it’s a great potential that would eventually remove the chances of human error. In companies, a large volume of operational activity is as important as security. Consistent and unexpected process delays could result in strained business relationships. When there is no mutual understanding, sales are dropped and the company would be at risk of losing its valuable capital contributions.
Thus, to meet benchmark standards, and reduce operational costs, it is critical to use digital KYB solutions for verifying companies. They have the convenience of online identity verification, which cuts down on business onboarding costs.
Final Thoughts
To warp up, KYB is a great choice for all businesses to verify partners and secure their relationships. When companies know who they are going to do deal with, they carry out their business with great confidence and trust. KYB checks also help businesses understand what their partners demand, thus boosting the business-to-business conversion rate. Besides this, complying with KYB guidelines is a mandatory practice for all companies, and ignoring it could cause them to pay hefty fines and penalties. Thus, verifying businesses has become an absolute necessity of the digital era to prevent companies from fraud and criminal activities.
