Business verification — the only solution is transparency (introduction to KYB Platform, now known as Vespia)

Are you sure your business customer is truly who they claim to be?

You want to strike a deal with a new business customer or partner and everything looks good on paper: they have a beautiful website; Google seems to show that they exist; and they have even sent you documents on professional-looking headed paper. You fulfill your side of the transaction by sending your goods out to them, but the payment never arrives in your bank account. It’s only then that you really start digging and discover that the company you’re dealing with doesn’t actually exist. Worse still, you could soon find yourself becoming unwittingly embroiled in a case of money laundering that catches fire on social media and beyond.

It has become all too easy to conduct digital fraud. Nowadays almost anyone has access to the technology needed to create a fake website or forge incorporation documents, and thus become indistinguishable from a legitimate business, at least at first glance. Trust is now, more than ever, the beating heart of every new business relationship.

For the longest time, compliance, especially when it comes to anti-money laundering (AML), has been ‘something that the big banks do’ — small businesses and those not in the financial sector weren’t really troubled by it. More recently, though, as life moves inexorably online, as business becomes ever more global, and as countries pass new AML laws, the general conversation around transparency has changed: most businesses are now taking far more care to know who they are actually dealing with. In the ‘word of mouth’ era it was possible to be a bad actor and still manage to escape social disapproval, at least for a while. Nowadays, under the ever-present scrutiny of social media, a seemingly minor business mistake can be magnified into a scandal your company may never recover from.

Your company’s reputation and digital probity are today’s key success criteria. Trustworthy business customers, reliable partners, and crystal-clear business solutions can do amazing things for your market share but also boost your credibility as an industry leader in ethical business practices. If you want to beat the market, the only solution is to stay compliant with changing laws.

The obligation to comply with AML

In order to create a world of honesty and transparency, AML regulations now feature on the statute books of most jurisdictions. For example, in 2015 the European Union (EU) announced anti-money laundering directives (AMLDs), the most recent one being 6 AMLD (2020). The EU framework is probably the most detailed and forward-thinking set of compliance legislation there is. It’s the standard to which other countries measure themselves, in terms of AML compliance. When in the EU, you must do as the EU countries do: respect the law, play by the rules, and stay compliant with new regulations as they necessarily emerge.

AML laws were initially created to prevent financial institutions from becoming involved in money laundering and to ensure customer safety. There remained something of a legal grey area but, as regulations have been updated, refined, and reinforced, many businesses are now obliged to proactively combat money laundering and monitor any suspicious activity from their partners. Industries new and old are reimagining their compliance strategies. Fintech, cryptocurrencies, investment, trading, eCommerce, crowdfunding, and even logistics are all looking for ways to incorporate verification methods into their everyday business practices. It’s not about being obligated by law: fraud does not discriminate against the size or the business activity of your company. You may be a big financial corporation or an SMB; the burden of verification lies solely on you. The simple lack of Know Your Business (KYB) and AML compliance may result in a loss of money, loyal clients, and reputation.

KYB — what is it?

KYB (Know Your Business): we define KYB as the process required to verify the company you are dealing with. We also call it business verification. It differs from Know Your Customer (KYC) in that it involves checking the background and structure of a legal entity, as well as the people associated with it. A big part of KYB is finding the beneficial owners and their ownership structure.

It’s a big responsibility. And not every company has the luxury of a compliance team with endless resources. You may already spend a lot of time and money compiling a profile of your business customers, suppliers, or even investors. It becomes even more difficult once you understand that every country has its own business register with its own idiosyncrasies that need navigating and, even for the most experienced KYB detectives, many documents remain forever out of reach. The work that must go into uncovering a complete, detailed, and reliable portrait of a business entity is often breathtaking. And don’t get us started on the search for an ultimate beneficial owner (UBO)!

Main aspects of the KYB process

Manual vs. automatic KYB

Currently, there are two main ways to conduct business verification: manual and partially automatic. Doing it manually is very time-consuming and involves browsing all the registers and sanction lists available and requesting — and waiting for — the necessary information. You may receive scattered, incomplete data in a local language which is difficult to translate accurately. Some sources claim that manual verification takes an average of 32 days per customer, but sometimes can be as long as 4 months!

Partially automatic KYB means using third parties who provide business customer verification. It’s faster and may be cost-effective, although you will need to pay for individual procedures separately. We have calculated that in order to achieve an acceptable level of KYB you would need to combine at least 5 different approaches. There is no product that offers a comprehensive set of verification checks — identity verification, KYB/KYC, and AML compliance — until now.

KYB Platform — what is our mission?

Julia, our founder, wanted to develop a simple new standard for all KYB-related compliance procedures. It has a simple new name: KYB Platform. Our one-stop verification solution uses the latest AI and machine learning algorithms to help you prevent business fraud, meet regulatory compliance, and assess risks related to your business relationships. We will harvest more detailed data than any manual compliance team and, as a result, you will obtain a thorough compliance report with clear headlines containing the essential points. You can now devote yourself to your core business tasks and leave compliance to KYB Platform.

Many traditional compliance services focus on offering API integration, which is a great solution for a big financial corporation with plenty of resources and a high volume of customers. However, this is not always ideal for an SMB, because integration is time-consuming and expensive. Not to mention that you are going in blind, spending all this time integrating without fully knowing the origins of the data nor how fresh it is.

We decided to start with a more approachable, user-friendly solution in the form of our KYB Platform dashboard. This interface already gives you access to the following features:

• Access to over 200 business registers
• PEP, sanctions, and adverse media checks
• Identity verification
• KYB forms
• Original incorporation documents straight from the registers

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The dashboard is a great way for you to get a glimpse of the capabilities of the platform. We know, however, that your volumes will not stay low forever. API integration is one of a number of important features we will be launching very soon. You can keep up to date with each new development by bookmarking our blog. In forthcoming posts we will show you why we’re so excited about KYB Platform; we’ll be going into more detail about the stages of money laundering; and we’ll talk about how KYB works in your industry. Stay tuned!

We believe compliance should be as simple as possible, as fast as possible, and fully automatic — for any type of business, large or small, fintech or eCommerce. We think that business should be and can be safe for both you and the verified parties you are working with. It’s time to change the way companies interact and help them play by the rules in the global business arena. KYB Platform creates a world where business verification becomes as easy as breathing — so there will be no reason not to do it.

• If you would like to try Vespia (previously KYB Platform), contact us.
• Are you a pro in business development, marketing, or sales? Join us here or here!
• Are you an awesome developer? Let our tech founder know here!
• Read about how to combat money laundering!

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