In the realm of FinTech, understanding the nuances between Know Your Customer (KYC) and Know Your Business (KYB) is essential for businesses navigating the complexities of regulatory compliance and risk management. Both KYC and KYB processes are foundational in building trust and ensuring financial integrity within companies.
FullCircl, a SaaS platform renowned for eliminating regulatory and verification hurdles, recently explored the differences between KYB and KYC.
KYC—Know Your Customer, or occasionally Know Your Client—is a crucial set of policies and procedures deployed by firms, particularly within the financial services sector. These measures are designed to verify the identities of clients and mitigate risks associated with money laundering, terrorism financing, fraud, and other illicit activities.
The Importance of KYC
With a significant 64% of UK businesses encountering economic crimes such as fraud and corruption in 2022, the importance of robust KYC measures has never been more pronounced. Effective KYC practices not only prevent criminal undertakings but also aid in understanding customer needs, enhancing trust, and ultimately reducing operational costs.
KYC is not a one-time check but a continuous safeguard applied throughout the customer lifecycle. From pre-screening potential clients to ensure they align with the business’s risk profile, to onboarding and maintaining long-term relationships, KYC plays a pivotal role at every stage.
Electronic KYC (eKYC) has modernised the traditional KYC process by enabling digital verification, which enhances accuracy and speed while reducing manual efforts and costs. Moreover, the concept of Perpetual KYC (P-KYC) represents a proactive approach, continuously monitoring clients to adapt quickly to changing needs and regulatory demands.
The Distinction between KYC and KYB
KYB—Know Your Business—is equally critical when firms enter into relationships with other businesses. It involves verifying business legitimacy through comprehensive checks on company structure, ownership, and financial health, ensuring that businesses meet compliance and risk standards.
While KYC focuses on individual clients to prevent financial crimes, KYB targets business entities to ensure their legitimacy and compliance. The information gathered during KYB checks includes details on the business’s structure, its key stakeholders, and financial standing.
FullCircl’s Role in Advancing KYC/KYB
FullCircl is at the forefront of advancing KYC and KYB processes. By integrating automated data collection and analysis, along with executing essential checks and monitoring, FullCircl enhances both onboarding and ongoing customer relationship management. Their platform not only supports compliance but also aligns with individual business policies and risk profiles, driving innovation in the KYC domain.
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