We’re all aware of why KYC is necessary. For companies concerned with their image, and for whom moral probity is an essential part of the corporate DNA, ensuring that you’re dealing with individuals who aren’t going to tarnish the brand is critical.
Effective KYC ensures that businesses who want to operate the right way, avoiding fines and building a strong and trustworthy brand can do so. Effective KYC is achieved by verifying that customers, vendors, agents and otherwise have the right stuff, aren’t susceptible to bribery and don’t leave the corporate body open, knowingly or not, to be being used for money-laundering, fraud, or any other damaging criminal activity.
If the criminal activity can affect a corporation as large as HSBC, it can affect anyone. In a varied and fast-moving corporate world, it is increasingly difficult to know with who you’re dealing. The internet offers a degree of anonymity unthinkable a generation ago. KYC compliance is essential.
But your organisation will be dealing with as many businesses as it is for individuals. It’s important to use the same levels of rigour and due diligence when dealing with an organisation as it is when dealing with an individual.
A complex global marketplace
Standard KYC protocols exist to prove that people are who they say they are. But the world market these days is so impossibly complex that it’s not always easy to establish that companies are who they say they are, let alone individuals.
The opacity of offshore dealings, the privacy laws of tax havens and complex webs of shell companies created for tax purposes can make it difficult to prove that you’re dealing with credible, genuine businesses. In particular, property and financial services are notoriously difficult to police offshore.
Domain names can be registered anywhere on earth and could be a front for anything. But it’s important for the credibility of your corporate brand that you know who you’re dealing.
Prevention’s better than cure
What’s necessary is a vigorous, root and branch approach to company identification which can take place in real-time. Your business needs to be positioned to validate the business you’re dealing with as fast as possible. Commercial imperatives dictate that you don’t want to be dragging your feet waiting to see if you can deal with them, but nor do you want to act too hastily, and find your brand associated with something unsavoury. Fraud and corruption take a long time to sort out, and it’s just plain bad business to be wasting time and resources resolving a problem which could have been prevented.
Learn and evolve
KYC services need to keep evolving to stay a step ahead of fraudulent businesses, as tech companies have to keep learning to stay ahead of hackers. Here at ThisIsMe, we think that KYB is the next battleground and one which only a speedy and dynamic process which, crucially, keeps learning can keep your business clean, compliant and hassle-free.
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