While the Know Your Customer (KYC) process is very well known, the KYB – Know Your Business – process is less so. How are the two related?
According to Electronic IDentification, the difference from KYC lies in the purpose and intentionally of the process – with KYB more focused on identifying companies and suppliers.
KYC, meanwhile, corresponds to the process carried out by certain companies to identify and verify the identity of their customers in a compliant way with regulations in force. KYC is a process that tries to fight money laundering, terrorist financing, tax crimes and phishing by registering a user as a customer of a company.
The KYB business verification process shares all the features seen in defining KYC process. However, the difference lies in the user to identify – while in the standard process, potential clients or users are identified to be registered in a company, the KYB process is the one in which the person responsible or legal representative of a business is identified.
eID said, “Companies that offer professional services to other companies or those that constantly work with SMEs and freelancers must establish KYB procedures to identify the legal representatives of these businesses and verify their connection with the client company.”
The company added that as with the KYC process, digital KYB solutions help reduce costs, eliminate bureaucracy and develop control methods that are safer and more reliable than traditional identification methods.
The use of the KYB term is relatively recent, and the demand for the solutions has skyrocketed due to the announcement of various regulations in many states globally that forced its implementation.
As a result, the digitalization of processes and delocalization of them has caused companies that offer products and services to or after companies (B2B) need to establish KYB procedures.
eID said, “They need to reduce costs and times of administrative procedures and simplify previously tedious and complex processes, while ensuring that relations with their B2B clients are protected and have adequate legal support, also developing internal compliance policies broader regarding relationships with customers and suppliers.”
Read the full post here.
Copyright © 2022 FinTech Global
