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Aug 01, 2022

Breaking Down the Steps to Successful KYB Digitisation

The Know Your Business (KYB) process is a series of business verification procedures that banks perform to onboard corporate clients. Digitising this process can future-proof the compliance function by streamlining onboarding workflows and strengthening risk management.

Corporate banks looking to reap the benefits of digitisation should start by breaking down the KYB process to its most fundamental steps. This will help to identify where and how to deploy digital regulatory technology (RegTech) solutions that can remove complexity and enhance efficiency.

1. Customer identification

The first phase of the KYB process involves gathering documentary evidence that confirms the identity of the corporate entity, controlling persons and beneficial owners. The traditional way of obtaining the documentation directly from clients can be time consuming.

Replacing this with the digital retrieval of KYB records reduces touchpoints and saves time. Banks can download the Certificate of Incorporation, Annual Returns, Memorandum and Articles of Association from official company registries. They can also digitally extract information on directors or beneficial owners from photo ID documentation.

To truly unlock efficiency gains, banks can leverage all-in-one business information service platforms from providers like CRIF, which offer real-time access to high-quality and accurate data from official registries around the globe.

2. Verification by data extraction and assessment

In the second phase of entity onboarding, banks have to review and verify the information on beneficial owners, controller persons or entities from the collated documentation. Retrieving company filing documents from official digitised company registries, whether directly or through business information service providers, streamlines this process because the documents can be verified instantly and digitally.

As part of their regulatory obligations, banks also have to screen verified entities against global anti-money laundering (AML) watchlists to identify sanctioned entities or individuals. The manual process of transcribing and reviewing data from disconnected systems is inefficient.

Instead, banks should consider implementing a compliance platform which seamlessly integrates leading AML watchlists and presents the screening results in an intuitive manner. This can boost efficiency and minimise mistakes due to human error.

3. Ongoing monitoring

Most banks adopt the risk-based approach recommended by the Financial Action Taskforce (FATF) to assess the exposure of corporate clients to illicit financial activity. This risk-based approach is essential in the third phase of onboarding: ongoing monitoring.

Global and local AML watchlists, as well as the identity and structure of corporate entities, often change over time. Therefore, banks need to regularly screen onboarded entities to ensure that the information on ultimate beneficial ownership (UBO) is always up-to-date.

Banks can utilise RegTech solutions to assign risk profiles and monitor relevant registries daily. Whenever changes to appointments occur, this will trigger real-time updates to company structures in the system. The result: compliance teams can perform AML checks on reliable and accurate information without needing to chase clients for documents.

4. Reporting

The final phase of corporate onboarding focuses on reporting. Banks are obligated to maintain records of transactions and identification data obtained during the due diligence process. This is essential to establish a full audit trail that captures every decision and action that has been taken.

It can be difficult to manually maintain this audit trail, especially when information is spread across multiple sources and legacy systems. This is where a centralised compliance platform that is integrated with legacy systems can make the most impact.

An example of this is Know Your Customer’s Workspace platform which includes automated audit trails and KYB reports that record all due diligence actions throughout the onboarding process. Utilising a solution like this allows banks to be audit-ready at all times.

Working with the right partners to accelerate digitisation

To successfully digitise corporate onboarding, banks need to break down the process to its most essential components. Working with business information service providers such as CRIF is one way to achieve this quickly and cost-effectively.

To learn more about our digital KYB solutions for your business, contact us to start a conversation.

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  • Breaking Down the Steps to Successful KYB digitisation