KYC-Chain’s Corporate KYC: Resource-draining onboarding is over

As global regulations governing financial transactions continue to expand and evolve, sectors and businesses that previously operated in regulatory grey zones are now facing an urgent need to be compliant.

Know Your Customer (KYC) processes are an integral component of Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) protocols. Companies offering financial or other regulated services – such as crypto companies or other Virtual Asset Service Providers (VASPs) – are expected to have robust KYC processes in place to vet potential individual customers. 

But what about businesses that sometimes, or mostly, count other businesses among their customer base? That’s where Know Your Business (KYB) or ‘Corporate KYC’ comes in.

Corporate KYC involves gathering verified information on a business’s identity and operations, and is an essential process for companies that are regulated by global AML/CTF regulations. 

Basic Corporate KYC information can include:

• Understanding who controls a corporate entity – its Ultimate Beneficial Owners (UBOs) or Persons of Significant Control
• The jurisdiction it is registered in
• Whether it is a fully licensed and registered entity

Additionally, it is also often important to carry out Enhanced Due Diligence (EDD) on businesses that are flagged as potentially risky. EDD in a Corporate KYC process can include analyzing whether a corporate entity:

• Is connected or does business with any sanctioned parties or in sanctioned jurisdictions
• Has a history of legal sanctions or fines
• Is featured in any adverse media or watchlists 

Inefficient Corporate KYC: Expensive and Time-consuming

The traditional approach to corporate KYC taken by banks and other regulated organizations has involved carrying out due diligence on potential corporate customers using time- and resource-intensive manual processes. 

This tends to involve a company’s internal compliance team(s) conducting manual research of multiple government registers, sanctions watchlists and adverse media databases in order to identify whether a prospective corporate customer poses a risk from a regulatory standpoint.  

As well as being heavily time-consuming, the process can also be complex and difficult. This is particularly the case when dealing with small or new businesses that have less of an identifiable history or track record. 

When compiling KYC reports on a potential client – whether it is an individual or a business – the pressures of time on compliance teams can also lead to inconsistent documentation and analysis. This data then needs to be compiled, made uniform and entered into digital databases. 

The process provides plenty of opportunities for human error. And when it comes to compliance and regulation, ensuring the integrity and quality of data on customers is not just a matter of managing risk – it can be critical for a company’s very survival in the face of increasingly strict regulations. 

The inefficiencies of manual KYC checks haven’t gone unnoticed. In research carried out by Thomson Reuters, the organization found that the average annual expenditure of financial institutions carrying out Customer Due Diligence (CDD) and corporate KYC was around US$48 million per institution, with some of the larger firms even reaching US$70 million. 

Of the over four hundred compliance leaders interviewed as part of the survey, the majority also reported that accessing UBO data was the biggest obstacle facing their teams when conducting CDD and corporate KYC.

Other major challenges of manual CDD/KYC are drawn-out periods of onboarding. According to a February 2021 article in Finextra, it takes FIs an average of 3-4 months to successfully onboard a corporate customer. 

This can lead many potential customers to abandon the process before it is over, with estimated losses to the global corporate banking market in 2019 in the eye-watering region of US$3.3 trillion. 

For companies seeking to establish a relationship with a FI, the demands for information placed by FIs on their own compliance teams can also be inconsistent and highly draining on a small company’s limited resources. The security and privacy of sensitive data is also a major concern.  

While KYC-Chain is known for its advanced KYC checks for individuals, our end-to-end workflow solution also boasts powerful Corporate KYC features to ensure the corporate customers you onboard are not going to cause you any regulatory problems. It also makes the process incredibly fast. 

Let’s take a look at how KYC-Chain’s Corporate KYC capabilities work. 

KYC-Chain: Corporate KYC

KYC-Chain’s Corporate KYC solution helps businesses and organizations adhere to new and existing AML/KYC and CDD requirements. Our end-to-end workflow solution is automatically configured to be able to screen both individual and corporate entities. 

Once a potential corporate customer has initiated the onboarding process, our automated solution checks its name against a large list of  over 160 million entities across 139 national corporate registries. 

Our instant access to government registers and public records includes the ability to retrieve official company documents in order to conduct EDD on a company’s history when required. These capabilities allow KYC-Chain clients to instantly verify a business and its UBOs through one seamless workflow.

Business Verification 

Businesses must adapt to today’s consumers, who expect and demand real-time access to products and services online – or risk losing business to competitors. 

Business Verification provides companies and organizations with a scalable solution for onboarding customers quickly, cost-effectively and efficiently. This is a powerful means of verifying that the entity making the application to use your service is who they say they are. 

Verifying companies and individuals in real-time helps automate workflows, increases revenue, decreases the risk of fraud, and protects bottom lines.

At the same time, our tool checks the entity’s names and UBOs against global watchlists that include government databases of sanctioned entities, Politically Exposed Persons (PEPs) and other identifiers informed by AML-best practices. 

KYC-Chain also offers ongoing/continuous monitoring to ensure that any changes to shareholder ownership, company structure and legal status after they have been onboarded are packed up and reported to your compliance team. 

Our founder and CEO Edmund Lowell recently spoke to Money Laundering Bulletin (MLB) about this feature, contributing to an important conversation on how companies and FIs can safeguard against money laundering using new advancements in automated KYC technology. 

Edmund has also spoken to MLB about how advanced CDD and corporate KYC can serve as a powerful tool for boosting UBO transparency and decreasing the risk that PEPs and other high-risk individuals obscure their interests in companies. 

Put simply, the error-riddled, time and resource-consuming manual due diligence ways of the past are now giving way to automated corporate KYC checks. 

Organizations can now deploy regulatory technology solutions that help ensure compliance requirements while enabling seamless onboarding of corporate clients – all using a fraction of the time and resources that would be necessary with manual processes. 

Corporate Risk Scoring

One of the most powerful tools of our end-to-end workflow solution is our advanced risk scoring. 

As we outlined in previous articles on both individual onboarding and crypto wallet screening, KYC-Chain’s risk scoring allows our clients to build detailed and comprehensive risk profiles of their potential customers, which allows clients to take a risk based approach.

For executing corporate KYC on corporate entities, our tool can allow you to first build an automated risk profile before passing medium to higher risk profiles on to your human compliance teams to evaluate further. 

This risk-based approach significantly reduces the burden on your human compliance teams while ensuring you maintain robust and compliant AML protocols. 

Additionally, KYC-Chain is unique in that our workflow solution has an in-built feature that can check whether users – individuals or corporates – have already registered for the onboarding process. This security measure helps to prevent sybil attacks, and needs to be passed before a user can begin the risk scoring process. 

Are you looking for a market-leading automated KYC tool for onboarding your corporate or individual clients? Get in touch and we’ll be happy to discuss how KYC-Chain can be your partner in the process.