To have security, credibility and solidity in the market, all businesses must know not only who their customers are, but also the companies with which they have a relationship.

Well known, an old proverb that pervades the relationship between companies can be applied to the universe. It's the popular “Tell me who you're with, and I'll tell you who you are”. The partnership between different brands not only consists of a supplier-company relationship, but also of what we call “innovation ecosystems”.

Therefore, it is extremely important to be sure that all those companies with which your business maintains a relationship follow rules and good practices of conduct.

In this sense, some concepts appear, such as KYC, KYP and KYB. That's why we'll talk in this blog article about what KYB is and what its importance is.

Learn more about it by reading this post that we prepared especially for you!

What is KYB?

The acronym KYB (Know Your Business) refers to the practices that are carried out in the business-to-business relationship (Business to Business - B2B). 

This is a strategy that helps you recognize the companies with which you already have or want to start a relationship, bringing security and reliability to business relationships. 

Through the KYB, we can identify if the organizations you have relationships with are true or false.

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How does KYB work?

The KYB is a tool for compliance processes that uses protocols and certain procedures to carry out careful analysis of the financial conditions and legal status of an organization. Among other points, KYB evaluates:

  • company records; 
  • nature of the business; 
  • business license upgrade; 
  • identity of the owners, directors and other executives;
  • suspicious transactions and reports.

In this way, your company is able to prevent and remedy irregularities or dubious (and even illegal) behaviors that create risks for your own business.

Which companies should be concerned about KYB?

Companies of all segments and sizes can make use of this procedure. However, all financial institutions, payment companies and organizations that handle money transfers must and are required to carry out KYB verification of the companies in which they do business. 

Among the procedures performed are the verification of the organization's registration, the updating of the business license, the identity of its owners and directors, the nature of the business, the amount of the transaction and the analysis of any suspicious reports.

What is the importance of KYB?

The KYB process is a great ally for carrying out compliance processes, which ensure that institutions comply with all the rules, laws and regulations of their sector. 

When it comes to financial activities, every precaution is more than necessary and any risk of money laundering or terrorist financing must be mitigated. Not carrying out KYB procedures can leave a company exposed to these types of crimes. 

Therefore, it is extremely important to know the institution with which your company will be involved, because just as people can commit identity fraud and act as money laundering agents, there are companies that are false or fictitious companies.

know your business

Protect your business against fraud

One of the best ways to prevent and even avoid money laundering crimes within companies is the implementation of strong compliance procedures. 

NAAT.TECH solutions help your company implement and strengthen your company's compliance program. So, contact and talk to one of our specialists to find out how we can help your company protect itself from fraud.