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How to Verify If A Business Is Legitimate? KYB Explained

Written by InvestGlass on .

In the realm of finance and banking, ascertaining the legitimacy of businesses is far from routine—it’s a safeguard. Protecting against financial crimes, fraud, and money laundering is the game. Enter KYB (Know Your Business), the guardian at the gate of business interactions.

What Lies at the Heart of KYB? Verifying Companies for Compliance

KYB isn’t just KYC’s big brother—it’s a whole new beast. While KYC (Know Your Customer) deals primarily with individuals, KYB goes under the hood to scrutinize companies and their Ultimate Beneficial Owners (UBOs).

InvestGlass for companies verification
InvestGlass for companies verification

Types of Information for KYB Verification

  1. Basic company identification info
  2. Compliance and license details
  3. UBO insights
  4. Company relationships and context
  5. Sanction and blacklist checks

The KYB Journey: A Seven-Step Guide

Here’s your roadmap to business verification:

Step 1: Know the Rules of the Game

Get Comfy with Laws and Regulations

You can’t play the game if you don’t know the rules. Begin by immersing yourself in local Anti-Money Laundering (AML) laws and Customer Due Diligence (CDD) regulations. If the company offers financial services, these rules are especially stringent.

Tools and Resources

  • Companies House: A treasure trove of company information.
  • Financial Services Register: Your go-to for financial compliance measures.

Quick Checklist

  1. Download AML laws
  2. Check CDD regulations
  3. Visit Companies House for official sources
  4. Get insights from the Financial Services Register

Step 2: The Initial Check

Verification 101

First, find out if you’re dealing with a legitimate company. Obtain the company’s address and company number, then validate these details through Companies House or a credit check.

Digging Further

  • Company Website: Look for an official domain.
  • Company Credit Report: Checks the company’s credit score and financial performance.
  • Better Business Bureau: Reviews and accreditation.

Key Points to Validate

  • Company name
  • Physical address
  • Company number
  • Credit score

Step 3: Dig Deeper

Watchlist Wonders

Cross-reference the specific company against AML watchlists. Spot any red flags? Proceed with extreme caution.

Pro Tips

  • Google Reviews: Negative reviews are a warning.
  • Social Media Presence: Lack of activity could signify a fake web business.

Critical Elements

  • AML watchlist
  • Public reviews
  • Social media platforms

Step 4: Who’s Really in Charge?

Behind the Curtain

Execute due diligence on Ultimate Beneficial Owners (UBOs). Make sure they’re not blacklisted anywhere.

Checkpoints

  • Shareholder Information: Who holds the cards?
  • KYC Checks: Are these UBOs verified?

Items to Confirm

  • UBO identity
  • KYC compliance
  • Shareholder details

Step 5: Ownership Labyrinth

The Intricacies

Break down the ownership structure of such a company. Shady areas? Red flags should be flying.

Key Factors

  • Director Details: The decision-makers.
  • Incorporation Date: How long have they been around?

Critical Info

  • Ownership hierarchy
  • Director roles
  • Incorporation records

Step 6: The Tech Advantage

The Automated Avenue

Technology can fast-track KYB verification. Automated tools provide a comprehensive, multi-dimensional analysis of online businesses or limited companies.

Essential Tools

  • Automated KYB platforms
  • Financial analytics software

Step 7: The Never-Ending Story

Keep Your Eyes Open

KYB isn’t a one-time event. You must keep your data up-to-date and continually reassess risks.

Keep in Mind

  • Bank Account Details: Always up-to-date?
  • Contact Details: Keep offline contact information handy.

Routine Checks

  • Financial status
  • Compliance audits
  • Company history updates

The Risks of Skipping KYB Checks

  • Fraud Exposure: Engage with fake web businesses, and you’re asking for trouble.
  • Legal Backlash: Non-compliance isn’t an option.
  • Reputational Hit: One wrong move can cost you big.
  • Unsavory Associations: Do you really want to risk aligning with illegitimate businesses?

InvestGlass isn’t just another name in the KYB (Know Your Business) landscape. It’s a vanguard, a trailblazer. This Swiss cloud solution delivers a future-oriented, risk-based approach that’s a game changer for banks and other business verticals. The icing on the cake? A Software as a Service (SaaS) model that simplifies tech management and slashes costs.

The Gravity of KYB in a Nutshell

Doing business with legitimate businesses is non-negotiable. KYB is the shield that keeps financial institutions from dabbling with shady entities. It’s a way to ensure you’re dealing with a real company, not a fake company. The price of skipping KYB? Don’t even think about it. It’s a gamble you can’t afford.

Key KYB Elements for Verification

  • Employer Identification Number (EIN)
  • Limited Company Status
  • Physical Location
  • Web Presence
  • Legally Registered Name
Enforce digital verification with InvestGlass
Enforce digital verification with InvestGlass

The Devil’s in the Details

Here’s how InvestGlass elevates KYB:

EIN & Limited Company: The Basics

An Employer Identification Number (EIN) is a must-have. It’s the business equivalent of a social security number. Alongside, the limited company status tells you a lot about the business’s financial and ethical stance.

Physical Location: More Than Just a Brick and Mortar

A brick and mortar location on Google Maps is a good sign, but not the be-all and end-all. Some small businesses might not have a physical storefront but are still legitimate. Always cross-verify with the local chamber of commerce.

Web Presence: Beyond the Landing Page

Having a web presence isn’t just about having a snazzy website. Check for domain names, associated products, and even big contracts they’ve landed. A quick search could reveal red flags like stock photos or suspicious sounding language.

Language & Visual Cues: Don’t Ignore the Signs

Notice poor English on the website? Could be a red flag. The same goes for generic stock photos. Real businesses invest in quality content.

Table: Red Flags in KYB Process

Red FlagImplicationPoor EnglishQuestionable legitimacyStock PhotosLack of investment in real assetsSuspicious LanguagePotential fraudNo Physical LocationRequires extra verification

Who Benefits?

Potential customers and most companies, including small businesses, can breathe easier. InvestGlass’s KYB solution provides a safer space for transactions, making the world of business a bit less treacherous.

InvestGlass Approval Process and Automation
InvestGlass Approval Process and Automation

Final Thoughts

InvestGlass is a platform that’s more than just a KYB solution. It’s an ecosystem that employs advanced tools and analytics to keep you on the safe side of business. With search functionalities that go beyond a quick search, to phone numbers and landline numbers, it leaves no stone unturned. It’s a modern approach for a modern world.

In a realm where quite a substantial amount is at stake, cutting corners is not an option. InvestGlass ensures that you don’t have to.

Ready to upgrade your KYB process? InvestGlass is the answer you’ve been searching for.